Economic Development Department; Competition Commission + Tribunal Annual Report, with Minister

Meeting report

Department of Economic Development on its Annual Report – 2016/17
Minister of Economic Development, Mr Ebrahim Patel, noted that EDD achieved all its 23 Key Performance Indicators. There were 170 products planned, but EDD achieved 202 products and it spent 98.6% of its budget.

There was an increase of 538 000 jobs, from 15 675 000 to 16 212 000; 66% of these were formal non-agricultural jobs. Labour force increased by 1 029 000, an increase of 5% in one year, and youth (15-34) jobs increased by 86 000, whilst there were 206 000 more unemployed youth. Therefore, the youth unemployment rate increased from 37.7% to 38.6%.

The number of mergers, with employment and public interest conditions imposed by the Competition Commission, included a total of 385 mergers finalised; 19 mergers concluded successfully; R1.6 million penalties imposed. The development impact as a result of the merger conditions gave rise to 3 932 jobs created, 44 655 jobs saved, and sadly 184 jobs were lost as a direct result of the mergers approved. EDD raised public interest concerns in two large international mergers that led, after negotiations, to seminal agreements with SABMiller/ Coca-Cola and ABInBev/ SABMiller. As a result of the merger the following agreements were reached:
• R1.8bn total funds for development, including R1bn support for emerging farmers
• Headquarters located in SA
• Net employment to be maintained
• 10% of cooler space in spaza shops and taverns for competitors
• Increased localisation
• 20% of Appletiser equity to be sold to black South Africans

In its work EDD ensured that more than 120 000 small spaza shops and retail outlets will have the freedom to open part of their sponsored fridge space to products that compete with the near-monopoly large suppliers. In transforming the construction industry, the Commission signed a settlement agreement with the seven major construction companies found guilty of collusion on the 2010 World Cup projects. In addition to the competition penalty of R1.4bn, the agreement includes R1.5bn financial contribution to be spent over 12 years for engineering bursaries; enterprise development; training; mentorships; artisanal programmes; maths and science at schools; and agreement on significant empowerment in equity and partnerships. R233.2 million already has been paid by the companies to the National Revenue Fund. AMSA was fined R1.5 billion, the highest administrative penalty the Commission has ever imposed on a single firm. EDD promulgated relevant provisions of the Competition Act and made it a criminal offence for directors or managers of a firm to collude with their competitors or fix prices.

EDD work in terms of trade included:
• Issued a trade policy directive to introduce reciprocal commitments on investments, jobs and innovation
• Defending the country’s right to beneficiate scrap metal locally, through successful defence of court challenges
• Research and data-analysis of SA trade relations with selected other African countries
• Approving changes to ITAC Import Control Regulations to ensure that goods under import control remain under import control when the World Customs Organisation adjusts tariff lines and introduces new tariff lines
• Reviewing the capacity of ITAC inspectors dealing with scrap metal and clothing
• Working with the industry to identify economic impact of trade tariff adjustments in the steel sector.

Minister Patel challenged companies to no longer simply rely on tariffs or rebates for protection but to invest heavily in new technologies, training of workers and product innovation. To give effect to this he issued a Trade Directive to ITAC providing details on the factors it should consider when companies apply for tariff amendments. This is an example of how South Africa can achieve the goals of our trade policy and National Development Plan.

In terms of infrastructure coordination, EDD work included 72 Strategic Integrated Project (SIP) reports; 31 meetings providing full administrative and technical support for PICC (Presidential Infrastructure Coordinating Council) Council, Manco, Secretariat and SIP coordinators; 9 unblocking initiatives for infrastructure rollout; 5 cabinet decisions implemented; and 3 initiatives enhancing local procurement. R1.1 billion per working day spent on infrastructure projects to boost growth and jobs; 350 PICC monitored infrastructure projects; 193 000 jobs created in PICC monitored projects; and a $180 million PICC facilitation for loans for new BRICS bank.

