CompCom clamps down on abuse of dominance

Body says SA must to do more to discipline executives who flout competition laws.
CompCom commissioner Tembinkosi Bonakele says that the prevalence of cartels is an embarrassment to South Africa and that the fight against them needs to be stepped up. Picture: Moneyweb

The Competition Commission (CompCom) is becoming more active in the pursuit of businesses and companies that are not compliant with the Competition Act and says South Africa must do more to discipline executives.

Speaking at a law seminar in Sandton, CompCom commissioner and keynote speaker at the event Tembinkosi Bonakele said that the South African government and justice system needs to find ways to hold executives accountable for not complying with the Act of Prohibited Practices.

This act prohibits the abuse of a dominant position by firms in a market, but does not prohibit firms from holding a dominant position.The hurdle for proving abuse of dominance cases is significant, and requires in-depth legal and economic analysis.

The approach by the CompCom and competition lawyers is to take on fewer cases that are high impact, to set a precedent and curb future abuse of dominance in the market.

“We are not interested in [taking on] the hundreds of cases that are there, we want those few that are really impactful, that have an effect and that are winnable,” said Bonakele.

Read: CompCom warns LPG wholesalers on supply deals 

The commissioner said that dominant firms in South Africa should be concerned about concentration and government should take steps to promulgate deconcentration laws.

“The only reason why government will take steps to promulgate deconcentration laws, is because of behavioural issues by dominant firms. Participants are concerned that dominant firms are blocking entry and expansion or are charging excessive price,” said Bonakele.

“Government is obliged to respond in a way that should strengthen policy coordination and evaluate alternatives. One of the obvious steps to take is to strengthen the capacity of competition authorities,” he added.  

According to Bonakele, the CompCom is trying to curb cases where participants hold 80%-90% market share.

Another growing concern for the commission as highlighted by Bonakele, is the issue of cartels.

“The area of cartels is embarrassing to us as South Africans. It’s embarrassing to the business community, it’s also embarrassing to us as enforcers,” he said.

A cartel involves an agreement or concerted practice between two or more competitors to engage in fixing prices and/or trading conditions, dividing markets and/or collusive tendering.

In South Africa, the penalty for participation in a cartel is a fine of up to 10% of the firm’s annual turnover. Bonakele noted that 10% is too low and stricter measures must be used to discipline businesses participating in cartels. “The fight against cartels has to be tightened, and it must bite. We have to really explore this issue of sending people to jail. I think if we don’t do that we are going to lose legitimacy,” he said.

The commission is now also looking at airlines on the continent. The expense of flights and lack of competition with government still wanting to maintain national airlines is concerning. He said it is likely to impact on the integration of African economies. He added they would also be looking at telecoms, to facilitate integration.

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African socialism laid bare.

Reduce everyone to a single level and make sure it is the bottom level.

The biggest and most destructive monopolies in South Africa are the SOE’s.
When is the CompCom planning to take them on? Just as a start, scrap the NERSA regulations that protect Eskom against any competition from anybody, ever.

Until such time as CompCom does, forgive me for regarding it as just another element in government’s extortion racket, a total waste of taxpayers’ money, and destroyer of the economy to boot.

End of comments.

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