Competition Amendment Bill: deliberations

Meeting report

The Chairperson welcomed everyone to the second day of the clause-by-clause deliberations on the Competition Bill. Most of the clauses to be discussed had been deferred from the previous day.

Clause 32

Mr Mbulelo Ruda, Parliamentary Legal Advisor, indicated the clause seeks to amend section 59 of the Act, which regulates the administrative penalties that the Competition Tribunal may impose. He suggested that there be a standalone clause to make provision for the administrator to stipulate a fine more than the one prescribed in section 59.

Mr Sisa Makabeni, State Law Advisor: Office of the Chief State Law Advisor, suggested the inclusion of the procedure to be followed by the Committee in imposing penalties and a provision for the process regulations to be issued by the Competition Tribunal.

The Chairperson said the intent of the provisions should be to prohibit cases of exploitation in cases whereby domestic firms are being taken over by foreign ones. There should be consequences for non-compliance. A higher threshold would act as a deterrent.

Members agreed to the proposed amendment.

Clause 13

Mr Ruda said Clause 13 seeks to insert the new section 18A in the Act. This amendment provides the President the powers to constitute a Committee comprised of Ministers and officials determined, and appointed, by the President with powers to intervene in respect of a merger where the acquiring firm is foreign, and the merger may adversely affect the country’s national security interests. The amendment also provides for the determination of national security interests as well as the issuing of regulations that will govern access to information, including confidential information, and the process, procedures and timeframes associated with the consideration of these kinds of mergers. The Minister is required to publish a notice in the Gazette on any decisions taken by the Committee and to submit the Committee’s report and decisions to the National Assembly.

Mr Irshad Kathrada, Special Advisor to the Minister, said it would be appropriate to have two separate timelines- one for publishing a notice in the Gazette of the decision, and the other for submitting the Committee’s report and decision to the National Assembly. The timeline could be shorter for the gazetting, whereas the one for the Committee’s report may have to be lengthier to ensure it is in an appropriate form, and that any confidentiality concerns were addressed.

Mr Makabeni alerted the Committee to the provisions of the Intelligence Services Oversight Act of 1994 which spoke to the processes in the tabling of the report of the Joint Standing Committee on Intelligence (JSCI). The Committee may, at the request of Parliament, the President or the Minister responsible for each service or at any other time which the Committee deems necessary, furnish Parliament, the President or such Minister with a special report concerning any matter relating to the performance of its functions, and shall table a copy of such report in Parliament or furnish the President and the Minister concerned with copies, as the case may be. Nothing shall be included in any report of the Committee, the inclusion of which will be more harmful to the national security than its exclusion will be to the national interest. Therefore, the Committee would need to decide on which aspects of the report should be redacted and be for public consumption.

The Chairperson said it would be up to the Committee to decide on the processes to be followed in the tabling of the report, guided by legal prescripts. The reasoning was acceptable in terms of section 198 of the Constitution.

Mr Ruda said the notice could be gazetted within 15 to 30 days and then the parliamentary processes would kick in thereafter.

Mr Kathrada said the Department’s preference would be 15 working days following the decision contemplated in subsection (7). However, if 30 days was on the table, the Department would take it.

Members supported the proposed 30 days for gazetting and reporting of the decision as provided for in the clause.

Clause 14

Mr Ruda said clause 14 seeks to amend section 19 of the Act. This amendment provides that the Commission will have at least two Deputy Commissioners. One or more part-time or full-time Deputy Commissioners will be responsible for market inquiries. The amendment was necessitated by the need to increase the capacity of the Commission. There had been no objections from the public.

Members agreed.

Clause 15(b)

Mr Ruda said the amendment seeks to clarify that the Minister must table the report dealing with the substantial matters relating to the purpose of this Act in the National Assembly. The report did not have to be considered by the National Council of Provinces as well.

Members agreed.

Clause 22

Mr Ruda said clause 22 was amended by the addition of the levels of concentration on 43A. There were no objections to this amendment. On subsection (2), dealing with the establishment of adverse effects on competition, business was opposed to the amendment on the basis that the threshold for adverse competition was substantially low. However unions supported the amendment.

Members agreed to the amendments. 

Clause 23

Mr Ruda said the clause seeks to amend section 43B of the Act. The amendments provide that the Commission or the Minister may establish a market inquiry. Concerns, as expressed by the public, were that the amendment would give the Minister too much power. However, the Minister believed he had the obligation to exercise this mandate as a public representative.  

