Competition Commission & Competition Tribunal Annual Reports & Parliament of South Africa's relationship with the European Parliament

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Trade and Industry

06 October 2009
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Committee was briefed by the Commissioner of the Competition Commission on the annual report of the Commission for 2008/09.  The presentation included details of major cases dealt with by the Commission concerning cartels and mergers in the infrastructure and construction, food and agricultural products, petrochemical and industrial products and the financial services sectors.  During 2008/09, a total of 210 cases were referred to the Commission.  Eleven cases were referred to the Competition Tribunal.  Twenty-three cases were initiated by the Commission.  Twenty-three leniency applications were received. Administrative penalties imposed amounted to R331.4 million.  The cost of litigation in 37 cases amounted to R19.8 million.

Members asked questions about the effectiveness of the actions taken by the Commission in reducing prices, the independence and accountability of the Commission, the lodging of complaints by private individuals and the restrictions placed on the Commission’s report on the investigation into banking practices.

The Chairperson of the Competition Tribunal presented the annual report to the Committee. The Tribunal heard 140 cases during 2008/09 and reported an increase in the number of large mergers dealt with. The briefing included details of the major cases dealt with by the Tribunal during the year.  Administrative penalties imposed totalled R303 million.

Questions were asked by Members about the independence and accountability of the Tribunal, the risk of corruption, the jurisdiction over foreign companies involved in cartels, the effectiveness of penalties, the support provided to poor communities to fund the cost of litigation and whether companies adhered to the conditions imposed by the Tribunal.

The International Relations Section of Parliament briefed the Committee on Parliamentary procedures governing international delegations and agreements as well as the history of Parliament’s engagement with the European Parliament.

Members asked questions about the budget, access to information, the opportunity for participation; the role of the Committee; interaction with the Committee on International Relations and Cooperation as well as the Parliamentary Group on International Relations, the status of the Cotonou agreement and the comparative roles played by the Parliaments of other countries.  The Committee approved the draft report, with one amendment.

Meeting report

Competition Commission Annual Report
Mr Shan Ramburuth, Commissioner; Competition Commission presented the annual report for 2008/09 to the Committee (see attached document).

The presentation included an overview of the cases handled by the Commission in the infrastructure and construction, food, agro-processing and forestry, intermediate industrial products and financial services sectors.  Investigations carried out in the infrastructure and construction sectors included concrete and plastic pipe cartels and mergers in the wire products and asphalt industries.

Investigations in the food, agro-processing and forestry sector included milling, bread and milk production.  The bread cartel was a relatively long-running case. One of the four major members of the cartel had applied for and received corporate leniency. Two other members of the cartel (Tiger Brands and Foodcorp) had reached settlement agreements with the commission.  A decision in the case against Pioneer Foods was awaited. In the milk cartel matter, settlements had been reached with one of the seven producers involved (Lancewood).  A second member was granted partial leniency (Clover).  The remaining members of the cartel (Parmalat, Milkwood, Woodlands, Nestle and Ladismith) continued to argue on legal technical points and prevented the matter from being heard on its merits.

Investigations in the intermediate industrial products sector included cases brought against Sasol and Mittal.  The case between Mittal and Harmony Gold was settled between the parties but other cases had been brought against Mittal.

Investigations in the financial services sector concerned banking practices.  The Commission worked closely with other players in the financial sector, for example the South African Revenue Service.

The total number of cases referred to the Commission was 210, of which eleven were referred to the Competition Tribunal.  The Commission initiated 23 cases during 2008/09.  The Commission’s Corporate Leniency Policy was amended in May 2008.  For the period July 2008 to July 2009, 23 leniency applications were received.  The thresholds and filing fees for mergers were amended from April 2009.  A breakdown of the merger decisions per sector was included in the presentation.  Administrative penalties imposed increased from R43.8 million in 2006/07 to R331.4 million in 2008/09.  Legal costs reflected a substantial increase as a result of the increased number of cases, the high cost of litigation and the increased complexity of cases brought before the Commission. In 2008/09, the cost of 37 cases amounted to R19.8 million.

