Time to take the fight back to the cartelists

MORE than R6 billion in fines and counting. That’s the amount of administrative penalties the competition authorities have imposed on companies for various anti-competitive practices since 1999. The colluders will continue to get away with the loot until consumers join the authorities in the fightback.

Last year alone, the Competition Commission and Competition Tribunal imposed fines of just under R350 million. R6bn is massive. But it’s a drop in the ocean compared to the estimated value of the projects that have been subject to collusion and other forms of anti-competitive conduct across strategic sectors of the economy. I am certain the figure could run into hundreds of billions.

Take the construction cartel for instance. The commission estimates projects that were subject to the investigation to be valued at R47bn, of which an approximate R27bn comprised projects paid for out of the public purse – our money.

The commission has, over the years, dismantled cartels in several key sectors such as cement, fertiliser, food (poultry, fish and bread), pharmaceuticals and steel.

Just last week, the commission announced it had referred to the tribunal for prosecution a case of massive collusion against 17 banks for price-fixing and market allocation in the trading of foreign currency pairs involving the rand.

The details of how the traders unabatedly colluded via messaging platforms are shameful to say the least.

But it’s starting to become the norm. Authorities investigate and prosecute a case: the company enters into a consent agreement, confessing to breaching provisions of the Competition Act, or the tribunal issues an order finding against the company for anti-competitive conduct. The company pays no more than 10% of the affected turnover and it’s business as usual.

Other firms even take three steps ahead of the authorities, making provision for the fines before the tribunal makes its ruling.

A 10% fine seems to be a small bite of the revenue pie of a big corporate, does it not? It may seem too insignificant for most companies’ profit margins, though the same may not be said about the potential harm done to a company’s reputation.

But then again, who cares about reputation when you are a dominant player in a market in which consumers have little choice but to deal with you or your evil competitors?

Which brings me to this vital point: fines imposed by the competition authorities are meant to serve as a deterrence and never a case for reparation. However, the authorities should be lauded for securing these fines – it’s by no means light work. Another worthy victory is the competition authorities’ ability to negotiate creative remedies beyond fines, to help repair damage caused by the cartelists.

But the latter is partly not the authorities’ main focus. The big players in this space undoubtedly have to be the aggrieved consumers and affected businesses.

The Competition Act makes provisions for parties who suffered damages as a result of anti-competitive practice to institute a civil claim for reparation in a civil court.

This area of the act has admittedly not been exercised much. I don’t know if it’s lack of public awareness on the part of authorities or fewer successful civil claim actions to set a good precedent.

Despite this, consumers and civil society organisations need to pursue this area with vigour to ensure that companies found guilty repay the money in earnest.

Public outrage – a few comments, a like here and a retweet there on social media platforms – is good and expected, but not enough. It’s time to take the fight back to the cartelists.

In May last year, civil society organisations, including Black Sash, Cosatu and the Children’s Resources Centre, succeeded in a settlement agreement with Premier Foods, bringing to an end a long-standing civil claim brought by the victims of the bread cartel for damages suffered as a result of Premier Foods’ participation in the bread cartel.

In the same year, government reached a settlement agreement with seven companies involved in the construction cartel to set up a Voluntary Rebuild Programme valued at R1.5bn.

The agreement aims to promote transformation in the sector and settle outstanding and potential civil claims between the parties relating to a number of infrastructure projects.

More recently, the South Gauteng High Court ordered SAA to pay Comair more than R1bn for engaging in anti-competitive behaviour between 1999 and 2005.

More successes like these in the courts will send a stronger message to would-be offenders.

Adding to the criminalisation of cartel conduct, you have a far-reaching competition law, criminal and social justice system protecting law-abiding businesses, especially SMEs and the most vulnerable.

Cartel conduct is the most egregious form of anti-competitive practice that robs consumers of competitive prices and choice. And it’s time those aggrieved stop playing victim and take the fight back to the Competition Act delinquents. Azishe! (let it be!).

Public outrage is good and expected… but not enough

Themba Mathebula is a former media relations practitioner at the Competition Commission. He writes in his personal capacity.