Competition Board chairman Pierre Brooks speaks to Reg Rumney about the changing shape of competition law
Competition Board chairman Pierre Brooks is thoughtful and circumspect, as befits a man with a legal background — some would say to a fault, especially those who would have liked a more aggressive competition policy.
Yet if Brooks feels at all threatened it is not by his ministry or those agitating for tougher action against “monopolies”, but by opposition to tougher laws by business itself.
Brooks feels some disgruntlement about enforcing competition policy. “It’s been an uphill battle,” he says of the five-year period since I interviewed him
Trade and Industry Minister Trevor Manuel has promised that a draft Competition Bill will be published soon for debate. But what is clearer now than five years ago is that competition policy cannot operate in a vacuum.
The Competition Board’s recent move to the Trade and Industry Ministry has provided an opportunity, says Brooks, to co-ordinate policies.
Competition policy, Brooks says, cannot stand aloof from other policy decisions that have an impact on competition policy. So he echoes Manuel’s reported statement on the link between the ending of foreign exchange control and enhanced competition.
Also, if South Africa wants to participate in international trade, strong competition policy is necessary. The government must examine tariff protection, especially in highly concentrated areas, to expose local firms to international competition to a greater extent.
Brooks finds foreign firms tend to export to South Africa initially to create a market for their goods. Once they have established a toehold here, they will then look at direct investment.
Trouble is that potential competitors are obstructed in various ways. Domestic businesses, foreign firms, complain, manipulate local systems to keep them out. Brooks says local competitors have even threatened foreign firms with the possibility of anti-dumping charges for tendering lower for a municipal job than domestic firms. The result has been the exclusion of the foreign firm from the tender process. Foreign firms have tended to enter into joint ventures to avoid direct competition.
“We should create an investor-friendly climate by making it easier for foreign firms to come in,” says
Competition policy, Brooks believes, must be integrated with other policies, for example, safety specifications. “Local manufacturers sometimes set specifications themselves, but objective, universal standards are needed. South African standards are not necessarily the best.”
Brooks does not rule out enforced break-ups of conglomerates, but reckons this would be a last resort.
A starting point would be to force any company in total control of, say, a distribution network to allow outside companies to use that network as well.
Competition policy can also prevent abuses of dominant positions to keep competitors out of the market.
Asked about the tendency of black empowerment exercises to create new conglomerates, Brooks says: “One can question the vision of big business in doing that. People are worried about the empowerment of elites.” He believes such moves are designed to catch headlines and do not show the kind of strategic planning businessmen are used to.
Small business is where jobs will be created, he says. Big business has not expanded the number of jobs in the last decade or so.
“There is a lot more business could do to empower small business without being dictated to.”
Though he is not anti-big business, he sees the board’s role as defender of the underdog. “Competition policy should at least protect small business from abuse by big business.”