The presentation included details of the activities of the policy and research section, stakeholder relations, the staff complement of the Commission and the expenditure on human resources.  The implications of amendments to the Competition Act were covered and the presentation was concluded with the strategic priorities of the Commission.

Mr A Van der Westhuizen (DA) asked whether the Competition Commission’s successful handling of cartel cases had resulted in any significant reduction of product prices.

Mr Ramburuth replied that anecdotal information indicated that prices had been reduced when the cartels were broken up.  For example, prices had dropped in the mining sector in North- West and Mpumalanga. However, it was difficult to back up anecdotal evidence with hard facts.  The Commission’s main task was to disrupt cartels and stopping them from operating.  In time, markets tended to adjust to a new equilibrium but it took time to see results and prices did not fall immediately.  An example was the case brought against the pharmaceutical company Glaxo-Welcome concerning the cost of anti-retrovirals (ARV’s).  Glaxo-Welcome had patent rights on the treatment and the initial monthly cost of ARV’s was R4 000.  The settlement and agreement allowed for the manufacture of a generic equivalent, resulting in a reduction in the monthly cost of ARV’s to R400.

Mr SJF Marais (DA) noted that the Commission acted independently.  He asked to whom the Commission was accountable.

Mr Ramburuth advised that the Commission was accountable to the Portfolio Committee on Trade and Industry, via the Minister of Trade and Industry. Annual performance meetings were held with the Minister. On substantive issues, the Competition Commission had to convince the Competition Tribunal in a public hearing and the Tribunal had to adjudicate the matter and make its decision available to the public.  The decision could be taken on appeal to the Competition Appeal Court. The procedures followed were public and rigorous standards needed to be maintained.

Mr Marais asked if the Commission investigated matters on the basis of complaints from other companies or consumers or if it did so mero motu.  For example, more complaints were lodged after the Harmony/Mittal case was settled.  He asked if the settlement of complaints was an easy and cheap way out for transgressors.

Ms C Kotsi (COPE) asked how a private person, who suspected that there was something wrong about the pricing of a product, could report the matter to the Commission.

Mr Ramburuth explained that anybody could lodge a complaint about anti-competitive activities with the Commission. The Commission’s staff would assist the complainant with the lodging of the complaint.  The complaint was forwarded to the screening unit as the Commission received many complaints, which had nothing to do with the Commission.  Alternatively, the Commission initiated a complaint and conducted an investigation mero motu.  In instances where the Commission had received several complaints about the same organisation or activity, the Commission would initiate the complaint process.  This was increasingly the case.  Settlements were not necessarily the cheapest way out for transgressors and it might be more cost-effective for an organisation to pay lawyers to litigate the matter.  The principle applied in the decision on whether or not to reach a settlement was to compare the settlement with what the Commission would have won, had it pursued the case and obtained a judgement. If the settlement was far less, the Commission would not settle.

Mr Marais asked if Members of the Committee could have sight of the 28 recommendations the Commission had made for the Financial Services sector.  It would appear that all entities operating in the sector had complied with FICA but there had nevertheless been a substantial increase in banking charges.

Mr Ramburuth advised that the report on banking charges was finalised and made public in 2008 and was available on the Commission’s website.  However, certain banks were concerned that the report included confidential information.  The Commission agreed to blank out the information but made it clear that the banks were responsible for the censorship of the report.  The Commission had agreed to the censored report because it feared that the banks would have prevented the entire report from being made public.  The global financial crisis occurred in September 2008.  The Minister of Finance persuaded the Commission to take care in the release of a report that was critical of banks and which might have the effect of exacerbating the economic crisis.  The Minister had pointed out that a lot of the report’s content was based on sentiment and a complicated report of this nature could easily be misconstrued. The Commission released the report in December 2008.  The Commission was happy to brief the Committee on the report at a later date.

Mr Z Ntuli (ANC) asked what community outreach programmes were undertaken by the Commission.

Mr Ramburuth replied the Commission did not see its primary role as visiting communities but rather targeted organisations who were directly involved in anti-competitive practices and the associated problems. However, the Commission had done a lot of work with consumer organisations and had regular contact with the trade union federations and the Black Sash.  The Commission wanted to see were consumers who were more discerning. The Department of Trade and Industry was in the process of finalising consumer protection legislation, which would complement the work done by the Commission. The Competition Commission saw its role as fixing the way in which the market worked rather than taking up the cudgels for individual consumers.

