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Towards a fair and efficient economy for all

Annual Report Presentation to Parliament Shan Ramburuth Commissioner, Competition Commission 07 October 2009. Towards a fair and efficient economy for all. Outline. Overview Priority sectors Division reports and expenditure Competition Amendment Act Strategic priorities.

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Towards a fair and efficient economy for all

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  1. Annual Report Presentation to Parliament Shan Ramburuth Commissioner, Competition Commission 07 October 2009 Towards a fair and efficient economy for all

  2. Outline • Overview • Priority sectors • Division reports and expenditure • Competition Amendment Act • Strategic priorities Towards a fair and efficient economy for all

  3. Overview • Focus on enforcement • Highlights • Construction – 10 investigations initiated; 2 mergers prohibited • Food – 5 investigations initiated • Finance – banking enquiry completed • Ansac case finalised • Merger activity decline (from 513 to 414) • Appointment of Deputy Commissioner (1 Nov 2008) • Best Company to Work For • Expect a continued focus on enforcement Towards a fair and efficient economy for all

  4. Infrastructure and construction • The concrete pipes cartel • Initiated in December 2007, referred in February 2009 • Uncovered collusion in concrete pipes, manholes and culverts • Aveng paid R 46 million for its Infraset division • The plastic pipes cartel • Referred in February 2009 • Merger assessment uncovered the cartel • Uncovered cartel in plastic pipes dating back to the 1980’s • Commission is talking settlement with some respondents Towards a fair and efficient economy for all

  5. Infrastructure and Construction • Prohibited wire products merger • Aveng intended to buy steel reinforcing companies • Would result in high market shares and enhance existing collusion • Commission prohibited the merger • Prohibited asphalt merger • Much Asphalt would have merged with Gauteng Asphalt and others • Commission prohibited the merger because (1) high market shares; (2) Gauteng was a viable competitor; (3) high barriers to entry Towards a fair and efficient economy for all

  6. Food, agro-processing and forestry • Bread • Settled with Foodcorp in bread: paid R45 million • Pioneer case heard in Tribunal • Milling • Better understanding of cartel in the value chain • Possible cartels in flour and in maize meal • Possible regional arrangements to cement national arrangement Towards a fair and efficient economy for all

  7. Food, agro-processing and forestry • Milk • Referred to the Tribunal in December 2006 • Collusion and abuse of dominance by processors: (Clover, Parmalat, Lancewood, Woodlands, Nestle, Milkwood, Ladismith) • Settled with Lancewood, Clover got leniency in part • Technical points raised on summons and initiation procedures: • Clover and Ladismith (to the Tribunal, CAC and SCA) • Milkwood and Woodlands (to the Tribunal and CAC) Towards a fair and efficient economy for all

  8. Intermediate industrial products • Sasol • Initiation in piped gas (Egoli, Spring Lights, Coal, Energy and Power Resources) • Initiation in petroleum products (SAPIA, SABITA) • Mittal • Harmony and Mittal case settled • Commission investigations into tin plate pricing, steel cartels • Challenges in excessive pricing Towards a fair and efficient economy for all

  9. Financial services • Banking report finalised in June 2008 • Report made 28 recommendations, some requiring regulatory changes • Established a steering committee and 4 working groups • Steering committee consists of Treasury (chair), the DTI, Reserve Bank and Commission • Committee will review and oversee the implementation of the recommendations Towards a fair and efficient economy for all

  10. Number of cases initiated in 2008/09, by sector Towards a fair and efficient economy for all

  11. Number of cases in 2007/08 and 2008/09 • 11 complaints referred to the Tribunal • 118 complaints not referred to the Tribunal Towards a fair and efficient economy for all

  12. Corporate Leniency Policy • Corporate Leniency Policy (CLP) amended in May 2008 • Consulted with stakeholders and international best practice • Amendment provides: • Legal certainty : process is more certain • Marker procedure: potential applicants can request a marker • Role in the cartel: does not exclude instigators • Oral submissions: applicants can give oral statements • Responsibility: E&E is now the responsible division Towards a fair and efficient economy for all

  13. Leniency applications Jan 04 – Jul 09 Towards a fair and efficient economy for all

  14. Merger decisions by sector Towards a fair and efficient economy for all

  15. Thresholds and fees • Thresholds were increased with effect from 01 April 2009 • Filing fee for intermediate and large mergers increased • Commission introduced a merger calculator and issued a guideline for small merger notification • Expect decrease in merger filings Towards a fair and efficient economy for all

  16. Administrative penalties from 06/07 – 08/09 Towards a fair and efficient economy for all

  17. Expenditure on litigation from 02/03 – 08/09 (R’000) Towards a fair and efficient economy for all

  18. Policy and Research • Worked on 109 cases in the year • Activities included: • Submissions on regulatory matters (5) • Presentations and seminars (32) • Internal briefing papers (9) • Conference papers (7) • Submissions to international for a (5) Towards a fair and efficient economy for all

  19. Stakeholder relations • Compliance renamed Strategy and Stakeholder Relations • Working closely with the Commissioner’s Office • Engaged with: • Government – public sector forum (1), bid rigging workshops (2) • Business – Amendment Bill (2), workshops for SME’s (13) • Consumers – workshops and presentations (11) • Practitioners – meetings and presentations (3) • Trade Unions – workshops and training (5) • International organisations – interactions with OECD, ICN, SADC, UNCTAD, Lesotho and Sudan Govt • Academics – workshops at Universities (2) Towards a fair and efficient economy for all

  20. Staff allocation to divisions at 31 March 09 Towards a fair and efficient economy for all

  21. Expenditure on human resources Total expenditure: R 110, 638m • 49.6% of total expenditure spent on HR (R54,938m) • 75.7% of HR cost spent on salaries for staff • 5.7% of salaries spent on training of staff Towards a fair and efficient economy for all

  22. Competition Amendment Act • Implications of the Amendment Act • Concurrent jurisdiction • Incorporation of the leniency policy • Complex monopoly conduct • Market inquiries • Personal criminal liability Towards a fair and efficient economy for all

  23. Strategic priorities • Achieve demonstrable competitive outcomes in the economy • Deepening prioritisation in sectors and cases to achieve meaningful impact on specific industry sectors • An improved competitive environment for economic activity • Engaging with and influencing stakeholders for competitive outcomes in the economy • Realise a high performance competition regulatory agency • Strengthening and building leadership and management capability Towards a fair and efficient economy for all

  24. THANK YOU Shan Ramburuth Tel: 012 394 3332 E-mail: ShanR@compcom.co.za Towards a fair and efficient economy for all

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