Competition Commission & Competition Tribunal 2018/19 Annual Report & 2019/20 Quarter 2 Performance

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Trade, Industry and Competition

19 November 2019
Chairperson: Mr D Nkosi (ANC)
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Meeting Summary

Annual Reports 2018/2019

The Competition Commission briefed the Portfolio Committee on its 2019/20 Quarters 1 and 2 performances and the Competition Tribunal presented its 2018/19 Annual Report and the 2019/20 Quarters 1 and 2 Performance Report.

The Committee was informed that it was the 20th anniversary of the Competition Authority which currently employed 218 people, 80% of whom were under the age of 40. There was an increased volume of work and complexity in the investigation and prosecution cases which resulted in a longer timeframe for litigation in the courts and required specialist skills and industry knowledge for some investigations. The total investigation load was 181 investigations in Quarter 1 and 241 investigations in Quarter 2. Litigation amounted to 154 cases in Quarter 1 and 80 cases in Quarter 2.  The Commission had conducted an extensive advocacy consultation process with automotive industry participants following concerns of anti-competitive conduct in the automotive aftermarkets. The Health Market Inquiry had been completed and the final report published and handed to the Minister of Trade and Industry on 30 September 2019. From 2018/19, the Commission had curtailed investigations and other operations in order to reduce the cash deficit from 2017/18.

The Commission had received a clean audit report. Irregular expenditure for the 2017/18 financial year had been reduced and restated following consultation with National Treasury. Before the consultation, irregularities had stood at R128.6 million but that had been reduced to R71.6 million.

Members asked if the state-sponsored ArcelorMittal South Africa continued to enjoy a monopoly over the steel industry. What cases had been brought against ArcelorMittal South Africa? Members asked about the standard base option for medical aids and if that would that not take away from the benefits of medical aid. How could the Commission be aiming for competition but wanting to standardise plans? The performance targets against cartels were a concern for Members. How did the Commission quantify saving jobs?

Members asked if clients were informed that contracts were no longer valid when a cartel lost a case. How much longer was the banking case going to take? Had any recommendations made by the Competition Commission been ignored, especially by government? Had the Competition Commission investigated insurance companies? What measures could be implemented to assist small businesses while cases were in progress? What progress was there in dealing with dominance in the fishing industry?

The Committee was informed that a new Chairperson of the Competition Tribunal had been appointed in August 2019.  Highlights of the previous year included the hearing of 215 matters and the prohibition of two large mergers.  Eight of the 22 mergers applied for were approved subject to conditions, and public interest conditions were imposed on the merged companies. The highest administrative penalty levied was against Kawasaki Kisen Kaisha and amounted to R98.9 million. 94% of the penalties imposed were for cartel cases and 96% of prohibited practice cases involved cartel behaviour. Challenges existed in the time taken to set down matters and to issue reasons following merger cases. The main reason was that the four full time staff tasked with writing the reasons were simply too few to keep up with the body of work.

All of the six targets addressing the Annual Audit outcomes and compliance with annual financial statements had been met. The Tribunal had received a clean audit for the year ending in March 2019, the third in a row. The Tribunal had been awarded a trophy by the Auditor-General for the year ending 2018. The Tribunal had adopted a fraud prevention plan and appointed a fraud prevention committee. The Tribunal required that all employees sign an anti-fraud statement confirming their commitment to the Tribunal’s policy of zero tolerance to fraud.

Members asked who benefited where fines were collected as a result of anti-competitive behaviour . Had some thought not been given to the application of the common law of retribution? What measures had the Tribunal taken to deal with the time that it took to come to a conclusion of a case? Was there a plan to reduce the turnaround time as cases were taking far too long? What did the Tribunal do if part-time members were not available? Was there a strategy for acquiring full-time members? How did the B-BBEE policies influence the adjudication of cases?

The Chairperson informed Members that the Committee would not be proceeding with the appointment of a Chairperson of the National Lotteries Commission.

Meeting report

Committee Minutes
The minutes of 17, 18 September 2019 were confirmed as a true reflection of the meetings and were adopted without amendments by the Committee.

Mr W Thring (ACDP) referred to the minutes dated 18 September and asked what the process was going forward following the completion of the skills assessment form.

The Chairperson promised to find out.

The minutes of 23 October 2019 were confirmed as a true reflection of the meeting, and were adopted, with technical amendments, by the Committee.