Mr Ntuli wanted to know what the Commission was doing to narrow the wage gap between senior and junior employees.

Mr Ramburuth explained that the salaries paid at the time the Commission was established were not commensurate with the scales applicable to the public sector. Attempts had since been made to bring the salary scales in line with the public sector scale, although obviously not on a par with the scale of salaries in the private sector.

Mr X Mabasa (ANC) asked to what extent the public was empowered so as to lessen the workload and stress on the Commission.  He asked if action taken by the Commission against transgressors was sufficient deterrent to prevent recurrence.  He asked if the benefits derived justified the cost of pursuing cases.

Mr Ramburuth replied that the issue of whether penalties were sufficiently severe was indeed the “big question” which the Commission always asked itself.  He pointed out that the applicable law had not been conceived as a criminal law and that the penalties imposed were administrative rather than criminal sanctions. They were not intended to be a punishment for transgressors but rather a disincentive, much as traffic fines were intended to elicit compliance by motorists with traffic laws.  Fines were imposed either after reaching an agreement with a party or after litigation but even where there had been an agreement, the Commission had to take the matter to the Competition Tribunal, which had the right to adjudicate on whether a particular fine was too low. Because there had been complaints about recidivism in the past, there had been a move towards increasing criminalisation and he envisaged a role for the National Prosecuting Authority in this regard. Concerning the cost of pursuing a matter and the overall benefits of doing so, the Commission had a certain prosecutorial discretion. The Commission was guided by the awareness that it would not be wise to pursue a matter involving a high cost if there was a slim chance of success and factored all these considerations into the ultimate decision.

Ms C Kotsi (COPE) asked for a breakdown of money received by the Commission as penalties for anti-competitive behaviour and how the funds were applied. She asked about the relationship between the Commission and the consumer protection organisations.

Mr Ramburuth replied that the annual report contained a list of all entities that had been fined. The fines paid went to the fiscus via the DTI and the Commission had no access to the money.  The Commission retained the filing fee for mergers.  The Commission predicted in 2008 that the number of mergers would decrease but this had not been the case and as a result, the Commission received more income from filing fees than anticipated.

Mr S Njikelana (ANC) commended the Commission for being responsive to issues raised by the Committee and urged Members to support the Commission. He noted that the report on bank charges had been embargoed and asked when it would be made public. He asked what criteria were applied in the identification of priority sectors.

Mr Ramburuth replied that the Commission had decided to concentrate on markets which it felt affected the majority of South Africans and the poor in particular. The Commission aimed to align its enforcement activities with Government strategy. For example, the Commission concentrated on intermediate industrial products like steel, which was in line with the Government’s aim to develop the country’s manufacturing sector. Other criteria included the cost of conducting business.  In the case of small businesses, bank charges were a substantial expense. The Commission felt that the telecommunication sector required attention.

Mr Njikelana asked if the Commission still faced the problem of a high turnover of skilled personnel.  He remarked on the absence of information on staff composition with regard to race and disabilities.

Mr Ramburuth confirmed that the personnel employed by the Commission were representative.  As a new post-1999 institution, the Commission did not have the transformation problems which beset many older institutions.  With regard to staff turnover, he said that the staff complement included many young, upwardly mobile persons and the Commission expected to have a steady staff turnover in future.  He reported that a significant number of staff members had returned to the organisation, including three senior managers.

The Chairperson wanted to know the number of small and large mergers and acquisitions.  She asked what the statutory deadlines were for the finalisation of mergers. She asked how long the post of Manager of Mergers and Acquisitions had been vacant and what the implications of vacancies in this division were.  She wanted to know how many mergers and acquisitions received between 2008 and 2009 had been completed. She asked if the reference to “misstatements” in the annual report and the report of the Auditor-General was a typographical error.  She asked what the accumulated surplus was intended for and the reason for the operating deficit.

Mr Ramburuth was unable to provide the statistical information on mergers.  The post of Manager of Mergers and Acquisitions had not been vacant for very long and an Acting Manager had been appointed.

