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Presentation to the National Council of Provinces SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS by Shan Ramburuth Competition Commissioner 6 March 2007. Why competition policy?. Fairness and access Prices and Quality Innovation Consumer Choice. Competition Commission’s activities.
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Presentation to the National Council of Provinces SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS by Shan Ramburuth Competition Commissioner 6 March 2007
Why competition policy? • Fairness and access • Prices and Quality • Innovation • Consumer Choice
Competition Commission’s activities • Prosecution of anti-competitive behaviour • Merger control • Advocacy
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
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
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
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
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
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
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
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
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
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
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
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
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
Current merger cases: 2007 • Telkom/BCX • Prime Media/Khaya FM • Pick ‘n Pay/Fruit and Veg City • Mila Nutri/Yara SA
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
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
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
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