The Congress of South African Trade Unions (Cosatu) is planning mass action against South African retailers after the Competition Commission found that there would be no competition concerns should retailers sign the proposed code of conduct tabled by the union at the National Development Labour Council (Nedlac).
In a recent advisory opinion, the Competition Commission informed Cosatu that there would be no concerns should retailers sign the code, which provides for clothing stores to set a target of 75% local content for clothing products on their shelves.
The union federation said it asked the commission to respond to concerns raised by retailers that signing the code may be in breach of the Competition Act, particularly the provisions relating to prohibited horizontal practices.
In October last year, Cosatu tabled a demand at Nedlac requesting that retailers sign a code that, inter alia, would commit them to a 75% local content target, and secure their support to combat illegal imports and contraventions of legal minimum wages and working conditions at supplier factories.
The Cosatu demand was in the form of a notice under Section 77 of the Labour Relations Act, which gives a trade union or a federation of trade unions the right to initiate socio-economic protest action if the matter is not resolved at Nedlac.
Cosatu on Wednesday said that it will now issue a Section 77 1(d) notice, in which the federation has to give at least 14 days’ notice of the start of a programme of mass action.
Nedlac on Wednesday signed off on the Section 77 discussions and concluded that the matter has been considered.
The secretariat will therefore table a programme of action for the central executive committee from May 23 to 25.
This will include action taken under the Section 77 1 (d) notice and other actions, which can be taken under normal laws.
It will include pickets of retailers and shopping malls, human chains, sit-ins, boycotts of foreign goods and mass attendance at the annual general meetings of all retailers.
Retailers must ‘reconsider stance’
Cosatu said it hopes that the retailers will use this period to reconsider their stance and sign the code.
The union federation said the campaign will be synchronised with action organised under the separate Cosatu Section 77 notice on the effects of the overvalued rand on the mining and manufacturing industries.
“It should be recalled that the Nedlac management committee at the end of April 2005, in a last-ditch attempt to have this matter considered, called for a meeting of the most senior representatives, to see if the gap between the stakeholders could not be closed.
“This is due to be discussed further on May 19 at a meeting of high-level representatives of government, the [South African] Reserve Bank, business and labour.”
The union federation pointed out that by September last year, more than 32 000 jobs had been lost in the clothing, textile and footwear industry.
This figure, for the period since January 2003, has now risen to 40 000 lost jobs.
Following negotiations between Cosatu and a number of retailers — including Edcon, Pick ‘n Pay, Woolworths, Truworths, Foschini, Fashion World, Meltz, Pepkor, Cape Union Mart, Moresport, Shoprite Checkers and Topics — in January this year, a “committee of five” retailers tabled a proposed code to Cosatu.
Cosatu said that in February, the same retailers unilaterally withdrew their proposal, on the basis that such a code may constitute a breach of the Competition Act.
According to Cosatu, the retailers argued that the code is in contravention of Section 4 (1)(b)(ii) of the Competition Act, because it divides markets by allocating suppliers and thus constitutes a prohibited horizontal practice between competitors.
The union added that it interacted with retailers and requested copies of legal opinions that informed their concerns.
Saving jobs
Cosatu pointed out that the code neither allocates suppliers nor fixes prices, but instead seeks to promote the local industry and create and save local jobs.
“In addition, the code is an agreement between the labour movement and a number of retailers, not an agreement between competitors.”
Cosatu noted that the Competition Act itself seeks to promote the objectives of social justice and employment, both of which are at the core of the proposed code.
“Notwithstanding detailed responses by Cosatu to show that there was no legal substance to these concerns, the retailers persisted in their view that any proposed code would be contrary to the Competition Act,” the union said.
Cosatu said that one retailer, Fashion World, indicated that it would be prepared to sign the code, provided the Competition Commission indicated that there were no legal problems.
Another major retailer indicated that it was prepared to meet with Cosatu at a bilateral level to explore the possibility of settlement.
However, Truworths, Woolworths, Foschini, Edcon, Pick ‘n Pay and Queenspark all indicated that they were opposed to signing the code.
This plunged the Nedlac talks into deadlock.
The union said that the Competition Commission has now upheld its view.
The advisory opinion, issued by commissioner Menzi Simelane, said an agreement between Cosatu and a representative association of retailers “in the form of the proposed code, whilst falling within the conduct to which the [Competition] Act applies, does not constitute an anti-competitive practice”.
He further stated that “where Cosatu enters into this code with individual or specific retailers, the Competition Act will not apply. This is so because Cosatu is neither a supplier nor customer of the retailer.
“Further, each retailer is entitled to make its own decisions on the sources for its clothing, textiles and footwear products provided it is a local supplier as set out in the code.”
According to the union, this is a clear vindication of its views that there are no legal concerns with signature of the proposed code, and that retailers should now sign the code without further delay.
The call for 75% of local produce has the backing of the tripartite alliance, the South African Council of Churches, the Treatment Action Committee and the community constituency at Nedlac.
Cosatu added that the Department of Trade and Industry has endorsed the idea of a code between retailers and the labour movement on local procurement. — I-Net Bridge