Cartel bosses must be prosecuted – Cosatu
DIRECTORS of companies involved in cartel conduct should be prosecuted because fines imposed on the companies did not deter antitrust behaviour, Cosatu said.
The labour federation was reacting to Wednesday’s Competition Commission raids at the premises of six cargo shipping companies in the Western Cape and KwaZulu-Natal. The commission said it was investigating the firms for collusion.
Cosatu said it would be following the commission’s investigation closely, “because it is disconcerting to think that these companies have colluded to inflate prices for cargo transport making our region uncompetitive”.
The labour federation said: “We hope the raid will not be the end of this long overdue action, but it will lead to arrests, convictions and stiffer sanctions. Government has been too soft on businesses which collude and abuse our laws for too long, leaving ordinary workers to bear the brunt of their corrupt activities.”
Cosatu said directors and executives of companies implicated in cartel behaviour should be prosecuted, and “we want them sentenced to longer sentences.
“We reiterate our position that going forward, we need laws that will allow members of public to also claim damages against cartels.”
Lesley Morphet, a partner and the head of the competition department at law firm Hogan Lovells, said search and seizure operations were normally part of the commission’s investigations and took place when the commission suspected there was information relevant to their investigation on the premises. This included electronic information.
Nkonzo Hlatshwayo, also a competition partner at Hogan Lovells, said the commission also resorted to raids without a warrant if the delay in obtaining the warrant would defeat the purpose of the entry and search operation.
‘The raid is part of an investigation. There is no proof (the companies) have colluded.’
Where there was the possibility that the concerned companies could destroy the information to frustrate the commission’s investigation, a dawn raid without a warrant might be justified, he said.
Morphet said while collusion required a level of co-operation by competitors, it was possible for companies to engage in conduct not knowing it could be classified as collusion.
Several South African companies continue to find themselves on the wrong side of the competition law, despite many years of enforcement including hefty penalties.
He said some of the transgressions had historical reasons. “Some of the industries used to have price control boards where companies shared information,” he said.
When these were disbanded, it was possible the practice lingered on, Hlatshwayo said.
Morphet said, in the aftermath of the raids, some companies immediately applied for leniency. Given the introduction of criminal liability for directors and managers, it was unclear if this trend would continue.
Hlatshwayo said the raids should not be an embarrassment to the companies.
“The raid is merely part of an investigation. There is no proof at this point that they have colluded. The commission must still prove that.”