In promoting inclusion, particularly emerging farmers, 38 black farmers were supported to enter soya-production for the first time to supply a local crushing plant with 2 005 hectares of land under cultivation. 800 black farmers will be supported by ABInBev to enter into commercial production to provide inputs for beer-making in South Africa and to promote exports of value-added malted products – 2 600 workers will be employed over the next five years. Lastly, black farmers are being brought into the supply chain for making Grapetiser cold drinks in the Northern Cape area – the company moved from 11% local supply to 25% and the target is to move this up progressively.

EDD obtained an unqualified audit opinion and there were fewer findings compared to the previous year. Misstatements raised by the AG were subsequently corrected and no material findings were made on the reported information. The Minister thanked the Committee for the opportunity to brief them.

Discussion
The Chairperson stated that the concern continues about the overall impact on job creation as the country is dependent on government for growth and investment, compared to previously where 75% of fixed investments were stemming from the private sector. It would be important to hear what the Deputy Minister has been doing in the area of TVET colleges, the details of the partnerships established and the overall impact impact driven by the department in those spaces.

Mr P Atkinson (DA) congratulated the Department on the positive audit outcome and meeting its KPIs. He came across a Business Day article that reported that the PICC work has not been well maintained, meaning that the maintenance of the infrastructure is not prioritised. He asked the Minister to comment on this, and what he thinks the underlying reasons are that infrastructure is not well maintained. It is important that infrastructure is built, however maintenance is just as important when the infrastructure exists.

With regards to Politically Exposed Persons (PEPs), the IDC had resolved to go ahead with transparency publishing the list of funding transactions processed by the IDC. He asked if EDD is following up on the PEPs, and the loans granted to the PEPs on that list.

Mr Atkinson stated that investment in the economy by the private sector has declined, however government’s investment into the economy has increased. He asked the Minister what is being done to try and get the private sector to invest in the economy or what steps are being taken to boost private investors to invest into the economy.  

Mr I Pikinini (ANC) asked for clarity about General Motors leaving the country.

Mr S Tleane (ANC) asked about the Presidential Infrastructure Coordinating Commission (PICC) projects, particularly the major projects happening under the PICC. He asked the Minister if he can name a few major companies that are involved in the PICC projects and indicate whether they are complying with BBBEE.

He asked what EDD is doing to assist ITAC regarding the audit findings on material misstatements. He asked whether the EDD organogram has finally come together, or whether it is still being developed and whether placements are taking place to fill key positions. He asked the Minister to provide clarity on Sefa and its current relationship with EDD.

The Chairperson stated that a PICC Report will be received that afternoon by the Economic Cluster which will highlight the state of the infrastructure in the country.

The Minister responded that the Economic Cluster will be reporting on the overall infrastructure development in the country that afternoon, so more information will be furnished for Members to take note of. As for the maintenance of that infrastructure, overall not enough is done to maintain the infrastructure. Essentially part of what the report will reveal is that when infrastructure has been neglected it becomes more costly to maintain due to cumulative effect of wear and tear.

Perhaps some of the reasons infrastructure maintenance is neglected is because government officials in departments do not prioritise infrastructure maintenance. The grants received to maintain infrastructure are often re-prioritised or redirected to other projects. The quality of the existing infrastructure is critical; perhaps the relevant structures should have a discussion about making infrastructure grants obligatory to be ring-fenced.

The IDC took a decision to release all information on its funding transactions with businesses. Although this comes with its own challenges, it is a step towards the right direction in promoting governance. Hopefully this initiative will inspire many government departments to do the same. The DTI declared that it will take the same step for its grants given out to companies.

As for encouraging investors from the private sector to invest in the local economy, EDD identified key areas that need to be achieved to improve investment by the private sector. Those areas included transformation, encouraging and bringing young people to the forefront of business and government to contribute towards the economy; governance – to ensure that investors and the public money is looked after and is efficiently disseminated; and partnerships – ensuring that government works closely with the business community.
 
