Competition Commission 2013 Strategic Plan and Budget; Competition Tribunal 2013 Strategic Plan & Budget: postponed

Economic Development

25 March 2013
Chairperson: Ms E Coleman (ANC)
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Meeting Summary

The Committee received a briefing from the Competition Commission on its strategic plan, budget and annual performance plan for 2013. The scheduled presentation by the Competition Tribunal was postponed due to time considerations.

The Competition Commission told the committee that its objective was to promote competition in the economy and the planning process of the Commission consisted of six steps which included: the development of a three year strategic plan for 2010-2013; an annual review of achievement of targets; an evaluation of progress; changes in the internal and external environment; the Annual performance Plan (2013-2014); and a 5 year Strategic Plan (2014-2019). The three Strategic Priorities of the Commission included: achieving demonstrable outcomes; increasing competitive environment for economic activity; and realizing a high performance organisation. The Committee was further presented with a situation analysis of the Commission and the corporate governance structure of the Commission.

The Commission faced challenges in the following aspects: space constraints; adverse and constraining decisions by the courts; case load; difficulty in predicting litigation costs; measuring impact and knowledge management.

In the discussions that followed the presentation, Members asked questions related to staff morale and motivation, staff retention and the measuring of the impact and progress of the work of the Commission. The Committee asked how the Commission planned to promote a greater spread of ownership as an objective of the Commission, what the Commission meant by increasing sophistication and what the investigations of the Commission in terms of food and agro-processing involved. Members further investigated whether there was legislative provision for the appointment of two Deputy Commissioners by the Minister of Economic Development. The Committee asked specific questions relating to the fast-tracking of settlements within the construction industry and allegations about an investigation by the Public Protector into the Commission. 

Meeting report

Introduction by the Chairperson

The Chairperson welcomed Members of the Committee and the delegations from the Competition Commission and the Competition Tribunal. The Commission was supposed to review the Strategic Plans for 2013 as these plans had to be reviewed yearly. The Strategic plans ran for a five year period and the period under review was from 2009 to 2014. The Commission and the Tribunal were going to present these plans through short presentations which covered the Strategic Plans, the Annual Performance Plan (APP) and the Reviewed Organogram. The Committee was expecting to receive the Medium Term Expenditure Framework (MTEF) of the Commission and the Tribunal which was going to contain the financial aspects of the entities.

Mr Shan Ramburuth, Commissioner, Competition Commission, said that the reviewed organogram had not been submitted to the Committee. The organogram would be provided to the Committee at a later stage.

Ms Yasmin Carrim, Full-time Member, Competition Tribunal, said that the Strategic Plan of the Tribunal had already been given to the Committee and only the APP had been tabled for this meeting.

The Chairperson said that for the purpose of uniformity, it was important for all the documents to be submitted as a whole. The Committee had been interacting with the Competition authorities for over four years and the members had gained quite some insight on their work and could now engage intelligently with the entities.

Briefing by the Competition Commission
The presentation from the Competition Commission was done by its Commissioner, Mr Shan Ramburuth.

Mr Ramburuth told the Committee that the objective of the Commission was to promote competition in the economy. The planning process of the Commission consisted of six steps which included: the development of a three year strategic plan for 2010-2013; an annual review of achievement of targets; an evaluation of progress; changes in the internal and external environment; the APP (2013-2014); and a 5 year Strategic Plan (2014-2019). He presented the Committee with the first generation strategic plan environmental factors and strategic priorities, highlighting the contribution of the Commission in terms of alignment with the Department of Economic Development’s outcome of decent employment and economic growth.

The three Strategic Priorities of the Commission included: achieving demonstrable outcomes; increasing competitive environment for economic activity; and realizing a high performance organisation.

In a situation analysis, Mr Ramburuth outlined the legislative mandate and stakeholder engagements of the Commission and the role of economic law and policy as a catalyst in bringing about economic transformation.

