27 August 2008
editorial
Johannesburg — THE skirmish between BHP Billiton and the Competition Commission over BHP Billiton's information disclosure does not augur well for the pending merger inquiry.
The commission will not be so petty as to have its decision on whether to recommend the proposed merger between BHP Billiton and Rio Tinto influenced by the angry exchange that has taken place . Its recommendation will be based on the effect of the merger on the local market, where a combined group has the potential to dictate the prices of products such as iron ore or thermal coal.
But the inquiry could be prolonged if the two sides cannot engage openly. At the moment they look like the proverbial immovable object and irresistible force : the world's biggest resources corporation and a regulatory authority that has built up a reputation in the past two years for standing firm against powerful interest groups in the food, steel and banking industries.
BHP Billiton is willing to show confidential documents to the commission to help with the investigation, but wants them returned. For some reason, which may only become clear at the Competition Tribunal hearings later this week, it has not gone through the procedure allowed for in the Competition Act to ensure sensitive sections remain confidential. By demanding special treatment, the group seems to be showing a lack of faith in the commission's ability to maintain confidentiality.
BHP Billiton was accused of petulance earlier in the year when it withdrew most of its banking business from Standard Bank because of remarks made by bank chairman Derek Cooper, who commented that shutting the Hillside aluminium smelter would save the country a lot of electricity.
Though it denies it, BHP Billiton has shown decreasing interest in SA, selling various coal-mining assets and, this year, stopping the practice of holding a live year-end results video-conference in Johannesburg. Only London and Sydney now host live presentations.
This seems a little churlish, given the amount of money SA's taxpayers have pumped into BHP Billiton's aluminium smelters in the past by way of investment and electricity subsidies.
On the other hand, the commission has not endeared itself to the business sector either. Commissioner Shan Ramburuth told the media in May that the commission had taken heed of criticism that it was too complaints-driven, and had therefore stepped up enforcement considerably. Referring to a judge's comments in the recent Pretoria Portland Cement case, BHP Billiton's attorneys said in their affidavit the commission "has a history of overflexing its muscles when it comes to enforcing its investigative procedures".
Big business in SA can come up with a long list of valid reasons why this is not an investment-friendly country, from high corporate tax rates to inadequate security. But the fact that they are still here implies it can't be all bad. On the other side of the coin is a long legacy of weak apartheid-era government that enabled business to get richer by exploiting labour, accumulating monopolies and polluting the environment.
Since the Competition Commission's aggressive approach fits the increasingly left-wing emphasis in government thinking, businesses such as BHP Billiton might be better served by adopting a more conciliatory attitude.
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