The reason that government’s investments have increased sharply compared to the private sector investment in the economy is due to serious long term investments that have been made by government, as well as the fact that government has invested more on infrastructure. The work that is being done now is to ensure that in all the key areas of the economy, government identifies the policy trajectory, and actually follows that trajectory. For instance, policy on competition needs to be steady and robust and it must be implemented.

Engagement with businesses is also key to talk to the private sector to invest more robustly into the economy, but the private sector is worried about policy uncertainty in the economy so that causes frustration. Hence, inclusive engagement on policy formulation is critical, because if the private sector is aware and confident of government policies that eliminates the frustration.

The Minister responded that there are hundreds of companies involved in the PICC government infrastructural projects ranging from construction, manufacturing, cement, etc. For instance, Murray and Roberts sold a significant portion of its equity to a black consortium in the construction industry. The consortium is black owned and managed.

The EDD organogram has been adopted; however there is one simple challenge and that is the funding shortfall for key posts. Another challenge is the kind of structure needed to be implemented. The Department requires a flexible organogram due to the complexity of some of the projects it undertakes and oversees; those projects need specialised skills and the current permanent staff is not skilled enough to be assigned to some of the big complex projects. So the Department is often confronted with the issue of bringing in people from outside to assist and consult.

This is supported by the fact that the average income of staff in EDD is above the average income of staff of other departments. This alone shows that the Department needs certain skills and specialists due to the complexity of the work it does. The Accounting Officer will concur that the EDD proposed organogram had to be forced onto the proposed structure by the Department of Planning, Monitoring and Evaluation (DPME) because the way that EDD requires to be structured is way different from the DPME proposal. So as it stands currently, the adopted organogram is being revised because EDD wants to bring in top people who are able to assist the department when it needs those skills, and keep them on a contractual basis. It is indeed a conundrum to achieve this because the Department must adhere to the proposed structure by DPME.

On the funding for Sefa, National Treasury has made money available to Sefa through EDD, and EDD transfers it to the IDC and the IDC to Sefa because Sefa is a wholly-owned subsidiary of the IDC. The IDC reports to EDD. This is how Sefa is somewhat still tied to EDD although the agency is within the mandate of the Department of Small Business Development (DSBD) and it directly reports to the Minister of Small Business Development.

On General Motors leaving SA, in the factory that they have, there are two lines and one line is run by GM and the other run by Isuzu. EDD is now trying to check whether Isuzu can absorb some of the GM work line and absorb those operations. Negotiations are being held, and so far they have been going well.

The Chairperson is convinced that government is still lenient on ensuring that money set aside for maintenance is utilised precisely what it is intended for. As for the black consortium that has ownership in the construction industry, as much as that is good, still more work needs to be done because that consortium still has to develop trust.

The Chairperson asked how long it takes for EDD to develop the expertise that it needs, because for the last four years EDD has repeatedly stated the same point about the lack of capacity. Surely there are people who have basic skills, and that can be the starting point.

The Chairperson asked if the Minister thinks that abandoning the JIPSA programme was a mistake, because clearly the country would have had enough or more of the skills needed if the programme had been kept going.

The Deputy Minister, Mr Madala Masuku, responded that an Imbizo held with the Department of Higher Education and Training with the TVET colleges aimed at understanding the key challenges in the TVETs, the best possible solutions to those, and coming together as the relevant departments to define what it is that needs to be done and how that can be achieved collectively.

On the EDD organogram, Deputy Minister Masuku said that the department does have capacity; however the issue sometimes is the nature of the work that is required to be done. So the complex projects that require specialised skills occur very seldom, hence a flexible structure would be appropriate and convenient for the department.

In response to a question by Mr Pikinini on environmental management, Deputy Minister Masuku replied that the infrastructure on land to store water in catchment dams has been done, the projects are still being carried in some parts of the country and the infrastructure is there. However, the biggest challenge is harnessing the capacity that is there and maintaining it. One needs to be mindful that consumption ranges from drinking water to utilisation in the mining industry and scrap metal industries. These are some of the things that need to be considered when looking at environmental management.

