Law firm ENS Africa says competition policy and law can be used as a tool for economic regulation, as is demonstrated by the preva- lence of competition legislation in many jurisdictions.
ENS Africa antitrust/competition executive Lizel Blignaut notes that a few decades ago, competition laws featured mainly in developed countries, but they are fast becoming a regular feature of the regulatory landscape in developing countries, such as African countries, which have started to harness competition law as part of an overarching approach to further develop and ensure regulation of their economies.
Blignaut adds that competition law integration is also evident in developing countries, owing to the recent enforcement of the Common Market for Eastern and Southern Africa (Comesa) Regulations, which regulate mergers and anticompetitive conduct in the Comesa member States.
The South African Competition Act, No 89 of 1998 as amended, applies to all economic activity within, or that has effect within, South Africa. In this regard, South African competition laws apply to all South African firms and international firms doing business in, or whose business activities have an effect on, the South African economy.
South African firms that do business outside South Africa are subject to the rules and regulations of those jurisdictions in which they are active or where their activities have economic effect.
Blignaut also notes that South Africa’s Competition Act is in line with international competition laws.
She states that the overhaul of the competition law and policy framework in the late 1990s afforded policymakers the opportunity to develop a “best of breed” framework.
“The Competition Act is considered to be fairly sophisticated and the South African competition authorities are highly regarded in international competition circles,” she observes.
However, Blignaut notes that, while there is a strong common thread linking the competition laws of various jurisdictions, with free markets underpinning these laws, there are differences in the broader objectives that each of these competition regimes seeks to achieve. These differences are mainly emphasised when dealing with public-interest issues.
She explains that developed and developing countries have different public-interest agendas that account for the variance in focus and approach to the application of competition laws. “In South Africa, the public-interest objectives strive to promote employment, ensure that small and medium-sized enterprises have an equitable opportunity to participate in the economy, increase the ownership stake of historically disadvantaged persons and expand opportunities for South Africa’s participation in world markets.”
In contrast, the European Union’s public- interest objectives focus on reducing trade barriers and creating a single currency and market.
A feature of the South African arena is that its competition law enables government to participate in competition proceedings.
“While the Competition Commission is an independent body tasked with promoting fair competition and enhancing the competitiveness of South African markets, the commission, as a result of active participation by government in its processes, also has to balance the application and enforcement of competition law with industrial policy when performing its mandate,” explains Blignaut.
She says the competition authorities in South Africa are well positioned to continue fulfilling their mandate and building on their past successes. “After recent internal management disruptions within the commission, the appoint- ments of new acting commissioner Thembinkosi Bonakele and, subsequently, several key senior management officials, including a chief econo- mist, have restored some internal stability to the organisation.”
Other than the market inquiry into the private healthcare sector in South Africa, no other major shift in the focus of the Competition Commission’s work is expected. The commission’s stated objective is to focus its resources on markets and sectors where there is a greater degree of social impact, including supporting government’s economic development objectives, Blignaut explains.
“The commission must balance these broader policy objectives in assessing the matters brought before it. Its role in advocating for procompetitive behaviour and policies has also taken greater prominence and is expected to continue,” she states.
Blignaut says one of the challenges the commission faces is dealing with government’s expectation that it attend to several ills in the South African economy through competition policy, as some of these problems can be more effectively dealt with through direct sector regulation or industrial-policy measures.
To the extent that the Competition Act empowers the competition authorities to actively pursue public-interest objectives, the practice that sees merger matters carefully scrutinised for effects on the public interest – particularly on specific, vulnerable employees – will continue, she says.
Another challenge that the competition authorities face is balancing the use of resources against expected outcomes. An example of this was evident in the construction cartel case.
“Through a fast-track settlement process, construction firms involved in the cartel were issued with fines. This case had a widespread effect in that the construction cartel involved construction projects that comprised a significant portion of public and private infrastructure expenditure in South Africa.
“In light of the far-reaching impact of the cartel conduct, concerns have been raised that the administrative fines set by the commission have been relatively low,” says Blignaut.
“It would seem that the commission chose a pragmatic approach that was aimed at efficiently allocating its resources and effectively concluding its investigations,” she concludes.