Mooted amendments to the Competition Act, which could lead to jail time for executives overseeing collusion and price-fixing, could weaken the Competition Commission rather than give it more clout.
This week Cabinet was expected to view the draft Competition Amendment Bill, which is reported to contain measures to deal with cartels in South African industries.
It has been reported the Bill contains measures that will make company directors liable for fines and jail terms. The amendments come hot on the heels of a number of price-fixing and collusion scandals, as the Competition Commission flexed its muscle by busting a number of cartels in the bread, milk and pharmaceutical industries.
A number of competition lawyers told the Mail & Guardian this week that criminalising anti-competitive practices could actually weaken the Competition Commission because the commission will have to prove guilt beyond a reasonable doubt, whereas now it has to prove it only on the balance of probability.
Cliff Dekker’s Mondo Ntlha says the extra burden of proving beyond reasonable doubt could weaken the Competition Commission, with fewer cartels being apprehended.
Ntlha says a number of companies that have been investigated for collusion had reached a settlement with the Competition Commission rather than going before the Competition Tribunal. However, if the activities are criminalised they might take their chances with the tribunal because it is harder for the commission to prove.
Webber Wentzel’s Anthony Norton says there are “serious administrative and constitutional issues with criminalising offences under the Competition Act”. It would immediately be challenged constitutionally if it was introduced,” says Norton.
The M&G understands that pressure might be put on the Competition Commission to use the full letter of the law in its bid to fight collusion. It has the legal right to fine a parent company 10% of its total turnover as a group if one of its subsidiaries is found guilty of collusion.
The commission has been lenient so far in fining only 10% of the guilty subsidiaries’ turnover.
The Competition Commission referred the M&G‘s queries to the department of trade and industry, insisting that it merely implemented the policy laid down by government.
Attempts to contact the department’s Zodwa Ntuli, who has been driving the amendment process, were fruitless and the only response received was that the proposed amendments to the Competition Act would “strengthen the powers of the competition authorities to deal with competition issues that currently pose difficulties”.
“The proposed Bill still has to be presented to Cabinet and will after approval by Cabinet immediately be made public,” the department says.
The tiger’s share of controversy
What exactly does it take to get fired from Tiger Brands?
The South African company was involved in two high-profile collusion cases in the past year and it appears that not one employee has lost his or her job.
According to Tiger Brands, 28 staffers were implicated in the bread and milling collusion case. Four senior staff left the company.
Tiger Brands chief executive Peter Matlhare and chairperson Lex van Vught admitted at a press conference last week, called to address the company’s other collusion case involving subsidiary Adcock Ingram Critical Care (AICC), that none of the remaining 24 staffers had been fired. It insists that “due process was followed”, amounting to three senior managers being fined and a number of others getting final written warnings.
Meanwhile, in the other collusion case, involving the rigging of government tenders for intravenous drips, Tiger Brands admitted that its subsidiary, AICC, is guilty and agreed to pay a fine of almost R54-million.
But Tiger Brands said it would admit to “no wrongdoing” and that the collusion was conducted by AICC senior executive Arthur Barnett, who operated alone.
Disciplinary action against Barnett is yet to be concluded. Tiger Brands has still not dealt with the fact that a Competition Commission witness implicated ex-Tiger Brands board members Mike Norris and Haydn Franklin and company secretary Ian Isdale, claiming they knew about the bid rigging since 2002 and failed to act.
In response to Mail & Guardian questions this week Tiger Brands said: “It is important to clarify that the allegations that the two ex- board members and the company secretary were made aware are still under investigation, but there was no allegation of collusive activities made against them.”
Tiger Brands head of corporate affairs Jimmy Manyi said that once the investigation was completed, the board would take “appropriate action”.
The Black Management Forum (BMF), of which Manyi is president, released a statement this week condemning collusive tendencies and the behaviour of corporate executives.