The Minister responded that the early 2000s was the beginning of high growth in the country and this was due to commodity prices. In response to the scarce skills at the time, JIPSA was initiated as a joint initiative for priority skills acquisition. Various stakeholders were involved including the universities to assist in the incubation of skills. JIPSA was meant to be a short-term intervention. Now the Human Resource Development Council of South Africa attempts to take the idea of JIPSA and make it a permanent initiative.

JIPSA focused on engineering skills because it was believed to be the back bone of economic growth as far as infrastructure is concerned. When the scarce skills were identified for the new ICT economy, quite a few skills came up, so the HRDC will cover the broader spectrum of the skills needed – skills development will not be limited to only certain sectors or industries of the economy.

The Minister suggested that JIPSA may be a very lucrative discussion with other relevant departments to review the impact of skills on economic development. The Chairperson would be advised to also get involved in that discussion.

The Chairperson thanked the Minister and the Deputy Minister for the good work that the Department is dong, and she encouraged that it continues to do so.

Competition Tribunal on its Annual Report for the year 2016/17
Mr Enver Daniels, Deputy Chairperson: Competition Tribunal, took Members through the Annual Report and highlighted the case reviews for mergers:
105 mergers decided (prior year -133 decided)
70.59% were cleared in less than 60 days (prior year –72.58%)
2.94% were cleared in 60 days (prior year –0%); and
26.47% were cleared in more than 60 days (prior year –27.42%).

In terms of performance highlights in adjudication excellence, it reported:
191 matters were heard
100 days was spent in hearings
27.5% increase in procedural matters
179 orders were issued –5.03% decrease on 2015/2016; and
153 reasons were also issued –10.85% increase on 2015/2016.
 
The reasons targets were not met were due to the length of court record; lack of capacity; and the complexity of some cases requiring extensive research and deliberations.

Ms Janeen De Klerk, Chief Operating Officer: Tribunal gave the financial overview and highlighted that the Tribunal received a clean audit. Income received amounted to R35.72 million, the bigger chunk came from grants (57.54%), and filing fees (39.64%) and other income constituted only 2.82%. The expenditure for the year was higher than the income received – it amounted to R38.62 million, and 62.46% of that was absorbed by personnel expenditure.

Discussion
The Chairperson thanked the Tribunal for consistently and continually protecting the country from companies and people who are exploiting the markets and the consumers.

She asked what it means for the economy when more foreign firms seem to be acquiring local firms, and whether this is a reflection of moving towards a good direction or otherwise. She noted that the budget for community outreach is limited, and this is understandable considering the limited resources of the Tribunal. This is something that the Committee will take up with EDD to ensure that it takes such initiatives into consideration in their budgets.

Mr Pikinini asked how the Tribunal is dealing with capacity on matters of adjudication, because some cases require extensive research due to their complexity.

Mr Tleane stated that the Tribunal may be situated in Tshwane but it is a national institution, so when it reaches out, it cannot just reach out to the neighbouring communities and local school within its proximity. The outreach programmes need to stretch out to the country. He asked what steps were taken by the Tribunal after a tribunal member who was needed to attend to a complex case went to Singapore whilst investigations on that case were being undertaken. He asked if the Tribunal is happy with its current capacity. He asked for an update on the latest request made by Standard Bank for relevant documentation on the case it is involved in.

The Chairperson asked about the Tribunal’s view on increased non-competitive behaviour in the country by local companies – what causes such behaviour, and to what that behaviour can be attributed.
Ms De Klerk responded that the outreach programme is not limited due to financial constraints but the underlying issue is always time and schools availability. However, the Tribunal aims to make use of the campus radio stations as a medium form to broadcast the work of the Tribunal. For the schools, it is difficult to go beyond a hundred kilometres because the schools have to travel to the Tribunal to witness a case being heard. There was also concern about the internship programme as the Tribunal recruited only interns from universities within close proximity. The Tribunal dealt with this by spreading out its advertisements to all campuses where competition law is taught. There are students from Cape Town that have been part of the short term-short vacation programmes, and one of the long-term interns actually comes from the University of Cape Town.