Ms Nellie Pillay, Head of Corporate Services and Chief Financial Officer; Competition Commission, explained that, in terms of the Public Finance Management Act, the Commission had to submit financial statements by 31 May of each year. After that date, there was an opportunity to make adjustment entries. The Auditor-General looked at such entries.  An adjustment entry was made when the Commission transferred the Corporate Services Division to other premises.  Rental for a period of four months was not received, resulting in a change of approximately R400 000.  In prior years, the Commission carried the accumulated surplus forward, to be utilised for future expenditure.  In the 2008/09 financial year, the income received had not been sufficient to cover expenditure, hence the deficit. The amount of R21.4 million mentioned was the amount applied for from the National Treasury, for which approval was awaited. Misstatements were the differences between amounts reflected in the financial statements released at the end of May and the amounts shown in the final annual accounts.

Competition Tribunal Annual Report
Mr Norman Manoim, Chairperson of the Competition Tribunal, presented the annual report to the Committee (see attached document).

The Tribunal regulated corporate mergers and adjudicated allegations of anti-competitive practices.  The Tribunal was independent of the Competition Commission.

The concepts of merger regulation and restrictive practices were explained.  A breakdown of the cumber and types of cases heard by the Tribunal were provided.  In 2008/09, the Tribunal heard 140 cases. Since 2005/06, the trend was towards larger, more complex mergers, with a corresponding lengthening of the time required for hearings. Approximately 90% of mergers were approved.

The presentation included a summary of recent significant decisions and the highlights of 2008/09.  The Tribunal featured in 375 media reports (in sources monitored by the Tribunal).  The total amount of administrative penalties imposed had exceeded R303 million. A list of the companies and amounts concerned was included.  At international level, the Tribunal engaged with the
International Competition Network (ICN) and the Competition Committee of the Organisation for Economic Co-operation and Development (OECD).

An overview of the financial management of the Tribunal, a list of the current Tribunal members and information on the staff complement were provided.

Mr Manoim expanded on the Tribunal’s highlights.  He said that the American Natural Soda Ash case had taken seven years to settle as innumerable procedural points had been raised by the respondent firm (an American multinational soda ash producer).  Seven years later the case had proceeded to an adjudication of the merits. When the CEO of the company was called to give evidence, the Tribunal had been informed that the company was closing its case and within a few weeks the parties had settled the matter.

Mr Manoim said that procedural points were often the last line of resistance for companies accused of cartel activity. Procedural points were an essential part of the Competition Commission’s work and were crucial in clarifying the jurisprudence.

With regard to the issue of the effectiveness of fines, Mr Manoim said he could only comment on cases that had come before the tribunal. The Tribunal had seen no evidence of recidivism in any of these cases. In cases involving cartels, there had been no evidence that fines were not effective. Members of the public had occasionally expressed dissatisfaction over the transfer of fines to the Revenue Fund. However, it was difficult to ascertain exactly who the victims of cartel misconduct were but such victims retained the right to sue the offending firms for damages. The high cost of litigation and the burden of proof on the claimant resulted in few civil claims.  He suggested that consideration was given to make funds available to the Legal Aid Board for purposes of such litigation.

Mr Marais asked about the Tribunal’s independence and with whom in Government it liaised.

Mr Manoim replied that he had worked for the Tribunal for ten years and had very little contact with the Minister of Trade and Industry.  He had had no discussions with concerning the content of decisions with any Minister and, to the best of his knowledge, neither had any of his predecessors. There had always been a complete respect for the independence of the Tribunal’s decision making accountability.

Mr Marais noted that, although the Tribunal oversaw the findings of the Commission, there seemed to be a very close partnership between the two entities.  He asked if there a tendency on the part of the Tribunal to agree with and merely rubber stamp the views of the Commission.

Mr Manoim replied that there had been a number of cases where the Tribunal had taken a different position to that of the Commission.  Four such instances involved mergers. This was the case when it came to enforcement as well.

With regard to cartels, Mr Marais noted that there were recent examples of collusion between South African importers and foreign exporters.  The practice of under-invoicing deprived the fiscus of revenue and encouraged unfair competition.  He asked to what extent the Tribunal was able to deal effectively with such conduct on the part of foreign companies and requested examples of where it had done so.