In terms of the competition law and policy embedded in South Africa’s economic realities, the Commission had to work within the context of the triple challenges of poverty, unemployment and inequality. Its guiding policies were the New Growth Path (NGP), the Industrial Policy Action Plan (IPAP) and the National Development Plan (NDP). The strategies which were being used by the Commission included the prioritization of key sectors, advocacy for pro-competitive outcomes and high-performance agency.

The internal governance structure of the Commission was made up of various committees. These included the Executive Committee, the Management Committee, the Human Resource Committee, the Information Technology Committee, Case Management and the Audit Committee.

Challenges
The Commission faced the following challenges: space constraints; adverse and constraining decisions by the courts; case load; difficulty in predicting litigation costs; measuring impact and knowledge management.

Discussion
Mr S Ngonyama (COPE) addressed the issues of staff morale and motivation and asked what the situation was in the Commission and if it was up to the required level. On the measuring of impact, he queried how well the Commission had performed with regards to the whole picture of economic development. How did the Commission assess its performance with regards to the competitive advantage with other countries?

Mr Ramburuth replied that the issues of increased staff moral and motivation had been made a priority between 2007 and 2010. The objective was met and the issue was genuinely resolved. Concerning the measurement of impact, Mr Ramburuth highlighted that it was important to distinguish between the indicators of the work of the Commission and the impact of the work. Work could be done yet it would take a long time for the impact to be felt. This was because there were many other factors at play within the economy. However, the Commission was taking the issue of measuring impact seriously. It was a complex thing which required pilots, proxies and methodologies.

Mr N Gcwabaza (ANC) asked how the Commission planned to promote a greater spread of ownership as an objective of the Commission. What did the Commission mean by increasing sophistication? What did the investigations of the Commission in terms of food and agro-processing involve? He had asked this question because there was a recent report that there was a lot of wastage of food during processing and this happened largely because firms wanted to maintain prices and even increase prices and this meant that overabundance of food would lead to a drop in food prices. This related to the issue of external competition from imported goods. Did the investigations of the Commission involve these issues and what were the impacts on food availability and food prices?

Mr X Mabasa (ANC) said that his concern was more on the measurement of the objectives and outcomes. The report was very general and did not quantify progress and outputs.

Mr Ramburuth replied that the plans of the Commission were multi-year plans and the time period to start and finish something was hardly within one year. The turnaround time was not very quick as the system allowed for processes and procedures. If the outcomes were to be looked at on a case-by-case basis, the presentation would be very long and would outline specific outcomes and progress. The processes were long and not quick-fix solutions.

Mr K Mubu (DA) asked for some examples of the adverse court decisions which impacted on the ability to initiate and investigate complaints. What incentives were in place to improve staff retention and what were the succession plans within the Commission? What were the uncertainties in leadership issues which were mentioned in the presentation? He asked for more information about the allegations that the Public Protector was investigating the Competition Commission.

Mr Ramburuth addressed the question on staff retention first. The Commission offered very attractive salaries and the staff received a lot of training in and out of the country. The Commission won the award for the best company to work for in the public sector in 2009 and 2011.

 

Mr Ramburuth replied that the issue of the investigations by the Public Protector had not been raised with him at all and he was not aware of any complaints or investigations. The Deputy Commissioner had for the last two days tried to find out about any complaints but nothing had been heard. This had never happened before with the Competition authorities. Since he had joined the Commission, it had always received clean audits.

Mr Z Ntuli (ANC) asked which industries were going to be investigated to check the pricing tendencies. With regards to the monitoring of compliance, he recalled that in the Wal-Mart issue there was a decision that the Competition Commission must be informed on the progress of compliance. How did the Commission monitor other situations where there was no intervention by the judge? How was the impact of mergers measured in terms of job creation?

Ms D Tsotetsi (ANC) said that there were two Deputy Commissioners who had been appointed for a period of six months. What happened after this period?

Mr Ramburuth replied that in the course of the six months, the Ministry was going to put in place procedures to appoint full time Deputy Commissioners.