The concerns previously raised by the Committee have been dealt with by the Tribunal; it went as far employing a full time procurement officer that will deal strategically with procurement, as well as a full time finance division that reports directly to her office. This has allowed her to focus more on the strategic operational matters of the Tribunal. Further, the cell phone contracts have been terminated; staff members are now responsible for their own cell phone contracts – those allowances are paid into their salaries.

The Deputy Chairperson responded that the Tribunal is mindful that there are budget constraints regarding the outreach programme on some of the work that has been done to educate kids about competition in the country. Although, they may not understand the complexity of the law itself, the fundamental elements are understood – this reveals how effective the Tribunal is in its outreach programmes.

As for foreign companies acquiring local firms, there are actually a lot of South African companies that are buying foreign companies, so there is a balance. Capacity at the moment seems to be adequate at the Tribunal. There are excellent case managers who are young and enthused about the work. They are fundamentally interested in what they do and that reflects in their excellent work.

He could not comment on the matter about a member that went to Singapore in the midst of a complex case. He also could not comment on the Standard Bank matter, because it is still an ongoing case and as soon as the matter has been concluded, a report will be provided to the Committee.

Ms De Klerk added that the lack of capacity was never an issue for case managers. However, for Tribunal members, that has been since dealt with and the capacity is now adequate.

Ms De Klerk responded to the question about the Tribunal member that went to Singapore. The Tribunal was conflicted on this matter because the attendance of the Singapore conference was planned prior to the anticipation of the case. It was difficult to cancel the trip because provision had already been made, and the Tribunal also considered that the conference seldom occurs and it was important that the Tribunal was represented at that conference. It was not anticipated that the trip to the conference would coincide with the case, but the member spent only two days and came back.

Competition Commission on its 2016/17 Annual Report
Mr Thembinkosi Bonakele, Competition Commissioner, noted that the Commission concluded a far-reaching settlement with ArcelorMittal South Africa (AMSA). The details were:
• AMSA was alleged to be engaged in collusion, information exchange and excessive pricing in markets for long steel, flat steel, scrap metal and wire mesh-multiple investigations ever since 2008;
• AMSA was alleged to be charging import parity prices in the local market, often higher than what international customers were charged;
• R1.5 billion administrative penalty was imposed, settling all four complaints. This was the highest penalty ever imposed in South Africa.
• AMSA also agreed to limit its EBIT margin to a cap of 10% for flat steel products, for five years; and
• AMSA also committed to a R4.6 billion capital expenditure over five years.
The Commission believes that this settlement will lead to a reduction in prices and overall improvement of competitiveness in the steel market.

The merger between Anheuser-Busch Inbev and SABMiller was the largest merger ever considered by the Commission and it yields public interest benefits. Several competition and public interest conditions were imposed by the Competition Tribunal, following the Commission’s recommendation:
• AB Inbev had to divest its shareholding in Distell, within 3 years of the deal;
• Continue to supply tin metal crowns to third parties for 5 years, granting access (10% of fridge space) to small beer producers in perpetuity and no inducement;
• Merging parties could not retrench any employees as a result of the merger;
• AB Inbev committed to make available R1 billion for development of agriculture, over five years and to promote entry and growth of emerging and black farmers.

The Commission prohibited the proposed merger between Imerys South Africa and Andalusite Resources because it would have led to a monopoly situation, potentially higher prices and/or reduced quality. The merger would have adversely affected smaller players who lacked the capacity to respond to monopoly conditions. The prohibition prevented a significant lessening of competition in the market.

• Introduction of individual criminal liability for collusion
• Encouraging findings of five impact assessments conducted in agriculture, information and communication technology (ICT) sector, pelagic fish, academic textbooks and citrus markets;
• Strengthening of relations with counterparts in Brazil, Russia, India, China, South Africa (BRICS);
• Continued role in uplifting South Africa’s youth through its graduate trainee programme; and
• Promotion of competition law and economics as a discipline in mainstream academia through partnerships with universities.