Mr Manoim replied that if any foreign cartel had any effect on the South African economy, the Tribunal had jurisdiction in the matter. The test was whether the conduct of the entities concerned had an economic impact in South Africa. The fact that the system of civil claims was imperfect did not mean that there was no redress for aggrieved parties. Ensuring compliance with the law and a cessation of anti-competitive behaviour was in itself an important form of redress.

Ms Kotsi commented on the perception that little was done to redress transgression.  She felt that the Tribunal did not have to wait for others to take the initiative but needed to be proactive. She asked how the Tribunal ensured that there was no corruption or collusion between multi-national companies and staff or Members of the Tribunal. The issue of corruption was of great concern to her.

Mr Manoim agreed that that where there were vast amounts of money at stake, there was a need to be alert to the possibility of corruption. He said that institutionally the system had been designed to prevent opportunities for corrupt practices.  There was a clear distinction and separation between prosecution (the responsibility of the Commission) and adjudication (the task of the Tribunal).  Even if there was a suspicion of collusion and a complaint that the Commission had failed to lodge a complaint, the Act gave people the right to bring a private complaint. With regard to the danger of corruption in the Tribunal, he pointed out that decisions could always be taken on appeal or review and the Tribunal was required to provide reasons for all its decisions.  Tribunals consisted of panels of three adjudicators, each of whom had an equal vote.  He felt that there were enough checks and balances in the system to remove any possibility of corruption or collusion.

Mr Mabasa congratulated Mr Manoim on his permanent appointment as Chairperson of the Competition Tribunal. He asked to what extent the Tribunal impacted on members of the public. He asked if the Tribunal made use the public in its work. He asked how the Committee could assist the Tribunal.  He requested further information on the ratio of cases that were successfully concluded.

The Chairperson asked how the Tribunal assisted members of poor communities.

Mr Manoim replied that the Tribunal had been successful in publicising its activities. Members of the public were allowed to make representations. Representations had been made by trade unions, farmers’ associations and individual associations.  With regard to poor communities, the effective operation of the enforcement system had the effect of lowering prices and providing the consumer with a greater choice.  It was important that the system should be perceived by the public to be effective.  Transgressing companies suffered damage to their reputations.  Appearances before the Tribunal attracted a lot of adverse publicity, causing much damage to the image of the companies involved in addition to the financial impact of a substantial fine.

Mr Njikelana supported the idea to provide funding for the Legal Aid Board to assist poor communities with litigation. He supported a naming and shaming campaign and asked for examples of decisions where conditions were attached. He wanted to know if there were any cases where companies had failed to adhere to such conditions.

Mr Manoim agreed that the Legal Aid Board might be used more effectively to facilitate civil claims.  The American system of treble damages created an incentive for individuals to claim damages and encouraged legal ambulance chasing.  The downside was that the standard of liability in dominance cases was very low – something the Tribunal was loath to see happening in South Africa.  If many such claims were brought to our civil courts, the courts might start to decrease the amounts awarded as damages.

In response to Mr Njikelana’s question, Mr Manoim said that a list of conditions imposed can be found on pages 28 and 29 of the annual report. Where conditions were designed to address competition problems, firms were ordered to enter into supply contracts with emerging firms.  Structural remedies often involved an order for the divestiture of the firm’s dominant position.  In most cases, conditions had been adhered to. In one case, divestiture had not been effected in time but had since been complied with. If conditions were not adhered to, there were remedies including unwinding a merger.

Mr M Oriani-Ambrosini (IFP) felt that the current system could be improved by adding the component of private enforcement and enabling people to bring an action for damages against a company, regardless of any action taken by the Commission.  He asked about class actions, saying that such actions for damages were an absolute necessity as nobody could sue for less than R100 000. Class actions enabled litigation to proceed when individuals could not afford to litigate.  He asked about adjudicators appointed on a part-time basis, what the qualifications for such appointments were and how a person could apply.

