The South African Competition Commission expressed its support for the broad based Black Economic Empowerment (BEE) Bill during its submissions to the Trade and Industry Parliamentary Portfolio Committee hearings in Cape Town on Thursday.
The Bill, together with the strategy for broad based BEE, developed by the Department of Trade and Industry (DTI), will assist the Commission when addressing black economic empowerment issues in the analysis of merger transactions, or considering exemption applications in terms of the Competition Act, said Zolile Ntukwana, Manager of the Compliance Division at the Competition Commission.
When considering whether a merger can or cannot be justified on public interest grounds, the Competition Commission is required to consider, among other things, the effect the merger will have on the ability of small businesses or firms controlled by historically disadvantaged persons to become competitive. Similarly, the Commission may grant exemptions to parties involved in agreements or practices that would otherwise fall foul of the Competition Act, on the same grounds.
”The codes of practice contemplated in Section 7 of the proposed BEE Bill will be of great use to the commission and our analysis,” Ntukwana said, ”since they are expected to set out empowerment targets”.
The commission recommended that the Bill be revised to mandate the advisory council be headed by the Minister of DTI rather than the president, since the council’s role will be to advice the president on BEE issues.
Further, they recommended that Appendix C of the strategy document (which specifies details regarding the number of appointees to the proposed advisory council as well as terms of office) be incorporated into the Bill so as to be consistent with other pieces of legislation in South Africa.
”The Bill sets the framework for implementing Black Economic Empowerment. We also believe it will promote the spread of ownership and assist new business entrants to participate in the economy,” concluded Ntukwana.
Meanwhile the Democratic Alliance (DA) says the strategy must be sent back to the drawing board.
”The proposed BEE Bill totally ignores the fact that job creation, particularly in the small business sector, is the single most important factor that will bring about broad-based BEE and transformation,” DA trade spokesperson Mark Lowe said in a statement on Thursday.
The strategy and the Bill came under fire during committee hearings this week, from both the Congress of SA Trade Unions (Cosatu) and the SA Chamber of Business (Sacob).
Cosatu are concerned the definition of BEE is too narrow and may only benefit a small black elite, while Sacob is arguing it could be detrimental to the viability of small companies.
Lowe said the state’s BEE proposals clearly had little support outside the African National Congress.
”The DA has consistently warned the government’s BEE strategy is too narrowly focused on big business, and the transfer of ownership and existing equity.”
BEE should be broad-based, focusing on economic growth through the development of the small business sector, with its huge potential for job creation, he said. ‒ Sapa, I-Net Bridge