Patel’s potentially ruinous power grab

New bill could transform minister into SA’S Competition Czar

So, will the Competition Amendment Bill become known as the “Patel Bill” before it has made its way through the parliamentary process and ends up as law? The proposed changes to the Competition Act look horribly like a power grab by one of the most astute politicians in the ANC today. If it comes into effect in its current form it will put an end to a competition regime that has been one of the few highlights of the post-1994 government.

The bill is a breathtaking attempt by economic development minister Ebrahim Patel to place himself at the very centre of competition policy and implementation in SA. Key proposals in the bill deal not just with who decides on cross-border mergers, but essentially transform the minister into the Competition Czar.

It’s as though Patel has watched one too many Hollywood superhero movies and believes he should have all the powers that reside in the competition authorities.

Here’s what’s on the cards: that the minister be given the power to issue regulations exempting an agreement or practice from the application of the Competition Act; the power to appeal against competition tribunal (and possibly competition appeal court) decisions; the power to call for market inquiries; and the power to halt inquiries.

This will hollow out our competition authorities, whose reasonably certain processes will be replaced by ad-hoc lobbying of the minister.

Then there are the cross-border transactions. The bill provides for the prohibition of transactions that have an adverse impact on national security interests. The proposed amendments provide for the president to set up a committee, which will consider if any acquisition by a foreign firm may have an adverse effect on SA’S national security interests if it has an impact on markets, industries, goods or services, sectors or regions.

We can assume the president will be too busy running the country or managing ANC crises to exercise this power and will probably delegate the running of this committee to, you’ve guessed it, Patel.

This bill has been launched at the same time that a cohort of top SA politicians and business people has gone out to the world to beg for investments. If implemented as proposed, the bill will not only create considerable uncertainty for potential investors (though our government is unlikely to go as far as the French who, in 2005, deemed yoghurt maker Danone a strategic company), it will also create huge delays.

Like every other country in the world, SA has a right and a duty to protect its strategic interests and the reality is that mergers, local and international, often tend to be destructive.

Government is obliged to protect its citizens from short-term profit seekers. But it already has the power to do that, through the Competition Act’s public interest provisions.

Patel has used these provisions to great effect, managing to extract employment and investment commitments from Coca-cola, AB Inbev and Walmart. But his proposed power grab will extend this politicking tactic to the entire competition arena. In the process it will destroy one of SA’S few regulatory successes.

It’s as though Patel has watched one too many superhero movies and believes he should have all the powers