Ms J Hermans (ANC) said that the responses received should be added as an addendum to the minutes so that they were on the record.

The Chairperson suggested that it was not necessary to attach the answers to the minutes as they would just be made available.

Ms Hermans replied that the Secretary should advise as to procedure as she wanted the response recorded.

The minutes of 12 November 2019 were confirmed as a true reflection of the meeting and were adopted, with technical amendments, by the Committee.

The minutes of 13 November 2019 were withdrawn.

Briefing by the Competition Commission (CC)
Mr Hardin Ratshisusu, Deputy Commissioner, CC, apologised for the absence of the Commissioner, Mr Tembinkosi Bonakele, who was in London on business.

Mr Ratshisusu said a highlight of the year was the celebration of the 20th anniversary of the Competition Authority. A Memoranda of Understanding had been concluded with the Independent Communications Authority of South Africa (ICASA) and with the Zimbabwe Competition and Tariff Competition.

The Commission employed 218 people, 80% of whom were under the age of 40. Female representation was 55.2% of the staff [In his oral presentation, the Deputy Commissioner stated 55% males but the correct figure is 55% females as per the presentation document]. The Commission had met 13 out of 16 targets in Quarter 1, and 16 out of 20 targets in Quarter 2. There was an increased volume of work and complexity in the investigation and prosecution cases and a longer timeframe for litigation in the courts. Specialist skills and industry knowledge were required for some investigations. The total investigation load was 181 investigations in Quarter 1, and 241 investigations in Quarter 2. Litigation amounted to 154 cases in Quarter 1, and 80 cases in Quarter 2.

The Commission had conducted an extensive advocacy consultation process with automotive industry participants following concerns of anti-competitive conduct in the automotive aftermarkets. There was a need to open up the market, transform and encourage increased participation of SMMEs and historically disadvantaged individuals (HDIs) in the sector. The Commission had drafted a Code of Conduct for Competition in the SA Automotive Industry. The Commission had been engaging stakeholders, including the National Association of Automobile Manufacturers of South Africa (NAAMSA), in a final effort to reach resolution to the issues in the sector.

The Health Market Inquiry (HMI) had been completed and the final report published and handed to the Minister of Trade and Industry on 30 September 2019. The inquiry revealed that the private healthcare market was characterized by highly concentrated funders and facilities markets, disempowered and uninformed consumers, an absence of value-based purchasing, little regulation of practitioners as well as accountability failures. Several recommendations were made to promote systemic change.

Financial Overview
The Commission had received a clean audit report. Irregular expenditure for the 2017/18 financial year had been reduced and restated following consultation with National Treasury. Before the consultation, irregularities had stood at R128.6 million but that had been reduced to R71.6 million.

Over the years, the Commission had used surpluses from the previous financial years to fund its operations. From 2016/17, the surplus had been depleted. As a result, the Commission had overspent its budget in the 2017/18 financial year. From 2018/19, the Commission had curtailed investigations and other operations in order to reduce the cash deficit from 2017/18. The Commission recorded an operating surplus of R24.3 million in 2017/18, which was an improvement on the two previous financial years where the Commission had recorded financial deficits. R18 million was set aside towards repaying the deficit. The current deficit was R36.8 million.

Certain aspects of the new expanded mandate in the Competition Amendment Act would only be implemented from the commencement of the new financial year.

Discussion
Mr M Cuthbert (DA) noted that the Commission had done some work in the steel industry but state-sponsored AMSA (ArcelorMittal South Africa) continued to enjoy a monopoly over the steel industry. What cases had been brought against AMSA? Concerning the standard base option for medical aids, he asked if that would that not take away from the benefits of medical aid? The Commission was aiming for competition but wanted to standardise plans.

Mr Thring referred to the slide on the equity ratio and the Deputy Commissioner’s comments that there were more males than females in the Commission. Was the presentation wrong?

Mr Thring said he had fought against racial classification and yet 25 years into democracy, the Competition Commission was still setting racial targets.

Mr Thring was concerned about the performance targets against cartels. The Commission had targeted 12 cases but there were 110 cases in litigation. Cartels wanted to keep the prices high but the Commission had only managed to deal with 12 in two quarters. That was not nearly enough. 43 321 jobs had been saved, but how did the Commission quantify saving jobs?

