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Presentation to the National Council of Provinces

This presentation to the National Council of Provinces' Select Committee on Economic and Foreign Affairs by Shan Ramburuth, Competition Commissioner, delves into the importance of competition policy. It covers aspects such as fairness and access, prices and quality, innovation, and consumer choice. The Competition Commission's activities include prosecuting anti-competitive behavior, merger control, and advocacy. The application of the Act extends to all economic activities within South Africa, irrespective of the nature of the enterprises involved. The presentation also touches on the Competition Authorities' external parties, Competition Appeal Court, Competition Tribunal, enforcement statistics, notable cases including price-fixing instances, and ongoing merger cases. Various exemptions, leniency policies, and merger control details are provided, emphasizing the impact on competition, public interest, and international contributions to the competition landscape.

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Presentation to the National Council of Provinces

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  1. Presentation to the National Council of Provinces SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS by Shan Ramburuth Competition Commissioner 6 March 2007

  2. Why competition policy? • Fairness and access • Prices and Quality • Innovation • Consumer Choice

  3. Competition Commission’s activities • Prosecution of anti-competitive behaviour • Merger control • Advocacy

  4. Application of the Act • All economic activity within or having an effect within South Africa • Conduct of all enterprises: public or private • Concurrent jurisdiction: • -Sector regulators • -“Forum Shopping” • -MOUs with ICASA, NER, Postal Services Regulator, negotiating with the SARB and FSB

  5. The Competition authorities The Competition Authorities E X T E R NA L P A R T I E S Competition Appeal Court Appeal of Tribunal decisions Appeal of Tribunal decisions Competition Tribunal Appeal of exemptions, intermediate mergers or non-referral decisions, defence of referral decisions Referral of complaints & large mergers Competition Commission Exemption applications, complaints and merger notifications

  6. Enforcement: 2005/2006 Complaints (105) Investigations (134) Non-refer after screening/further investigation (74) Referral (6) Respondent defends Consent order (8) Interlocutory applications CT approves/ agrees with CC Respondent successfully defends

  7. Price fixing: 2005/2006 • General Motors, Daimler Chrysler, Nissan, Volkswagen, Citroen: Minimum resale price maintenance Settlement, consented to penalty totaling R25 150 000 • Subaru and BMW: Fixing of prices and/or trading conditions Settlement, consented to penalty totaling R 8 500 000 • Lufthansa • Fixing of trading conditions • Settlement, consented to penalty of R8 500 000

  8. South African Airways (SAA) cases: 2005/2006 • Litigation in Tribunal (Nationwide complaint) • Abuse of Dominance: Travel agents’ incentives • Tribunal imposed penalty: R25 million • Consent Agreements: • Collusion, code sharing with Lufthansa: R20 million • Collusion, fuel levies with SA-Airlink,-Express, Comair: • R20 million • Abuse of Dominance, travel agents’ incentives • (Comair complaint): R15 million

  9. Current cases • Harmony Gold/Mittal Steel Excessive pricing Tribunal’s decision pending • SAVA/Telkom Access to essential facility Litigation in the High Court over jurisdiction • Ansac/Botash Fixing of trading conditions Many interlocutory applications, appeals Tribunal must still hear the merits of the case

  10. Current cases • Profert/Sasol Refusal to supply Referred to the Tribunal • CC/Dairy Processors (Clover, Parmalat, Ladismith Cheese, Woodlands Dairy, Lancewood, Nestle and Milkwood Dairy) Price fixing of raw and retail milk Referred to the Tribunal • CTH Trading/Senwes Abuse of dominance – exclusionary conduct and price discrimination Referred to the Tribunal

  11. Current cases • CC vs Blue Ribbon, Sasko and Albany Fixing of prices and trading conditions Western Cape investigation widened to national • Big Daddy vs South African Breweries Dividing markets, minimum resale price maintenance and exclusionary conduct • Barnes Fencing vs Mittal Steel (Long steel) Price fixing and price discrimination

  12. Exemptions • Maintenance or promotion of exports • Promotion of SMMEs & business owned by HDIs to become competitive • Stop decline in an industry • Economic stability of a designated industry • Intellectual property rights • Professional rules

  13. Corporate Leniency Policy • Introduced 6 February 2004 • Regulate cartel behaviour • Indemnity to firms providing information on cartel • “First through the door” • Assist CC in case against other cartel members • Not instigator • 10 applications to date, 6 granted conditional leniency

  14. Merger control • Change of control • Small, intermediate and large • Test: -Substantial lessening or preventing of competition -Technological, efficiency and pro-competitive justifications -Public interest grounds: • Effect on particular industrial sector or region • Employment • SME’s or firms owned by HDIs to become competitive • Ability to compete in the international market

  15. Merger notifications

  16. Prohibited mergers: 2005/2006 • 4 out of 394 • Eyethu/Ultra Registrars • Small merger, abandoned • Sasol/Engen • Large merger, prohibited by Tribunal • Foskor/Sasol’s phosphoric acid business • Large merger, abandoned • Medicross/Prime Cure • Large merger, prohibited by Tribunal, allowed by CAC

  17. Conditional approvals: 2005/2006 • 14 out of 394 • IntelSat/PanAmSat • Intermediate merger, behavioural conditions • AP Moller-Maersk/Royal P&O Nedlloyd NV • Large merger, structural conditions • Tiger Bands/Ashton Canning • Large merger, employment-related conditions

  18. Current merger cases: 2007 • Telkom/BCX • Prime Media/Khaya FM • Pick ‘n Pay/Fruit and Veg City • Mila Nutri/Yara SA

  19. International contributions • International Competition Network • Hosted 2006 conference • Organization for Economic Development • Observer status since 2006 • United Nations Committee for Trade and Development • Competition Committee

  20. Advocacy • FAIS ombud’s referral: Changes to the Short Term Insurance Act - “untying” insurance and bond • Pension Funds Adjudicator’s ruling on switching retirement annuity funds • Postal Regulator’s competition guidelines • Comments on the MIDP • Workshops with Estate Agents Board • Joint working committee with ICASA

  21. The banking inquiry • National Treasury’s research • Competition Commission’s research • Market transparency • Voluntary submissions • Public hearings • Recommendations on: • -Access to payment system • -Bank charges

  22. Way forward - strategic planning • Increase staff morale and motivation • Align structure and work processes with strategy • Importance of approach and methodology • Knowledge management • Communication and advocacy

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