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Parliament Passes Competiton Amendment Bill

23 October 2018

The African National Congress (ANC) in Parliament applauds the passing of the Competition Amendment Bill [B 23 - 2018], by the National Assembly (NA) today. This Amendment Bill, which was introduced in July 2018 as a prioritised Bill, seeks to amend the Competition Act of 1998, so as to introduce significant new measures to address the lack of economic inclusion of black South Africans and the transformation of sectors of the economy that are highly concentrated.

The Bill provides the Competition Commission with new powers to address economic concentration by initiating a market inquiry if it has reason to believe there are factors which impede, restrict or distort competition, or if requested by the Minister. The amendments provide for the right of participation in a market inquiry to firms in a sector; trade unions; staff, officials and expert witnesses of the Commission, sector regulators and relevant Ministers.

The Competition Commission is also provided with the power to effect reasonable and practicable remedies to address adverse effect on competition, or to make recommendations to the Tribunal for divesture of assets. Affected firms will have a range of procedural rights that they can rely on to ensure that any remedies are appropriate and justifiable.

The Amendment Bill also introduces provisions to stop dominant firms from abusing market power on pricing. The Bill compels dominant firms to show that their prices are reasonable and that their pricing practices do not effectively exclude small-medium enterprises from participating in markets.

Furthermore, the Bill proposes tougher penalties for prohibited acts. The penalty for first time offences has been increased from zero to a maximum of 10% of turnover (i.e. the 'yellow card' provision has been removed), while the maximum penalty for repeat offences has been increased to 25%.

The new penalty regime provides for penalties to be extended to the controlling firm where the controlling firm knew or reasonably ought to have known about the offence.

Key to the amendments introduced by this Bill, is a stronger focus on public interest issues in mergers between firms. These will now include criteria on the promotion of greater economic ownership by black South Africans, employment, industrial development and regional impact. The Bill also has an increased focus on small and medium business, particularly ones owned or controlled by black South Africans.

Unlike a number of other countries including the United States, Canada, Australia, China and the European Union, South Africa does not have a general law or legal provisions to enable the executive to veto a merger on national security grounds. In light of this, the Bill provides for the President to publish a list of national security interests and constitute a committee of members of cabinet and public officials; to consider where mergers and acquisitions of South African companies, might be a National Security threat for the country.

This important Bill addresses the principles outlined in the 54th ANC National Conference Resolutions in relation to economic concentration, which noted that the high level of concentration of ownership in many sectors of our economy is dysfunctional to growth, entry of black South Africans in the economy and effective competition, and that the penalties for uncompetitive behaviour must be increased.

The adoption of this primarily transformative Bill by the National Assembly today is therefore indicative of the ANC's commitment to transform and decentralise the South African economy.

The ANC applauds the Portfolio Committee on Economic Development for the sterling work they have done to ensure that this piece of legislation was treated with the necessary urgency it deserves.

As a Section 75 Bill, the Bill will be sent to the National Council of Provinces (NCOP) for concurrence.

Issued by the Office of the ANC Chief Whip, comrade Jackson Mthembu.


Nonceba Mhlauli

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