He asked how, after successful cases against collusion, such as the one against Murray and Roberts, did the Commission follow up to ensure that decisions had been implemented? In respect of the Computicket case, did the decision by the Tribunal result in the actual release of clients who had been contracted to Computicket and were the clients informed that the contract was no longer valid? The case against the banks had been nearing an end in 2017 but now the Committee was told that there were still months to go. How much longer was the case going to take? If banks had been getting away with anti-competitive behaviour, money was being lost. The sooner that case was resolved, the better.

Ms Y Yako (EFF) requested a report on enquiries that the Competition Commission had investigated. Had any recommendations made by the Competition Commission been ignored, especially by government?
Had the lives of the Commission staff been threatened? Did they have the backing of SAPS? On currency litigation, she noted that the Minister of Finance had said that his investigation found no manipulation. Had the Competition Commission investigated insurances? She was aware that the CEO of MiWay Insurance sat on the Board of Santam. Could the Competition Commission investigate on her behalf?

M N Motaung (ANC) asked for an update on dominance in fishing industry, especially in the Western Cape. Could she receive an update on the Amendment to the Competition Act signed earlier that year? Was the number of females in the Commission under 50%? Could the Commissioner confirm those statistics? What was the Competition Commission going to do regarding SMME in provinces where it did not have offices?

Mr S Mbuyane (ANC) noted that competition cases were prolonged and small businesses suffered. What measures could be implemented to assist small businesses while cases were in progress? He noted the state of competition in the healthcare sector and the high rate of failures in the industry. Hospital licences were controlled by few in the industry. Was that being addressed? Regarding the three-point plan, what did the Competition Commission plan to do going forward?

Mr Mbuyane noted that the awareness programme was concentrated in the big cities in Gauteng. What about other provinces? In respect of the Forex case, he asked if there was no instrument to force banks to cooperate because they were obviously not cooperating. He was pleased that the healthcare market inquiry had been completed as there were so many fraudulent cases in that industry.

Ms Hermans noted that the disability figures in the Commission were below target. Were they working on the targets? She asked for an update on the dominance in the fishing industry. Subsistence and local fisherman were finding it hard to make a living. She noted the outsourcing by the Commission and asked if there were plans for insourcing?

Ms Khanyisa Qobo, Divisional Manager: Advocacy and Public Affairs, CC, addressed the fishing question and said that the Commission worked with the previous Department of Agriculture, Forestry and Fisheries (now called Department of Environment, Forestry and Fisheries) and one of the issues had been the lack of participation of HDIs and SMMEs. The Commission was aware that the licensing policy should be adapted to favour the HDIs and SMMEs. The new policy had been implemented and the Commission was comfortable that it gave due consideration to the HDIs and SMMEs.

Concerning education and awareness, Ms Qobo explained that structured dialogues were held with organised business and organised labour. The Commission had engaged with the groups in a structured manner on a particular theme. It had been a sectoral-driven engagement.  The Commission made a point of reaching the user groups in a particular case, e.g. public transport and in the case about supermarkets, the Commission had gone to spaza shops and the agro-processing sector as they had an interest in land and economic participation. Sectoral driven advocacy was utilised, for example, when she and her team met small scale farmers.

Ms Qobo stated that the Commission made use of the media, especially the radio where they were able to use the vernacular, and television. The team went to malls, etc. and held exhibitions. All material was written in plain language so that stakeholders could engage with the Commission. The Commission had produced pamphlets for parents on school uniforms during the school uniform case. Advocacy was directed towards targeted groups.

Mr Amos Moledi, CFO, CC, acknowledged that the Commission was still paying back the deficit. It would take three years to pay back but expenditure was under control and the budget included R18 million in the current year to pay back the deficit. The deficit was down to R36.8 million.
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Mr Makgale Mohlala, Divisional Manager: Mergers and Acquisitions, CC, explained that only 12 cases had been finalized as it was the same team investigating and prosecuting for the Tribunal. The budget had been significantly reduced so the Commission had had to insource and take the investigators away from investigation to prosecute and that was a demanding job which limited the Commission’s ability to investigate cases. Some cases had been affected by capacity constraints. One had also to look at what had been finalised at the litigations stage, which was again the same team. He pointed out that the Commission was currently focused on litigation as it did not help to keep bringing in more cases that were not being finalised.