Ms Tsotetsi asked if there were no legal challenges concerning these processes and what were the cost implications.

Mr Ramburuth replied that the Commission had budgeted for two Deputy Commissioners.


Ms Tsotetsi asked in which Act the two Deputy Commissioners were provided for.

Mr Ramburuth replied that the positions were provided for in the Competition Act.

The Chairperson said that the Committee had been hearing of the fast-tracking interventions in the construction industry since the 2010 FIFA World Cup and she wanted to know the progress with the plans. It was an exciting concept and the Committee wanted to follow-up on the progress.

Mr Ramburuth replied that with regards to the fast-track settlement, the Commission had set up a project plan on how long the whole process would take. It was running a bit late but he did not think that the Commission was more than four months late with the project.

The Chairperson asked at what stage the project plan was and how had the industry been positively impacted.

Mr Ramburuth replied that it was a complex procedure considering the amount of firms that applied for settlement and the number of contraventions which had been applied for. The Commission staff had to go through a lot of evidence. One of the delays in the project which was initially identified as a risk was that in addition to firms applying for settlement, firms were implicated by other firms. Implicated firms had to then be given opportunities to do their own internal investigation and report to the Commission on the decision. There were huge legal and negotiation processes. On progress, the Commission had evaluated all the settlement applications and had concluded investigations and was now in the process of making settlement offers to the firms. It was up to the firms to accept or reject the settlement offers. If they rejected the offers, the Commission was going to proceed to prosecute them in the Tribunal. In clear terms, the Commission had finalised Phase 1of the project plan.

The Chairperson asked if the Commission had the capacity to handle the issues.

Mr Ramburuth replied that the Commission had the capacity to deliver on the construction project. It was a difficult question to answer as dealing with a settlement process required several steps which brought about unplanned challenges. Adding the capacity could not guarantee the speeding up of the process.

The Chairperson said that she was skeptical of some of the processes because the Commission now had to wait for the companies to complete their own internal processes. Did the Commission give firm deadlines to these companies?

Mr Ramburuth confirmed that deadlines had been given to these companies.

The Chairperson said that the Minister of Economic Development had informed the Committee that there was an Amendment Bill- that amended the Competition Act- was coming to Parliament. Were there any areas which the Competition Authorities had worked on as the Bill was expected in Parliament by the end of the second quarter?


The Chairperson said that she was happy that the Commission had an implementation schedule. This was quite an improvement from the strategic plans. The fact that the Commission was talking about working on the prioritization of sectors was very good.

The Chairperson said that it was very unfortunate that the all the Competition Authorities had to catch flights back to Pretoria and that meant there were time constraints. She urged Mr Ramburuth to be brief in his responses so that the Committee could also receive the briefing from the Competition Tribunal.

Mr Ramburuth said that the Commission did strategic planning exercises once every few years and the new MTEF required that the planning be done every five years. This meant that for the next five years, the Commission had to be working off that plan. Next year, the Commission was going to have a new plan. Strategic plans by nature were multi-year plans and not yearly plans.

The Chairperson said that what the Committee wanted to know what the Commission was planning to focus on from 2013 to 2016.

Mr Ramburuth replied that the plan which was before the Committee was the plan of a final year of a strategic plan which was to be completed in 2013. For next year, there was going to be a five-year strategic plan which was going to be developed in the course of 2013.

The Chairperson said that the Committee could not dictate on that process as it was the role of the National Treasury to guide the Commission by giving a strategic plan template. The Committee wanted to know what was in focus for the next year.

The Chairperson said that the Committee had a challenge with time as it intended to receive a briefing from the Competition tribunal. However she was going to make a ruling to propose that the Committee set up an alternative date to receive the presentation from the Competition Tribunal.

Mr Ramburuth said that he could undertake to respond to the rest of his questions in writing and to give answers to any further questions in writing.

The Chairperson said that it was important for both the Competition Commission and the Tribunal to be present at the next meeting as the matters to be discussed concerned both entities.

The meeting was adjourned.

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