CAPE TOWN, South African Economic Development Minister Ebrahim Patel says the Competition Amendment Bill which the government is introducing will equip competition authorities with the tools needed to probe anti-competitive behaviour by cartels and monopolies in the economy.

Briefing journalists at Parliament here Tuesday, Patel said the Bill, which was presented to Parliament later, was drafted last year following concerns that anti-competitive behaviour increasingly made it difficult for smaller players to penetrate the economy.

He said while the main focus of the Bill was to ensure economic transformation, it also seeks to address several big areas that affect competition. This includes prohibited practices like collusion and abuse of dominance by a firm; the structure of markets — which looks at economic concentration and its impact on small and black-owned businesses; and mergers.

We believe that the amendments taken as a package will boost SMEs (small and medium-size enterprises) and economic inclusion, opening up the economy to fresh investment and innovation.” he said.

We believe the Bill gives a clear mandate to the competition authorities to address economic concentration in a balanced manner and to promote economic transformation. It gives greater clarity to firms and investors on prohibited practices and what constitutes abuse of dominance.”

Patel’s briefing comes after investigations into cartels and monopolies in a number of sectors — from fertilizer, poultry, bread and construction to steel, banking, auto components and telecoms, among others — have resulted in some companies firms being slapped with fines amounting to more than 7.0 billion Rand (about 527 million US dollars) since 2010.

Patel said the Bill will provide a greater certainty on what is permitted collaboration and prohibited collusion between competitors, customers and suppliers. The Bill also zones in on dominant players — firms which control more than 45 per cent of market share — and adds the abuse of dominance to the list of excluded acts, particularly where it impedes the ability of SMEs and black-owned firms to participate effectively in a market. It also empowers the Competition Commission to show that the price charged by a dominant firm is excessive and for the firm to carry the obligation to show that it is reasonable.

The Bill will also revamp the regime to determine excessive prices and clarify in greater detail what is predatory pricing. It will also strengthen the penalties applicable for all prohibited practices as well as provide greater clarity to firms and the public on what is prohibited practices.

The second focus area that the Bill seeks to tackle is on the market structure, which looks at economic concentration and its impact on SMEs and black-owned businesses. The Bill provides for market inquiries to be conducted on the general state of competition in a market and to make recommendations to the Minister on its findings.

On mergers, Patel said the Bill clarifies the factors which are relevant to determining the competition effects of a merger as well as the role of competition and public interest in the merger. In the main, the Bill includes an additional public interest criterion to the law.

Source: NAM News Network