Regarding the timelines on the banking inquiry, he could not say when it would be finalised as it had been referred to the Competition Tribunal. Banks had challenged the Tribunal saying that there was no case. The Tribunal had determined that there was a case to answer and the Commission had been requested to amplify the details of the case. The banks had taken the case to court and the case would be heard in the Competition Appeal Court on 12 and 13 December, after which there would be a decision as to whether there was a case for banks to answer or not. The Commission disagreed with the Tribunal as there were problems and some of the banks had settled the matter overseas. The Commission had evidence of manipulation. The Commission did not have jurisdiction over those banks that did not have offices in SA, but it believed that even though the banks might not have offices, because the manipulation had an effect on the SA economy, there was jurisdiction in the case. There were no treaties addressing the issue. The banks were presenting their case even while protesting that the Competition Commission did not have jurisdiction over banks.

Regarding the insurance sector, Mr Mohlala informed Ms Yako that the Commission had been watching the sector but was not yet sure what was going on. The Commission was planning to launch an investigation as soon as it was ready.

Mr Andile Gwabeni, Divisional Manager: Human Capital, CC, agreed that the percentage of people with a disability stood at only 1.7% disability. The target was 2% and the Commission was looking at ways to attract people with disabilities. Regarding the gender split, he confirmed that 55% of the staff complement at the Commission was female.

Concerning insourcing, Mr Gwabeni explained that a new organisational structure had been approved in 2018. The new structure would be able to develop the capacity to take on the bulk of the work, i.e. insource the work. However, the structure had not been funded and so the Commission had no alternative but to outsource some of the work. As far as learning and development was concerned, the Commission had an internal academy designed to develop the skills of professionals. The Commission had reined in on expenditure and looked to improve learning and development within the Commission.

Mr Ratshisusu, responded to the question on the impact on monopolies by explaining that the Competition Act covered all institutions in the country except government departments. State-owned enterprises fell under the Competition Act. The largest penalty administered to that stage was against ABSA in the amount of R1.5 billion. He added that one of the reasons that SAA was struggling was that it had faced a damages claim of R1 billion from a competitor following a finding of uncompetitive behaviour. There had been successful cases against Telkom and other state-owned enterprises. The Commission had tried to make a case against Sasol but had failed.

In response to the question about medical aid schemes, Mr Ratshisusu explained that when one took medical aid cover, one could not compare schemes because there were hundreds of variations. The public needed a base cover so that comparisons could be made and competition was possible. Some medical aids had over 250 packages. One needed to know exactly what was being compared in a medical aid scheme. From the base point, medical aid schemes could offer a variety of packages. Currently consumers were simply unable to compare medical aid packages as there were too many variables.

He admitted that there were more females in the organisation. Perhaps it was his desire to emphasise that the Commission was doing well in that field that had caused him to misspeak in the presentation and say that there were more males. Regarding the classification of employees according to race, the Commission was simply adhering to the employment equity statute and so it had to categorise staff as per the Department of Labour requirements of race.

Mr Ratshisusu informed the Committee that the classification of jobs saved was derived from looking at mergers and determining how many jobs were saved by allowing a merger to take place. The decision regarding a merger was sometimes determined based simply on the number of jobs that could be saved. For example, when Edgars was about to collapse, the Commission put more weight on public interest as 39 000 jobs were on the line. Mergers were not the only thing that led to job losses but they could have a major impact on job losses. The merger in the platinum sector had cost over 10 000 jobs.

He added that the Commission did follow up on cases and ensured that the judgement was implemented. All contracts became null and void if a company lost a case and that would have been the case following the Computicket judgement. He informed Mr Mulder that there were reports on the cases, and that one achievement had been the banking product for the poor and the elimination of certain bank charges.

Were lives threatened? The Deputy Commissioner stated that no one had laid a case with SAPS. However, when the Commission needed to conduct a raid, it asked the police to assist and cooperation was good. Personal risk was an ongoing matter that was being addressed. In respect of the banks, they had not yet been found guilty as the case was still before the Tribunal. The implementation of the amended Act would be addressed in full once measures had been put in place. The Minister had published regulations and the Commission had drafted rules to support the implementation of those regulations. The Amendments meant that the Commission needed to change all forms, etc. but the Commission was working on that in conjunction with the dti. In many respects, the Act was already in force.

