Keeping watch: The DA has written to Economic Development Minister Ebrahim Patel, calling for an inquiry into the conduct of the Competition Commission, which falls under his ambit. Picture: MARTIN RHODES
Keeping watch: The DA has written to Economic Development Minister Ebrahim Patel, calling for an inquiry into the conduct of the Competition Commission, which falls under his ambit. Picture: MARTIN RHODES

The DA is pushing for a commission of inquiry to probe the running of the Competition Commission amid allegations of corruption and mismanagement at the institution.

The commission is a key statutory body mandated to investigate and evaluate restrictive business practices, abuse of dominant positions and mergers. The DA says recent allegations against the body threaten its integrity and stability.

The Financial Mail reported on Wednesday that the commission had been accused of lying to obtain search warrants, failing to abide by its own rules, and ignoring legal precedent in the high-stakes foreign exchange case against 23 banks. According to the report, disgruntled Sandton lawyers say the institution is becoming increasingly high-handed towards business.

The DA’s call comes as Parliament prepares to process the Competition Amendment Bill.

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, limited transformation in the South African economy and abuse of market power by dominant firms.

Ebrahim Patel
Ebrahim Patel

The bill also seeks to, among others, amend the process by which the commission may initiate market inquiries, empower the economic development minister to initiate market inquiries, and promote the administrative efficiency of the Competition Commission and Competition Tribunal.

DA MP and economic development spokesman Michael Cardo said on Thursday he had written to Economic Development Minister Ebrahim Patel requesting the establishment of a commission of inquiry.

Cardo said there was a "pattern of behaviour that undermines the commission’s integrity, substantiated by recent court judgments".

"These include the ruling in June (2018) by KwaZulu-Natal Deputy Judge President Isaac Madondo that the commission had relied on conjecture, speculation and hearsay to obtain search-and-seizure warrants for ‘dawn raids’.

"The judge said the commission was guilty of a ‘serious breach of its duty of good faith’ because it withheld information and failed to disclose material facts to the court," Cardo said.

The proposed commission of inquiry should also investigate the precise nature of the professional and financial relationship between the commission and Ndzabandzaba Attorneys.

"The firm’s principal partner, Anthony Ndzabandzaba, previously served as head of training and development in the commission’s cartels division. His law firm has benefited handsomely from the commission’s coffers in the last 18 months, raking in more than R10m for work on cartel cases alone (63% of all such expenditure by the commission)," said Cardo.

Furthermore, the potential conflicts of interest among members of the commission’s executive committee needed to be probed, together with the purported use of VIP security protection for members of the executive committee, including the commissioner and the deputy commissioner, he said.

The Economic Development Department was yet to respond to requests for comment on Thursday.

Meanwhile, Jean Meijer, a partner at international law firm Herbert Smith Freehills, says the competition amendment bill gives the government the right to block foreign investment.

"Section 18A is entitled ‘Intervention in merger proceedings involving foreign acquiring firm’. In broad terms, the section establishes a framework within which a committee appointed by the president [comprising cabinet members and other public officials] is given the power to decide whether or not a proposed transaction may proceed if it involves an acquisition by a ‘foreign acquiring firm’ and relates to certain yet-to-be-identified national security interests," says Meijer.

"A foreign acquiring firm is defined as an acquiring firm that was incorporated, established or formed under the laws of a country other than South Africa; or whose place of effective management is outside the republic. This latter portion of the definition is probably aimed at South African firms that have relocated their head offices from SA to other countries, an issue that has been of concern to government for some time.

"This provision is likely to create significant uncertainty and potentially a disincentive for foreign investors."

phakathib@businesslive.co.za

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