Reg Rumney
The shape of new competition policy is becoming clearer. Trade & Industry Minister Trevor Manuel in a speech last week revealed some of the proposals soon to be circulated in a draft Bill.
Among the main objectives, said Manuel, were that:
* The linkages between firms, be they through vertical integration, horizontal collusion or cross-holdings, be recognised as far more important an indicator of uncompetitive behaviour than the size or market-share of a stand-alone entity;
* Anti-competitive behaviour be recognised as a growth-retarder and harshly punished;
* Adjudication of anti-competitive behaviour not be left to ministerial whim. A special tribunal must be established and its decisions based on objective tests.
* Formulation and enforcement be placed under the same umbrella, since the police, at present, have limited enforcement capability.
* Persons harmed by anti-competitive conduct be allowed to claim damages.
Referring to the well-worn theme of economic concentration and market domination in South Africa, Manuel said this hurt the implementation of the government’s Reconstruction and Development Programme
Providing housing was made difficult by the extent to which single companies, trust funds or boards of directors straddle the building materials industry, among others, Manuel said.
“Research has shown that the largest furniture manufacturer in South Africa wholly owns 17 plants amounting to an effective 35 percent share of the overall market, while over 90 percent of furniture in South Africa is sold by seven large retail shops. Associated Furniture predominates in furniture, and there are only two or three significant suppliers of white goods (electrical appliances) and textiles.”
A few companies would benefit from RDP projects, he said.
“In housing a small number of suppliers in bricks, cement, timber, sand, stone, flat glass, plumbing fittings, ceilings, board, furniture, white goods, and textiles account for a significant proportion of the country’s production capacities.
“In bricks, the Clay Brick Association claims that Corobrik produces 58 percent of the country’s requirements, while in Natal, where housing needs are dire, they are practically the only brickmakers.”
Manuel went on to point out three producers dominate cement production, a small group of firms dominates timber production, and one firm is the biggest supplier of sand and stone.
“The one thing they all have in common is that their direct ownership can be traced back to the top four or five conglomerates on the Johannesburg Stock Exchange
Manuel promised the government would correct serious social imbalances created by past governments, and hinted that action would be taken somehow against existing conglomerates. “Competition policy cannot be made applicable to new entrants only,” he said.
Manuel’s comments have since been interpreted as “Big Business Bashing”, or disguised affirmative action.
But he concluded by stressing that the raison d’etre for effective competition law was a dynamic economy, permeated by healthy inter-firm rivalry and the opening of opportunity.
“It is not to dress white conglomerates in black masks,” he said, apparently referring to black empowerment exercises which have seen the creation of new black-headed conglomerates on the JSE.