He added that some legal processes meant that cases could take 10 years. Large companies usually chose to defend themselves and the Commission could not stop the legal challenges. In the future, perhaps the Commission could request certain amendments to the policy that might limit challenges. The healthcare market inquiry, following a panel investigation under Chief Justice Sandile Ngcobo (retired) had found that there was no competition. The market had failed. Consumers were weak because they could not choose when ill and in hospital. The medical aid schemes were also struggling with large hospitals. There were regulatory failures. In affluent suburbs there were three or four private hospitals but competition had not worked.

The Chairperson asked that the Competition Commission to follow up with written responses.

Ms Yako stated that the response about insurance would not be accepted by her constituency. She wanted a better response as her party would be taking up the matter. The CEO of MiWay sat on the Board of Santam. That could not be right. She wanted an answer in writing as to when the Commission would be taking up the matter of non-competitiveness in the insurance industry.

Ms Motaung reminded the Chairperson that she had asked the Commission about offices in areas other than Gauteng and about advocacy campaigns.

Mr Mbuyane requested a written response on the healthcare market inquiry. To simply say that the health care system had failed was not acceptable. What about the tobacco scene? What was happening there?
Business contracts, cleaning contracts, etc. were all areas that had to be added in the public interest.

Ms Hermans congratulated the Commission on the employment of 55% females but she wanted to know the percentage of women in senior management.

Mr Mulder had heard about investigations into the private health care system but it was actually a political issue. The government was responsible for the public health sector but it had failed and, consequently, the private sector had failed and needed to be addressed, but the monopoly was in the public sector and that had to be addressed.

The Chairperson asked the Deputy Commissioner to conclude and then to provide written responses.

The Deputy Commissioner explained that he had started the presentation by saying that the Commission was prioritising as there were too many issues, but the Commission would prioritise insurance in the next five years. The Commission had 20 people working on advocacy from the single office in Gauteng. The Commission also piggy-backed on other outreach programmes but he agreed that it could do more. In the current environment of fiscal constraint, the Commission simply could not ask for money for offices and so it would have to do more with what it had. He pointed out that the responses to the questions asked were in the report that had been presented to the Committee and to Parliament.

The Deputy Commissioner thanked the Committee and appreciated the feedback from the Members.

The Chairperson noted that the Minister had engaged with stakeholders on the Competition Amendment Act and had received written responses from that engagement that morning.

Briefing by Competition Tribunal (CT)
Ms Mondo Mazwai, Chairperson, CT, was accompanied by the Chief Operating Officer, Janeen de Klerk and the Head of Registry Tebogo Mputle. She acknowledged her predecessor for handing over a well-run Tribunal.

Ms Mazwai informed the Committee that she had been in office for just over three months. She presented highlights of the Competition Tribunal from the Annual Integrated Report. The highlights of adjudication were the hearing of 215 matters and the prohibition of two large mergers.  21.57% of mergers were approved subject to conditions, and public interest conditions were imposed on eight of the 22 mergers applied for. The highest administrative penalty levied was against Kawasaki Kisen Kaisha and amounted to R98.9 million. 93.7% of the penalties imposed were for cartel cases and 95.9% of prohibited practice cases involved cartel behaviour. All of the six targets addressing the Annual Audit outcomes and compliance with annual financial statements had been met. The target relating to maintaining and implementing the case management internship programme had also been met.

Challenges existed in the time taken to set down matters and to issue reasons following merger cases. The main reason being that the four full time staff tasked with writing the reasons were simply too few to keep up with the body of work. Media releases were also not always issued within two days.

Financial overview
The Tribunal had received a clean audit for the year ending in March 2019, the third in a row. The Tribunal had been awarded a trophy by the Auditor-General for the year ending 2018. The Tribunal had adopted a fraud prevention plan and appointed a fraud prevention committee. The Tribunal required that all employees sign an anti-fraud statement confirming their commitment to the Tribunal’s policy of zero tolerance to fraud.

From the R55 million budget, R27 million had been spent on the investigations. Income was derived from government grants (65%), filing fees (32.7%) and other income (1.98%). National Treasury had approved the retention of accumulated cash surpluses to fund shortfalls anticipated in the 2019/20 budget.