The Commission has met 28 out of 33 applicable targets in 2016/17 (85%):
- Under merger regulation, the Commission achieved all six set targets. The Commission’s interventions saved 48 403 jobs, and 15 mergers were approved driven by public interest conditions. In the current year, the Commission received more merger notifications compared to 2015/16 and finalised 385 transactions.
- Under competition enforcement, the Commission met six out of seven set targets.
- Under compliance and litigation, it met five out of six set targets. It issued 24 advisory opinions and oversaw 98 cases at litigation stage.
- Under strategic collaboration and advocacy, only nine out of 10 targets were met. The Commission made submissions on five government policies and regulations including the National Integrated ICT Policy White Paper and the White Paper on the Audio visual and Digital Content Policy for South Africa. In addition, it concluded bilateral and multilateral MOUs with SADC and BRICS partners.

Financial performance information included:
• Total revenue decreased by R6 million (2%) from R295 million to R289 million.
• Government allocation decreased by 3% from R228 million to R221 million.
• Filing fee income increased by 4% from R55 million to R57 million.
• Interest income decreased by 15% due to less funds in the bank.

Total expenditure increased by 24% of R71 million from R296 million to R367 million. The Commission incurred a deficit of R78 million compared to last year’s R1.2 million. The deficit was funded by accumulated surpluses which are now materially depleted. However, the Commission achieved a clean audit.

From a period of significant surpluses, the Commission has now entered a period where it needs to rely on government allocation and fee income to support its programmes. Spending has increased over the years due to growth in volume and complexity of cases, in addition to extension of the Commission’s mandate to include market inquiries.

In conclusion, there is increased volume of work and complexity in the investigation and prosecution of cases with longer time frames for litigation in the courts; and specialist skills and industry knowledge required for some investigations. Going forward, the Commission requires additional funding to fulfil its mandate, and to regulate towards a growing and inclusive economy.

Discussion
The Chairperson noted that the Committee indicated during previous engagements that the Commission needed further budget allocation due the amount of work anticipated. At the time, the Commissioner responded that the Commission was still keeping its expenditure under control; therefore no additional allocation was necessary. Now it appears that the Commissioner should have heeded her advice before stating otherwise, and sadly this reflects bad planning.

Mr Tleane asked if AMSA and the other companies fined by the Commission have already paid the Commission; and if not, what the agreed payment arrangement was. He remarked on the Commissioner’s concerns about additional funding and asked what would happen if the required funding does not come in.

The Chairperson shared her concern and confusion about the financial information particularly the over-expenditure on personnel, although the appointment of the Chief Financial Officer was expected and other key positions that needed to be filled. There is a need to utilise resources sparingly because the fiscus is limited.

Mr Tleane asked what happened with the Vodacom tender. He was surprised that Vodacom did not get that tender – so details about this tender would be appreciated. The Commission can decide whether it wants to answer the question about the Standard Bank case, the Tribunal could not answer – so what is the status on this case.

Lastly, he remarked that the Committee cannot allow a situation where the Commission operates with a deficit, this cannot be condoned and under no circumstances should deficits be allowed. It was suggested that they should rather pause certain project if the funds are limited and take up the project when the funding is available. Surely if it is an imperative project Treasury can make funding available.

Mr Molatlhegi Kgauwe, Competition Commission CFO, responded that the budgeted amount for personnel expenditure and the actual spending are different. The Commission actually spent less than the budgeted amount on personnel.

Mr Hardin Ratshisusu, Deputy Competition Commissioner, responded that the amount AMSA was fined was R1.5 billion. The Commission agreed with AMSA on the payment plan that will run over five years. To date it has not paid a cent, but the first payment of R300 million is due in November this year. The company had indicated to the Commission that it was in financial distress so the Commission can only hope that it will receive its payment in November. There are also other companies that have been struggling to pay the fines, but so far some companies have been paying their fines. The Commission resolved that if a company does not pay the agreed amount in a year, the amount due will attract interest.

