Johannesburg — DO THE competition authorities need more tools in their tool box, or is it simply a matter of sharpening the ones they already have?

Developments in bread and in banking in the past week have highlighted the way the Competition Commission is increasingly sharpening its tools in an effort to curb abuses and bring about more of a culture of competition.

The trade and industry department has been working for some time on plans to amend SA's competition legislation and give the competition authorities more power. But as those authorities show their ability to make ever more effective use of their existing powers, the question is whether the department is wasting time trying to fix what isn't broken.

Last week, Tiger Consumer Brands, the bakers of Albany bread, agreed to pay a R99m fine for being part of a cartel that fixed bread prices. The cartel, which also included Premier Foods and Pioneer, was cracked thanks to the corporate leniency policy that the commission introduced nearly three years ago. The policy, which offers immunity from prosecution to the first member of a cartel to provide the commission with information on the cartel's activities, has brought to light abuses in markets from milk to milling to airlines. In the bread case it was Premier that was the whistle-blower and gained the immunity. Tiger was granted (conditional) immunity for informing on the milling cartel but not the bread one, hence the unprecedented fine, which represents 5,7% of its annual bread turnover. Pioneer didn't co-operate and faces prosecution and a fine of up to 10% of its turnover.

Though this isn't the first time the policy has been used, the case is significant because of the size of the fine and the fact that it is about anticompetitive practices and prices in a market with so direct an effect on poor consumers. The corporate leniency policy also helped bring to light the activities of a seven-member cartel in the milk-processing industry. Cartels are almost impossible uncover because they are inherently secretive, which is why competition authorities in several countries have in recent years turned to using corporate leniency policies.

IN BANKING, the commission has used the device of an independent public inquiry, in which companies participate voluntarily: the commission doesn't have the power to subpoena them. But SA's banks have co-operated, offering extensive information -- which may be why the inquiry said last week that it had decided to delay the release of its report. Whatever is in it, the value of the inquiry has arguably been as much in the process of public scrutiny itself.

Corporate leniency and public inquiries are fairly new tools at the commission, which had tended to be somewhat in the shadow of the Competition Tribunal, which had a high profile because it hears contested merger and anticompetitive behaviour cases involving large listed companies. But the commission, which is the investigating and prosecutorial arm of the competition authorities, has refined its role under new leadership in the past couple of years and is playing an increasingly strong role in its own right. In part, that leverages on the precedents set by the tribunal -- so when the commission recommended earlier this year that Pick 'n Pay's proposed merger with Fruit & Veg City be blocked because the companies would together have 58% of SA's retail fruit and vegetable market, the parties simply abandoned the merger.

But the commission has also been developing new ways to try to open up markets to competition. Commissioner Shan Ramburuth describes it as working more strategically, asking which is the best instrument to tackle abuses in a particular market. Some may be uncomfortable about letting off cartel members who blow the whistle, but it may be more important to fix the market problem than to mete out punishment. Ramburuth is emphatic, though, that the disincentives have to be large enough to prevent companies and their executives from engaging in anticompetitive practices.

So the question is whether the tool kit is adequate. So far, the new measures seem to be proving effective. The real test, though, is whether these cases prove to have a real effect on market conduct and, ultimately, on the prices consumers pay. That can be measured only over time. Meanwhile, there is clearly scope to tweak the legislation, but there's no reason to believe it needs any sort of radical rewrite.

Joffe is chief leader writer.