Cape Town - Changes to the Competition Act proposed by the department of trade and industry, such as criminalising anti-competitive behaviour, would make it more difficult for the competition commission to prosecute cartel activity, commissioner Shan Ramburuth told the parliamentary committee on trade and industry yesterday.
The competition commission and tribunal made a joint submission raising concerns that the proposed amendments, which introduce the notions of "complex monopoly" and personal liability, would tie up the competition authorities in constitutional challenges that would prevent them from doing their "competition work".
Ramburuth said that while he agreed with the desire of the department to impose tougher sanctions on firms involved in anti-competitive behaviour, he believed a more effective way to do this was to impose higher administrative penalties and penalties for first offences, instead of just for second and subsequent offences.
Ramburuth said: "By criminalising anti-competitive behaviour and making individuals personally liable, which means facing the prospect of criminal action, company directors would be far less willing to reach consent agreements with the competition authorities.
"We must point out that all of the significant cartel convictions - for example, the bread cartel, scrap metal and pharmaceutical cartel - have come in the form of admissions contained in consent orders."
Because the existence of cartels was extremely difficult to prove, consent orders had spared the commission considerable time and money and the uncertainty of running a trial, Ramburuth told the committee. This would change if the proposed changes were adopted.
A second effective tool that used by the competition authorities, the corporate leniency programme, would be undermined by the implementation of the proposed amendments.
Ramburuth said: "The corporate leniency programme is effectively a plea bargaining system where, in exchange for immunity, a participant in the cartel agrees to co-operate fully with the commission's investigations, including giving evidence in support of the commission's prosecution."
He added that the bread and pharmaceutical cartel cases had relied on information in exchange for corporate leniency.
David Lewis, the competition tribunal's chairman, said that uncertainty surrounding the constitutional implications of the proposed amendments and the definitions of key terms such as "complex monopoly" would ensure that, if the amendments were implemented, the Competition Act "will become a lawyers' feeding trough".
Ben Turok, a member of the committee, said that in view of the concerns raised by the commission and tribunal "there was a strong case for taking another look at the bill" in a bid to deal with these concerns.
The portfolio committee also heard submissions from Business Unity South Africa, Telkom and the Banking Association of SA. They all raised concerns about the criminalisation of the act and the lack of clarity in the proposed amendments.