Commissioner Bonakele replied on the Standard Bank matter that the Commission filed its papers to the Tribunal. Standard Bank responded by raising issues of jurisdiction and that it was not given enough information by the Commission to be able to respond appropriately. The Commission has worked with the Tribunal to have these issues resolved speedily, and the Standard Bank’s response has been argued at the Tribunal. The Commission has a solid case. There is a backlog at the Tribunal, and the Commission is concerned that cases take time to be heard, and these companies use certain advocates and if those advocates are not available the cases cannot be heard, but these are just administrative issues. The Commission has its own strategies that it cannot share with the Tribunal at the moment, but this is one case that it has committed itself to win.

What needs to be clear is that sometimes there is an impression that cases like these will eventually go away and transgressors face absolute impunity. He assured the Committee that this is a solid case and it is not  uniquely South African – it is something that has occurred in the UK and the USA but in this case it is about the Rand, so it may take years but it will be seen through.

On the Vodacom tender - there was a tender on all government mobile telephonic communications and the objective was to reduce government costs through this tender. Before the award was made, the Commission gave an opinion which was requested by Treasury. The Commission made it very clear that it was of the view that the agreement could contain exclusionary conduct because it strengthens Vodacom in a way that is irreversible. Vodacom is already dominating the industry, so it will be very difficult to reverse the dominance in the future, because the largest buyer (government) and the largest supplier were locked in one big agreement. How the price and efficiency is balanced is what the Tribunal needs to determine; notwithstanding the fact that competition will be forfeited indefinitely, by virtue of Vodacom agreeing to the contract it will contravene the Competition Act. This case is an ongoing investigation and the Commission will be engaging with Treasury on this matter further. The Commission did not only come at the tail end of this matter, there has been communication with the relevant parties involved; but the Commission could have come in before the award was made, unfortunately this was not the case.

If the Commission does not get the funding, it will have to comply with the prescribed law and the projects that needed to be done will not be done until the funding is available as per Mr Tleane’s suggestion.

Mr Tleane stated that the Commission indicated that AMSA will make its first payment in November, so what mechanisms are in place to ensure that AMSA lives up to its commitment. Lastly, what happens when the Commission loses a case in the court of appeal that it believed very strongly that it would win?

The Commissioner replied that in the past where firms made commitments to pay their fines, the perpetrators would always comply. The Commission notes the remarks, and perhaps it can consider establishing a monitoring unit to ensure that in an event a perpetrator does not pay its fine, necessary steps are taken, and the same will be applied when it comes to mergers.  

The Commission notes that all of these matters need resources in order to be established – everything needs to be balanced with the resources available. Perhaps some capacity needs to be created to monitor whether companies are able to pay these fines during the process and immediately employ the relevant structures and available resources to circumvent a possible undesired outcome. The Commission can also get quarterly reports to be better informed on the financial standing of these companies prior to issuing the fines. The Commission will engage with Treasury on the allocation of additional resources to support it.

When it comes to losing cases, the Commission can appeal to the Constitutional Court, but if it loses in the ConCourt then the matter cannot be appealed any further with the same respondents.  The Commission has noted that the Constitutional Court seems very reluctant to hear competition cases due to their complexity. The case can only be re-appealed if it includes new respondents who were not involved in the initial appeal application.

The Chairperson stated that when the Commission fines a company it must have the capacity to follow up on whether the company being fined is going to be able to pay the fine or not. Therefore, an appropriate structure or unit needs to have already been established to ensure that fines are collected.

She thanked the Commissioner for the work carried out during the year under review, and suggested that the Commission refrains from operating with a deficit. She reiterated Mr Tleane’s remarks that if funding is not available to take on certain projects, the Commission needs to appeal to Treasury for additional funding, otherwise it must halt those projects until money is available to tackle them.

The meeting was adjourned.