JOHANNESBURG – The business community has raised concerns about the uncertainty created by the Competition Amendment Bill’s “national security interest” clause.
The bill was debated in Parliament yesterday.
One of the contentious points of the bill has been a new regime for the president to identify a list of national security interests and to establish a committee to assess whether an acquisition by a foreign firm will be adverse to national security.
Business Unity South Africa (Busa) said it was concerned that the balance in the bill might be disproportionately weighted against ease of doing business.
Busa’s economic and trade policy director, Olivier Serrao, said the bill’s national security provisions should not be seen as being exercised arbitrarily or resulting in undue delays in merger proceedings.
“In Busa’s view, it is essential that these powers are used responsibly and that the government provides maximum guidance to the market on its approach to national security, how choices are made and communicating interventions,” Serrao said.
Primary objective
The Competition Amendment Bill was officially introduced to the national assembly last month. Its primary objective is to address structural challenges that are seen by the Minister of Economic Development to constrain the South African economy.
“The list of national security interests is contemplated extremely broad – the provisions go far beyond traditional public interest factors that have been the focus of legitimate ministerial intervention to date,” said Jean Meijer, a partner at Herbert Smith Freehills.
Another key change is the proposed increase of the maximum administrative penalty from 10 percent of a firm’s annual turnover in South Africa to 25 percent, in circumstances where that firm is found to have engaged in a repeat offence of the Act.
The International Monetary Fund in its latest country focus note on South Africa said that the country needs to dismantle the high levels of concentration in the economy to ignite growth. Research produced by the Industrial Development think tank found that monopolistic firms have less of an incentive to invest, since they can earn economic benefits by protecting their market share rather than upgrading their product offering.
Industrial policy
The study also found that the South African economy required a broader competition policy, as part of an industrial policy, which facilitated the entry and expansion of businesses, especially black entrepreneurs, and reduced barriers to entry.
Piet le Roux, the chief executive of Sakeliga (formerly AfriBusiness), said the bill was purposefully crafted to turn competition law into a vehicle for black economic empowerment (BEE).
“Of course, the result will not be real BEE, but the empowerment of bureaucrats and greater state control of the economy at the cost of consumers, employees and investors of all race groups,” Le Roux said.
Trade Federation Cosatu also made a submission on behalf of its 16 affiliates and their almost 2 million members.
Cosatu parliamentary co-ordinator Matthew Parks said the federation supported the bill's expansion of the mandate of the competition authorities to deal with economic concentration.