Cape Town - Despite excellent work by the South African competition authorities, much remained to be done in the country, which had a “rampant culture of collusion”, to stamp out anti-competitive behaviour which caused untold damage to the economy.
This message was made clear by both the Minister of Economic Development, Ebrahim Patel, and the Commissioner of the Competition Commission of South Africa, Tembinkosi Bonakele, at the 10th annual Competition Law, Economics & Policy Conference in Cape Town on Thursday.
In his opening address, Bonakele commended the South African competition authorities for their very favourable rating in the World Economic Forum’s recently released Global Competitiveness Report. The WEF report put South Africa at No 7 in the world for effectiveness of its anti-monopoly enforcement.
But it was clear that the hard work was far from done when he added that it was not an exaggeration to say an enormous number of cartels was still being uncovered.
Hosted by the Competition Commission, in partnership with the Competition Tribunal and the University of Cape Town, the Competition Law, Economics & Policy Conference brings together international policy experts, economic consultants, scholars, lawyers and academics to focus on the impact of competition policy on economic growth. The conference, being held at the V&A Waterfront in Cape Town on Thursday and Friday, is also examining the efficacy of competition enforcement in South Africa.
Minister Patel, making the keynote address, agreed that while there was much to be celebrated, there was also much work to be done. He said a lot of experience had been gained. “We need to find ways of scaling this fast.”
Noting that 133 new cartel cases had been initiated in last 12 months, he said: “We need to see how we can deal with the problems of success. We need to learn how to deal with the many cases that come up.”
Patel added that the investigative and prosecutorial capacity of the commission needed to be deepened to build on what was clearly one of the country’s success stories.
He also noted that collusive and corrupt practices in the private sector had their mirror image in the State, adding that the lifestyle audits recently suggested for public officials were possibly their equivalent of market enquiries in the private sector.
Bonakele added that South Africa had a particular problem “given damage cartels cause in our economy”.
Patel agreed, noting that South Africa’s particular history of concentration of power and wealth in the hands of a small minority made this work all the more necessary and beneficial to society as a whole.
He noted the competition authorities’ key role in reducing inequality, adding that while inequality was at such high levels in the country it was extremely difficult to ask the whole nation to get involved in any common project.
Bonakele said the damaging effect of anti-competitive behaviour had been the subject of many a study, and there was a global consensus that they needed to be stamped out.
He pointed to a recent World Bank review on South Africa’s competition policy which showed that the dismantling of cartels in wheat, maize, poultry and pharmaceuticals (goods that make up more than 15 percent of the consumption basket of goods of the poor in South Africa) had resulted in a lowering in prices for consumers that led to a reduction in the national poverty rate of 0.4 percentage points.
As a result of the Competition Commission’s intervention in these areas, more than 202 000 people were lifted above the poverty line, he said.
However, Bonakele said policymakers “ought to be talking in general about whether the deterrence message was being delivered”.
He recalled an incident in 2007 where the commission wanted to levy a fine of R100 million but the offending party had fought to avoid being the first transgressor to break that psychological barrier. They had eventually settled on a fine of R99 million. But now, he said, we have a fine of R5 billion being levied. But still that does not seem to be a strong enough disincentive.
Also, he said, criminal sanctions had been introduced earlier this year but the rate at which cartel activity continued to be uncovered “brings into question if the correct level of deterrence was being attained”.
African News Agency