Mr Manoim said that members of the Tribunal were appointed by the President on the advice of the Minister of Trade and Industry.  The Minister issued invitations to apply for the position.  Applicants needed to have suitable qualifications in law, commerce or public administration in order to be considered for the position.

Mr Oriani-Ambrosini asked about oligopolistic practices and the fact that they were sometimes shielded by legislation. The Commission’s authority was limited by legislation but he asked whether the Commission had the authority to ask for an enquiry into the entire commercial landscape in South Africa to ascertain how many anti-competitive practices were entrenched. An example was the telecommunications industry. He said it would be valuable to have some authoritative information on the economic costs of such anti-competitive conduct.

The Chairperson asked about the number of dormant matters, what rules applied and if there was a maximum time frame.  Concerning the budget of the Tribunal, she commented that the Tribunal could not determine in advance how much money it would get. She asked how the Tribunal measured its efficiency.  She wanted to know if the Tribunal relied solely on media reports of public hearings to generate public awareness.

Mr Manoim replied that most dormant cases involved people who had brought a complaint but did not take any steps to proceed with the complaint.  The onus was on the complainant to proceed with the case.  The Act stipulated that a complaint had to be laid within three years of the occurrence of the undesirable conduct.  The bulk of the budget was spent on salaries.  The Tribunal tried to appoint as many members as possible on a part-time basis in order to minimise costs. He agreed that it was difficult to prepare an accurate budget.  There was a slight surplus for the current year.  The Tribunal was quite a lean organisation and he was not sure that it could become any leaner”.

Commenting on the point about competitiveness raised by Mr Oriani-Ambrosini, Mr Ramburuth said that the activities of the Competition Commission could not by themselves increase competitiveness in the economy but that private firms needed to become more competitive and were responsible for ensuring their own competitiveness.  The Tribunal was a creature of statute and could only do what the law allowed it to do.  There was a range of things that the market could do to ensure higher levels of competition. South Africa had a rights-based legal culture and this gave anyone the right to challenge quasi-legal decisions such as those taken by the Tribunal. To an extent the Commission had become a victim of its own success.  The more was done, the more people expected it to do and the Commission was unable to do certain things in terms of its legal mandate. There was a role for civil society and for Parliament in this regard, which would strengthen the efforts of the Competition Commission and the Tribunal. These measures included lobbying for better consumer protection laws and encouraging better corporate governance and a greater oversight role for the boards of directors of companies. Most important was the need to pay greater attention to regulated markets to ensure that regulations governing the markets were not anti-competitive.  Occasionally, a private party came to the Commission and used an interaction with a Government Department as an excuse for continuing with anti-competitive behaviour. For example, the production of milk had previously been regulated and when it was deregulated, the industry held discussions with the DTI and had come up with an arrangement the industry now considered to be a practice that would automatically continue. The same applied in healthcare.  The Commission made a finding on tariff setting but the Department of Health was not clear about how to determine the tariffs.  The general principle was that where there was a sector regulated by law, the Commission could not oppose such a regime.  The aim was to ensure that laws were not anti-competitive.

The Chairperson asked if legislation existed that allowed anti-competitive practices.

Mr Ramburuth was unaware of such legislation but said that there were anti-competitive practices in the milk production, health-care sector and the petrochemical industry.  The tariffs set by the Independent Communications Authority of South Africa were another example of an anti-competitive practice.

Mr Manoim said that Parliament could assist the work done by the Commission by providing input on the opinion of communities on proposed mergers.  The Tribunal needed more information on the effects on small businesses as well.

Engaging the European Union: Parliament of South Africa’s relationship with the European Parliament.
Mr Kayum Ahmed of the International Relations Section of Parliament briefed the Committee on the current status of the relationship between the Parliament of South Africa and the European Parliament (see attached document).

The presentation included and overview of the core documents informing Parliament’s International Relations agenda, mechanisms for international participation, matters of Parliamentary diplomacy, participation in multilateral forums, the history of the Parliament of South Africa’s engagement with the European Parliament, current Parliamentary relations with the European Parliament, observations and recommendations.

Mr Marais asked if provision was made in the Committee budget or in the Parliamentary budget.

