Cartels in sights of authorities
Leniency policy a way out for firms offering full disclosure over collusion
LAST year was another recordbreaking year for the South African competition authorities and more stringent competition law enforcement is expected in 2016. The serious potential consequences of anticompetitive conduct for companies and executives makes it imperative that compliance with competition law is made a priority.
The Competition Commission’s focus remains firmly on the detection and prosecution of cartels and the commission executed a number of dawn raids in 2015 on companies alleged to have been involved in collusion with competitors. In October, the commission searched the offices of suppliers of liquefied petroleum gas and cylinders, as well as the LPG Association.
This followed a raid at the end of September on four furniture removal companies, and another in midSeptember on the offices of three recruitment advertising agencies in Gauteng. In March, the commission raided the offices of six suppliers of fire control and protection system companies. This highlights the need for companies to have a comprehensive plan to deal with a search and seizure operation at their premises.
In May, Commissioner Tembinkosi Bonakele initiated a major investigation into collusion by traders in currency pairs involving the rand via electronic messaging platforms, following similar investigations in the US and Europe involving the fixing of forex rates and Libor. The investigation is still ongoing.
The commission concluded investigations into a number of cartel cases and referred complaints to the Competition Tribunal for adjudication in relation to alleged price-fixing in the construction, furniture removal, motor vehicle repair, curio retailing, plastic pipe and cement industries.
This included the most recent case being investigated by the commission as part of its “fast-track settlement” process regarding bid-rigging in the construction sector, which relates to the N17 link road between New Canada and Soccer City (N17 project).
Many of these complaint referrals involved an application for leniency by a cartel insider in terms of the commission’s corporate leniency policy
The Competition Appeal Court dismissed the commission’s complaint against Sasol Chemical Industries about alleged excessive polymer pricing and in November, the Constitutional Court ruled that it will not hear the commission’s appeal against this decision.
The Competition Tribunal ruled that Media24 had engaged in an “exclusionary act” in terms of section 8(c) of the Competition Act, by running one of its community publications, Goudveld Forum, at a loss to eliminate a rival community newspaper in the Free State town of Welkom between 2004 and 2009.
The tribunal has yet to decide on an appropriate remedy in this case.
An important focus for the commission in 2016 is likely to be its market inquiries into the healthcare, liquid petroleum gas and grocery retail sectors. Section 6 of the 2009 Competition Amendment Act, which empowers the commission to conduct market inquiries, was brought into effect in 2013.
The commission has extended the period for completion of the healthcare inquiry to December 2016 and has published draft terms of reference for comment in the grocery inquiry.