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South Africa: Competition Law
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Business Day (Johannesburg)
EDITORIAL
13 May 2008
Posted to the web 13 May 2008
Johannesburg
IT IS ironic, in a way, that proposed amendments to SA's competition law are to go to the cabinet just as the Competition Commission is reporting ever richer successes in busting cartels.
Last week Tiger Brands subsidiary Adcock Ingram Critical Care agreed to pay a R53,5m penalty for collusion in the supply of intravenous drips to hospitals. That comes after Tiger reached a R98,8m settlement with the commission over collusion in the bread industry.
The bread cartel case has now been referred to the Competition Tribunal, which is also due to start hearing the milk industry cartel case later this year. Meanwhile the commission is investigating possible cartels in industries such as construction and food. And it's due to report soon on its probe of pricing in the banking industry.
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So the competition authorities can hardly be said to be powerless to tackle collusion and price-fixing. Indeed, they seem to be doing a rather good job of it -- too good, some in business might wail.
Why then does the government seem to think they need additional powers? The Sunday Times reports the new bill provides for much increased fines. These have the potential to bankrupt the companies involved, removing competitors from the market -- hardly a good thing. The bill will also allow company directors to be held personally liable, exposing them to fines or jail terms. That will surely make any company director think twice about collusion, but it could also make her or him think twice about being a director at all -- and we are short of skilled and experienced directors as it is.
Then there's provision, reportedly, for the commission to initiate its own investigations rather than simply waiting for complaints. But the commission hardly seems to be sitting back and waiting, and it already has such powers. It may not have enough capacity and skill to do more and better investigations. But that must be remedied by boosting the institutions, not changing the law. In proposing changes, the government must take care not to do competition more harm than good.
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