Highlights of First and Second Quarters 2019/20
89 matters were heard over 73 hearings days. The cost of the adjudicative process had been R1.98 million. Penalties had totaled R37.5 million. 64 orders had been issued, including 14 consent orders/settlements.

The Competition Amendment Act had been implemented in July 2019. It would substantially increase the mandate of the Tribunal in terms of volume and complexity of cases but it allowed for an increase in the number of members from 11 to 15 and gave the Minister the power to appoint acting part-time members. The budgetary impact was expected to be R9 million over three years.

Current challenges were funding and capacity shortage, although a recruitment process was underway.
 
Discussion
Mr Thring suggested that if the risk and fraud prevention committees moved to Eskom, SAA, Denel and so on, there might be a turnaround. He congratulated the Tribunal on these committees.

Mr Thring asked, in respect of the common law of retribution (lex talionis), who benefited when fines were collected following anti-competitive behaviour. In almost all of the cases, the benefit did not go to the persons who had suffered the most as a result of the anti-competitive behaviour of the cartels. Had some thought not been given to the application of the common law of retribution? He asked what measures the Tribunal had to deal with the time that it took to come to a conclusion of a case. The Computicket case had taken ten years. Small businesses struggling to keep a business afloat would be prosecuted very quickly and it seemed that those who had deep pockets were the ones who could string things out. What measures, if any, had been put in place to turn things around? Effective judgement was swift and not delayed.

Mr Mbuyane congratulated the Tribunal Chairperson on her appointment. He asked how the cartels got involved in the waste and sewerage businesses? How did the B-BBEE policies influence the adjudication of cases? Was there a plan to reduce the turnaround time for cases as they took too long? He thought that maybe the appointment of Tribunal members would assist in the processing of cases. What did the Tribunal do if part-time members were not available? Was there a strategy for acquiring full-time members?

Mr Mulder commended the Tribunal on the work done. Perhaps the Tribunal should replace the government.
The Annual Report of the Tribunal noted that SA had a market-based economy supported by regulations, but the government often interfered with the market. In how many cases was government interference the reason for acting? Were there any cases of government officials being involved?

The Chairperson asked to what extent did the penalties imposed constitute a constant stream of resources. He encouraged the Tribunal to engage with National Treasury because perhaps the penalties could contribute secure resources to the Tribunal. The issue of the relationship with schools and universities was important as they could be used as an opportunity for extending the awareness and education programmes and help with issues relating to capacity. A more structured relationship with schools and universities could ensure that there was a constant inflow of capacity and skills from people in those institutions.

Ms Motaung asked who was responsible for the appointment of part-time Tribunal members. Would their unavailability not lead to underperformance? According to their contract, how many times were they required to work per month or quarter as she had a problem with the tribunal not getting its work done.

Ms Mazwai responded that the fines went to National Treasury and not to the Tribunal. The Tribunal had no share of penalties. Regarding the question of retribution, a damages claim could be brought by any companies harmed in non-competitive activities. That was a measure that had worked in some instances, but mainly for business entities. Part of the problems of SAA was that a competitor had been awarded a damages claim after the Tribunal had found SAA uncompetitive. The avenue existed and, although it was not widely used, it was available under the Act. The second retributive issue, in addition to administrative penalties, was that firms found guilty had been asked to create a fund that would go to people affected. e.g. the fund set up by the bread cartel. It required creativity in reaching the people who needed retribution.

Ms Mazwai responded to the question from Mr Mbuyane about measures to speed up the processes. He had mentioned Computicket. In that particular case, there had been matters of law and so the case had gone back to the Commission and it had subsequently gone to the Court of Appeal against the Tribunal decision. It was the right of those people to approach the courts and they exercised their rights when they disagreed.  Long cases were usually matters out of the control of the Tribunal because they were matters of law, but the Tribunal had a case management system that monitored cases well. The Tribunal had set targets for completing cases and monitored against those targets to ensure that they kept on track. Staff could see how fast or how slowly cases were progressing. She noted that the Tribunal did have problems regarding the number of members that it had.

Appointments were made through the Minister who had to apply to the President and such appointments had to go through Cabinet. Since her assumption of office, Ms Mazwai had made a request for new members and the Tribunal was in discussion with the Minister about part-time members. It was a process that required balance in terms of diversity of staff and the required skills sets and so it was not easy to find the right candidates to do the job. Part-time members were academics who were professors and had a day job. Some of the part-time members were lawyers in private practice. Those appointments were also made by the President. The part-time members gave dates in advance but it did not always match the date that the parties were available. It remained an ongoing challenge to manage times. The four full-time members did a lot of writing of reasons because the part-timers were not able to do that.

