Red card: Most of the large construction companies were investigated and fined by the Competition Commission for colluding during the construction of the 2010 Soccer World Cup stadiums. Picture: SUNDAY TIMES
Red card: Most of the large construction companies were investigated and fined by the Competition Commission for colluding during the construction of the 2010 Soccer World Cup stadiums. Picture: SUNDAY TIMES

Andile Mngxitama, founder and leader of Black First Land First (BLF), arrived at the Department of Trade and Industry campus in Pretoria last Wednesday demanding a meeting with Competition Commissioner Tembinkosi Bonakele.

Mngxitama was told the commissioner would not be able to meet him and his entourage as he had pressing engagements. A planned press conference by BLF was subsequently abandoned.

Mngxitama had apparently wanted to find out why the fines levied by the commission were not bigger and why it had not arrested anyone yet.

By BLF’s measure the competition authorities, operational since 1999, have not been very successful – nobody has been thrown in jail. And no company has gone bust having to pay a fine, some of which have been eye-wateringly large.

In the commission’s defence, the lack of arrests can be put down to the fact that cartel activity was criminalised only in 2016. But by that measure the authorities might never win BLF’s endorsement.

Trudi Makhaya, CEO of Makhaya Advisory and a former deputy competition commissioner, says everyone at the commission and the Competition Tribunal have made it clear it will take some time for criminalisation to be effective as systems have to be put in place. There is also the hefty burden of proof that comes with a criminal charge.

The competition authorities have practised antitrust law in such a robust way it’s now completely part of the business establishment,
David Lewis, CEO of Corruption Watch

But few outside BLF believe the best way to measure the effectiveness of the competition authorities is in terms of jail time or the size of fines culprits have to pay. That said, the authorities themselves have struggled to devise a measurement that would be acceptable to a public demanding retribution for some or other egregious market-share agreement.

Unlike the South African Revenue Service (SARS), with whom they are often compared, there is no neat way to measure the effectiveness of competition authorities anywhere in the world.

That the South African landscape has been fundamentally rearranged since 1999 cannot be laid entirely at the feet of the commission and tribunal. In the late 1990s, when the new Competition Act was being drawn up, the South African economy was dominated by a handful of powerful companies.

Anglo American, Anglo Vaal Industries, Sanlam, Old Mutual, Barlows and Gencor controlled companies that dominated all sectors of the economy.

These players carved up the economy among them with little fear that the old Competition Board (precursor to the commission) or the National Party government would try to restrain them.

That no private sector player has the sort of reach and power previously taken for granted largely reflects the effect of SA’s re-entry into the global economy and the fact that so many previously protected companies struggled in the more open environment. But most also quickly realised the rules had changed.

David Lewis, CEO of Corruption Watch and former tribunal head, concurs with Makhaya that companies have learnt to take the competition authorities seriously.

"The competition authorities have practised antitrust law in such a robust way it’s now completely part of the business establishment," he says.

That they are such a constraining force is a substantial achievement, he says. "You can’t say that about many of the authorities set up after 1994."

They may not be able to break up businesses and throw people in jail, as BLF might wish, but they are a constant constraining force.

In the past 12 months or so, the commission investigated 393 mergers. It unconditionally approved 353, conditionally approved 32 and prohibited five. Three cases were withdrawn. It released its market inquiry report into the liquefied petroleum gas sector, launched an inquiry into public passenger transport and continued its inquiry into the grocery retail sector.

Impact studies of previous market inquiries of this nature indicate that they do help to restrain price increases over the long term.

More controversially, the commission launched an investigation into 17 banks alleged to be involved in a forex trading cartel, and one into cancer medicine prices. In between all of this it nabbed five companies for cartel conduct, went after meat suppliers for price fixing, boat operators for colluding in the Robben Island museum tender and Free State companies for colluding in a provincial treasury tender. They also went after Rooibos Limited for abuse of dominance.

All in all, there is not much in the economy that escapes its scrutiny. While this thought may strike dread into the hearts of die-hard free marketers, there is little doubt it has had a chilling effect on anticompetitive behaviour.

Almost 20 years since they became operational it is difficult not to view the competition authorities as the most effective set-up by the ANC government. These days not even SARS comes close.


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