NATIONAL TRAINING WORKSHOP ON COMPETITION POLICY AND LAW FOR MAURITIUS

KASTURI MOODALIYAR

SENIOR LECTURER IN COMPETITION LAW- UNIVERSITY OF WITWATERSRAND

SOUTH AFRICA

MOODALIYARK@LAW.WITS.AC.ZA

WHAT IS COMPETITION POLICY AND COMPETITION LAW?

The term “competition policy” is sometimes used to describe an array of government policy measures that influence competition in domestic markets. On that broad definition, policies regarding tariff protection, deregulation and direct foreign investment, for example, would come within the ambit of competition policy.(UNCTAD 2004)

WHAT IS COMPETITION POLICY AND COMPETITION LAW?

Competition law is intended to eliminate or curtail restrictive business practices, which hinder or prevent firms from competing freely with one another in domestic markets. The law recognises that, in some circumstances, the benefits to the community from a particular anti-competitive agreement or anti-competitive conduct will be greater than the detrimental effects that it causes.

Why do we need a competition

Policy?

We need competition policy because if firms are unmonitored, they may resort to actions that increase their profits but harm society.

How do we analyse competition

policy?

Competition policy requires both legal an economic analysis. Legal- being the interpretation and application of the Competition Act and Economic analysis provides valuable insights into market structures and business practices.

Brief history of Competition Policy

in SA

Maintenance and Promotion of Competition Act 96 of 1979

Competition Act No 89 of 1998 (as amended), (the “Act”) which came into operation on 1 September 1999.

Objectives of competition policy

The Preamble to the Act states that:

“apartheid and other discriminatory laws and practices of the past resulted in excessive concentrations of ownership and control within the national economy, inadequate restraints against anti-competitive trade practices, and unjust restrictions on full and free participation in the economy by all South Africans.”

Purpose of the Act

(a)   to promote the efficiency, adaptability and development of the economy;

(b)   to provide consumers with competitive prices and product choices;

(c)   to promote employment and advance the social and economic welfare of South Africans;

(d)   to expand opportunities for South African participation in world markets and recognise the role of foreign competition in the Republic;

(e)   to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the economy; andto promote a greater spread of ownership, in particular to increase the ownership stakes of historically disadvantaged persons”.

The structure of the Competition

Act

Competition Commission (“Commission)

Competition Tribunal (“Tribunal”) Competition Appeal Court (“CAC”).

All three organisations are completely independent of each other.

The Competition Commission

1.The organizational structure of the Commission

2.The role of the Competition Commission

3.How to bring a matter to the attention of the Competition Commission

4. The Competition Commission’s power to summons for documents and to conduct search of premises and seizure of documents.

The organizational structure of the

Commission

COMMISSIONER    Deputy Commissioner

Compliance Mergers & Acquisitions Enforcement and Exemptions Corporate Services Policy & Research Legal Services  

The role of the Competition

Commission  implement measures to increase market transparency; implement measures to develop public awareness of the provisions of this Act; investigate and evaluate alleged contraventions of chapter 2 (prohibited practices); grant or refuse applications for exemption in terms of chapter 2; authorise, with or without conditions, prohibit or refer mergers of which it receives

notice in terms of chapter 3 (merger control); negotiate and conclude consent orders; refer matters to the Competition Tribunal, and appear before the Tribunal; negotiate agreements with any regulatory authority to co-ordinate and harmonize

the exercise of jurisdiction over competition matters within the relevant industry or sector, and to ensure the consistent application of the principles of this Act;

participate in the proceedings of any regulatory authority; advise and receive advice from any regulatory authority; review legislation and public regulations and report to the Minister of the DTI

concerning any provisions that permits uncompetitive behaviour; and deal with any matter referred to it by the Tribunal.

How to bring a matter to the attention of the Competition

Commission

Complainant files CC1 complaint or Commissioner initiates complaint

1 year to investigate Notice of Referral or Notice of Non-

Referral CC refers to the Tribunal or Complainant may refer to the Tribunal

The role of the Adjudicative institutions in South Africa

1.           Competition Tribunal 2.           Competition Appeal Court 3.           Supreme Court of Appeal

Competition Tribunal

adjudicate on any prohibited conduct and to determine whether the prohibited conduct has occurred and if , to impose any remedy provided for in this Act;

  adjudicate on any other matter that may, in terms of this Act, be considered by it, and make any order provided for in this Act;

 hear appeals from, or review any decision of, the Competition Commission that may, in terms of this Act, be referred to it; and

 make a ruling or order necessary or incidental to the performance of its functions in terms of this Act.

Competition Tribunal

        forbid a proven prohibited practice     order a firm or person to supply or distributed goods or

services to another firm or person         impose an administrative fine         prohibit any merger agreement         order divestiture         declare the conduct of a firm to be a prohibitive practice         declare the whole or part of an agreement to be illegal         order access to an essential facility         confirm a consent agreement as an order of the Tribunal     approve any breach of its rules and procedures, if good

reason is shown.

Competition Appeal Court

The CAC may confirm, amend or set aside a decision or order of the Tribunal or remit a matter to the Tribunal for a further hearing on any appropriate terms

Supreme Court of Appeal

American Natural Soda Ash Co-operation and another v Competition Commissioner and others

Case No 554/03. www.comptrib.co.za

Restrictive Practices

 {Horizontal relationship} 

Manufacturer-----Manufacturer

Distributor--------Distributor

Retailer----------------Retailer

End User--------- End User 

Abuse of Dominance

Market power is defined in the Act as “the power of a firm to control prices, or to exclude competition or to behave to an appreciable extent independently of its competitors, customers and suppliers”.

Sanctions and Remedies

Administrative Penalty and consent orders

Leniency and whistleblowers

Administrative Penalty and consent orders

First time occurrence and repeated breaches certain prohibited practices;

Failure to notify a merger;

Implementing a merger which the Commission or the Tribunal had prohibited;

Implementing a merger contrary to the conditions imposed by the Commission or the Tribunal

Fines

The nature, duration, gravity and extent of the contravention; Any loss or damage suffered as a result of the contravention; The behaviour of the respondent; The market circumstances in which the contravention took

place; The level of profit derived from the contravention; The degree to which the respondent has co-operated with the

Commission and the Competition Tribunal; and Whether the respondent has previously been found in

contraventions of this Act.

Consent Orders

The Respondent and the Commission may negotiate a consent order to agree on the terms of an appropriate order, during, on or after the completion of the investigation of a complaint.

The size of penalties recently imposed

Federal mogul--R 3 million SAA--R 45 million Toyota--R 12 million Board of Healthcare Funders--R 20 million South African Medical Association--R 900

000 Hospital Association of SA--R 4.5 million Estate Agents--R522 400

Leniency for “whistleblowers”

Corporate Leniency Policy