In response to Mr Mbuyane’s question about how waste management and sewerage companies got involved in price-fixing, Ms Maswai referred to the case of Enviroserv which was a competitor of Wasteman. The business involved management services and it owned a landfill site at Vissershoek in Cape Town. Enviroserv also collected waste which it dumped in its landfill. The company became a cartel when it fixed prices on the dumping of waste on the landfill site because there were joint venture parties. The company fixed prices upstream because their prices impacted on the cost of waste management services.

Ms Maswai responded to the question about market-based economy. The Competition Act was underpinned by the market-based economy but the Tribunal was required, in terms of the Act, to balance that economy against the public interest.

She had not understood Mr Mulder’s question.

Mr Mulder asked if organs or officials of the state had been found to be interfering to the extent that she had had to investigate.

Ms Maswai was not aware of any such interference. Responding to the comments on schools and universities, she said that the Tribunal had an informal arrangement with the universities and interns came from that understanding.

The Chairperson said that the Commission and the Tribunal should have better communication. He believed that that some companies would note exactly what the Commission picked up and then use that information against the Tribunal. Were the two entities working well together? Was there clear communication between the two? If there was a good working relationship between the two entities, it would reduce the exposure of those who came through the system. Companies coming through the system would try to undermine one or the other entity because cases moved from one entity to the other.

Mr Mbuyane stated that Ms Maswai had not responded to the issue of the B-BBEE policy in responding to cases. What percentage had those companies paid because they just budgeted to pay the 10% fine. Some companies simply paid up as it was a strategy.

Ms Maswai pointed out that the legislative mandate required the Tribunal to look at B-BBEE policy. In mergers and acquisitions, the Tribunal looked into small businesses, etc. and some of the reasons for preventing mergers were because of public interest, which was often B-BBEE businesses. She had mentioned the case involving steel drums which had been a merger between a steel drum manufacturer who wished was going to become a monopoly and that would have been an issue for the B-BBEE businesses. The Tribunal looked at matters on a case-by-case basis.10% was the maximum fine that could be imposed but a second offence could attract a higher fine.

The relationship between the Commission and the Tribunal was good. There had been some staff movement between the two entities but a person who moved to the Tribunal could not work on a case that he or she had previously worked on. That was to prevent contamination. The case management system ensured that people did not work on cases where they might be conflicted. The relationship was good and the two entities collaborated where they could. For example, they had managed a law conference together recently, but they could not discuss cases.

Mr Ratshisusu agreed that the entities could not communicate on cases. On other issues, they worked collaboratively, for example, on conferences or international issues. The Tribunal was a court and the Commission was a prosecutor so they could not collaborate on cases. Sometimes the Commission wanted cases to move faster but there were processes of law that had to run their course. He agreed that they could support academia to develop Competition Law courses and both entities could collaborate on those issues.

Mr Ratshisusu pointed out that most of the stakeholders were businesses and lawyers. He had to be very careful but there was a sense that legal challenges were made because the stakeholders did not trust the system and businesses believed that they would get a better ruling elsewhere. The default position was that if they lost a case, to appeal, appeal, appeal and likewise to defend, defend, defend. The Commission and the Tribunal responded by ensuring that there was a robust engagement. In addition, the new Amendment Act had increased the penalty for second offences.  He thought that the new figure was about 25%. The system had found widespread approval internationally but the lack of trust remained internally. The Commission sometimes believed that it was working well with a company but when they got to the Tribunal, the attitude changed and the companies appealed to every court. He believed that the system was doing very well, despite attempts to undermine it.

Closing remarks
The Chairperson concluded the session by reminding Members that on the following Tuesday, the Committee would be engaging with the NRCS and SABS in respect of their turnaround strategies.

He thanked the Chairperson of the Tribunal for her presentation.

Ms Maswai thanked the Members for the opportunity to present the report. She said that the questions had been enlightening and she looked forward to working with the Committee for the next five years.

Closing remarks
The Chairperson thanked members of the Competition Commission and the Tribunal. He thanked Members for their participation.

The meeting was adjourned.

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