Economic development Minister Ebrahim Patel. Picture: FINANCIAL MAIL
Economic development Minister Ebrahim Patel. Picture: FINANCIAL MAIL

An independent panel will review the governance arrangements in the Competition Commission and the Competition Tribunal, and whether changes are required to improve performance and accountability at the two institutions, economic development minister Ebrahim Patel says.

The commission, which is administratively accountable to the department of economic development, has allegedly been involved in dubious procurement practices that threaten its integrity and stability. It is a key statutory body mandated to investigate and evaluate restrictive business practices, abuse of dominant positions and mergers. The tribunal adjudicates competition matters.

In a written reply to a question from the DA in parliament which was published this week, Patel provided more details of a forensic probe, particularly into the commission including the terms of reference. Patel said the panel would be led by law firm Malatji Kanyane Attorneys.

“The terms of reference includes a review of the contents of the [auditor-general’s] report on the Competition Commission, which includes the legal costs incurred by the commission to date and policy on the use of firms of attorneys. The panel is also expected to review the governance arrangements in the Competition Commission and Competition Tribunal and whether changes are required to improve performance and accountability,” said Patel.

“Malatji Kanyane leads the panel. Work began in early November 2018, and has since taken in representation and comment from both local and international experts. Mr [Tebogo] Malatji has considerable experience in competition matters, the PFMA [Public Finance Management Act] and procurement law as well as with forensic investigations.”

Patel said should any wrongdoing be uncovered, action will be taken against any implicated person or company. The review includes the use of forensic processes and ascertaining appropriate international benchmarks in the performance of the competition regulators, as well as taking account of current capacity in the institutions.

The DA first called for an investigation into the commission in 2018, following responses to parliamentary questions revealing that Ndzabandzaba Attorneys received R72m in payments from the commission between January 2015 and August 2018, and were channelled 70% of all cartel cases outsourced by the commission. The firm’s principal partner, Anthony Ndzabandzaba, previously served as head of training and development in the commission’s cartels division.

In February DA MP and economic development spokesperson Michael Cardo pointed out that the commission’s financial health was a source of great concern. The commission’s expenditure more than doubled from R199m in 2013-2014 to R422m in 2017-2018. The commission recorded deficits of R78m in 2016-2017 and R69m in 2017-2018.

“The commission’s accumulated surpluses have now been depleted, yet the commission continues to spend beyond its budget despite interventions from National Treasury. Furthermore, the commission’s irregular expenditure ballooned to R128m over the preceding two financial years [2016-2017 and 2017-2018]. Much of it benefited Ndzabandzaba Attorneys and two firms that provided services in connection with ‘dawn raids’ – Century Technical Solutions and Exatech,” Cardo said at the time.

According to the 2019 Budget Review, an amount of R125m set aside for the commission to investigate cartels and anti-competitive behaviour has been placed on hold pending the completion of the forensic investigation.

Patel said his department wants to make sure that the competition authorities are efficient to ensure that they are ready to implement the Competition Amendment Act, which was recently signed into law.

The law is intended to provide for an extension of the mandate of the competition authorities and the executive to tackle high levels of economic concentration, limited transformation in the SA economy and abuse of market power by dominant firms. It also seeks to, among others, to amend the process by which the commission may initiate market inquiries, and promote the administrative efficiency of the Competition Commission and Competition Tribunal.

phakathib@businesslive.co.za