Cosatu: Competition Amendment Bill will attract investment
Unlike the DA, which says parts of the bill are onerous and murky, Cosatu says it will lead to greater focus on jobs and worker ownership
Trade union federation Cosatu has argued that the contentious Competition Amendment Bill will actually attract investment, contrary to what some opposition parties and local businesses have suggested.
Among other things, the bill is intended to provide for an extension of the mandate of the competition authorities and the executive to tackle high levels of economic concentration. It is also meant to tackle the limited transformation in the economy and the abuse of market power by dominant firms.
“Much of the attacks by local business interests on the bill claim that it will deter investment. Yet, in reality, foreign investors and institutions, including the World Bank, complain about the collusive practices and concentration in the economy and identify these as the real reasons for the lack of investment,” Cosatu stated in its submission to the National Council of Province’s (NCOP) select committee on business and economic development, on Tuesday.
The committee is conducting public hearings on the bill. In October, the National Assembly adopted the bill, despite objections by the opposition parties. The NCOP has to consider the bill before it is forwarded to the president for assent.
The opposition objected to various proposals contained in the bill, particularly the minister’s regulatory role, which they said would give too much power to the economic development minister.
Various analysts have raised concern about the clause on “intervention in merger proceedings involving a foreign acquiring firm”, saying this would give the government the right to block foreign investment.
In its submission, Cosatu called on the government to act more decisively to deal with collusion and concentration as these hamper development and contribute to inequality.
‘Old, white boys club’
“We welcome the bill as a step in the right direction … We take an interest in competition matters as we regard them as a central lever to promote economic inclusion and to address SA’s high levels of economic concentration. Economic exclusion and concentration contribute to the record-breaking levels of inequality in SA,” the federation said.
It said the bill will undo the concentration in the economy by the “old, white boys club, who are keeping emerging black players out”.
“We believe that this bill will promote investment and lead to a reduction in prices in the South African economy. We support the public interest section of the bill that will lead to a greater focus on jobs and the promotion of worker ownership.
“The government must act more decisively to end the collusive and concentration practices in the South African economy as many foreign investors are complaining about these practices. We look forward to the urgent processing of the bill so that transformation of the economy can be fast-tracked.”
DA MP and economic development spokesperson Michael Cardo previously pointed out that “the bill codifies a trend of ministerial interventionism that will undermine the regulators’ independence”.
“Section 18A enables the president to appoint a committee with the power to decide whether an acquisition by a ‘foreign acquiring firm’ is in the interests of national security. This should have been the subject of standalone legislation on foreign investment, not grafted onto the Competition Act as a stop-gap measure,” said Cardo.
“As it is, ‘national security’ is badly and broadly defined. There is a new, onerous, murky process for mergers involving foreign firms that is likely to have a chilling effect on large transactions. It will create uncertainty and disincentivise foreign investment at the very time that President [Cyril] Ramaphosa has embarked on a $100bn investment drive.”