Mr Ahmed replied that a separate budget had been drawn up.  Parliament had allocated approximately R32 million for Parliamentary diplomacy activities. The budget was currently managed by the Secretary to Parliament and by the International Relations Section.

Mr Marais asked if there was a programme of participation in multi-lateral forums.

Mr Ahmed replied that he was aware that the SA-EU delegation was visiting Strasbourg from the 20th to the 22nd of October 2009 and the ACP-EU delegation was meeting in Luanda from the 25th of November to the 3rd of December 2009.  He offered to provide the Committee with the programme for the rest of the year.

The Chairperson wanted to know where the Committee could obtain further information on the matter.

Mr Ahmed replied that the Committee System and the Parliamentary Group on International Relations (PGIR) were in place but had worked in parallel.  His recommendation was that there was closer co-operation between the PGIR and Committees.  The Chairperson of the PGIR (Ms M Oliphant) had expressed her keenness to see closer interaction. The best way for the committee to be involved would be for the committee Chairperson to speak to the PGIR Chairperson and to try and set up mechanisms for closer co-operation.  Members of delegations were nominated by the respective political parties.  The ANC had submitted the names of candidates. The determination was made by a collective Committee, headed by the Chief Whips of the various political parties together with the Chairperson of the PGIR.

Mr Njikelana asked about the Cotonou Partnership Agreement and whether the Committee should have done more to ensure that the agreement had been ratified by now.

Mr Ahmed replied that the Cotonou agreement was signed by Government in 2000.  The agreement had not expired but ought to have been ratified by the deadline, which had been extended to June 2009.  The difficulty was that South Africa had two relationships with the European Union - the trade co-operation agreement with the EU and the Cotonou agreement. South Africa was reluctant to ratify the latter because of potential conflicts between the Cotonou agreement and the Trade Development and Cooperation Agreement (TDCA), which South Africa had signed.  There were international agreements concerning the non-proliferation of nuclear weapons, anti-terrorism measures and arms-trading but South Africa was currently reviewing the agreements to determine the best way forward.  South Africa was still able to participate fully in the ACP-EU parliamentary assembly.

Mr Njikelana asked if there was a broad plan of Parliament’s programme on international instruments.

Mr Van Der Westhuizen remarked that there appeared to be a very low return on investment and asked when the Committee would be afforded an opportunity to identify what it wanted to learn from this.  He asked what could be learnt from other countries’ experience and if this knowledge could be of assistance in determining best practice.

Mr Ahmed replied that he had compiled a comparative analysis of the SA Parliament, the United States Congress as well as the Brazilian, Indian and Canadian Parliaments.  There were two major areas of engagement in international negotiations. One extreme was the US Congress, whose members were fully engaged in international relations. The other extreme was the Chinese People’s Congress, where the Executive made decisions and the Legislature was essentially responsible for implementing those decisions.  South Africa fell somewhere in between.  Parliament was not yet a policy-making legislature but rather a policy-influencing one but was moving in the direction of the former position.  He agreed that benchmarking against other Parliaments was critical and that there was a need to follow up at a formal level.

Mr Van Der Westhuizen said that it was not so much about getting involved in negotiations but rather about learning from them. For example, Members were involved in the appointment of a statutory committee and he was keen to know how other Parliaments went about the matter and ensured that the members of the committee were held accountable.

The Chairperson commented that the issue had been a grey area.  The intention might be there but procedures and systems had to be in place.  She suggested that the Committee heard Mr Ahmed’s response but invited someone with the political authority to brief the Members as well.

In respect of the delegation visiting Strasbourg on the 20th of October, Mr Ahmed said that out of a delegation of eight, three names had been received and five were still outstanding.

The Chairperson read the Draft Report of the Portfolio Committee on Trade and Industry dated 7 October 2009.

Mr Oriani-Ambrosini moved the adoption of the report.

Mr Van Der Westhuizen proposed an amendment to the effect that Members of the Committee should be given an opportunity to state what they expected from the process.

The Chairperson requested that Mr Van Der Westhuizen and Mr Njikelana reviewed the corrected text to ensure that it accorded with the Committee’s decision to adopt the report as proposed by Mr Oriani-Ambrosini. The report would then be forwarded to the House.

The meeting was adjourned.

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