Members concurred with the Minister’s position, and agreed to the amendment.

Clause 25

The proposed new section 43D places a duty on the Commission to remedy structural features identified as having an adverse effect on competition in a market, including the use of divestiture orders. The Commission’s actions must be reasonable and practicable, taking into account relevant factors such as those listed in subsection (4).

Mr Ruda said that business had expressed concern about the additional powers being given to the Commission, arguing that the decision-making should rest with the Tribunal. However, the Minister had explained that the structure and essence of the workings of the Tribunal had not changed. There would be further amendments to ensure the clause’s provisions are read in congruence with section 62C provisions. 

There was no specific objection to the proposed new section 43E.

The proposed section 43G seeks to regulate a person’s participation in, or representations to, the market inquiry. It draws a distinction between participation in the market inquiry and the opportunity to make representations to it. It also empowers the inquiry to solicit information through questionnaires, requests for information and responses to submissions made by the Competition Commission. The Commission must ensure the participation of small and medium businesses which have an interest in the inquiry and are, in the opinion of the Commission, not adequately represented.

Mr S Tleane (ANC) said the proposed section 43G was very important, as it would ensure the adequate representation and participation of small and medium businesses in the relevant processes.

Mr I Pikinini (ANC) said the amendments would enhance administrative efficiency and should thus be agreed to.

Members agreed.

Clause 26 and 27

Mr Ruda indicated clauses 26 and 27 amend the sections of the Act relating to information that is claimed to be confidential and access to information that is confidential. Often disputes relating to the disclosure of information are time consuming and delay the speedy determination of the main matter. The amendments streamline the determination of these issues.

There were no concerns, and Members agreed.

Clause 33

Mr Ruda said the clause seeks to amend section 60 of the Act. These amendments enable divestiture as a remedy following a market inquiry on terms that have regard to the purposes of the Act, with the safeguard that a divestiture remedy can only be imposed by the Tribunal on a recommendation from the Commission. In addition, the parties and the Commission have the right of appeal to the Competition Appeal Court. He added that the provision was meant to encourage competition.

Members agreed to the amendment.  
 
Clause 36

Clause 36 of the Bill seeks to amend section 67 of the Act. Section 67 regulates the prescription of claims. The amendment clarifies the wording of the section so that firms cannot argue that the Commission is unable to investigate the matter because it has prescribed. The Commission must be able to investigate a matter to determine whether it has prescribed.

Members agreed.

Clause 37

Mr Makabeni said Clause 37 of the Bill seeks to amend section 74 of the Act. The amendment increases the fine for offences relating to the administration of the Act from R2 000 to R10 000. The monetary amount was adjusted for inflation over the years.

Clause 38

Clause 38 of the Bill seeks to amend section 79 of the Act. Section 79 concerns guidelines issued by the Commission. The amendments provide for a process of consultation before the guidelines may be published. The amendments require a body interpreting or applying the Act to take the guidelines into account, even though they are not binding.

Clause 39

This amendment empowers the Minister to make regulations concerning the issuing of advisory opinions by the Competition Commission.

Clause 40

This section requires regulatory authorities to negotiate co-operation agreements with the Competition Commission. The amendment extends the issues that must be the subject of this agreement to matters associated with market inquiries.

There were no objections from Members.

Clause 41

This amendment is a transitional provision and provides for the continued applicability of the Commission’s present leniency policy until a new one is published in terms of section 49E of the Act.

Clause 18A (10)

Mr Makabeni proposed that the clause read that the Minister must, within 30 days of the decision contemplated in subsection 7-

• Publish a notice in the gazette of the decision to permit, with conditions, or prohibit the implementation of the merger;
• Inform the National Assembly, in appropriate detail, of the decision.

Members agreed.

The Chairperson sought clarity about the role of Parliament in the appointment of Competition Commissioners.

Mr Ruda said appointments would be made by the Minister after consideration of recommendations by Parliament. 

Mr Pikinini said the deliberations and the amendments as a whole were helpful. They enabled Parliament to be part of the processes as representatives of society.  He added that involvement by Parliament in the appointment of Commissioners by the Minister would ensure collective responsibility.  

The Chairperson said the Committee was satisfied with the amendments thus far, as they were reflective of Committee and stakeholder positions. The Committee would wait for the finalisation of the A list of the Bill before adopting the amendments and the Bill as a whole. The vote on the Bill would be held at the next meeting early October. She thanked everyone for their inputs throughout the deliberations.

The meeting was adjourned.