Implementation of Competition Act; COVID-19 investigations and cases: Competition Commission & Tribunal

This premium content has been made freely available

Trade, Industry and Competition

20 October 2020
Chairperson: Mr D Nkosi (ANC)
Share this page:

Meeting Summary

Video: Portfolio Committee on Trade and Industry (National Assembly) 20 Oct 2020

The Portfolio Committee on Trade and Industry met with the Department of Trade, Industry and Competition, the Competition Commission and the Competition Tribunal on a virtual platform for a briefing on the implementation of the Competition Amendment Act (2018) and investigations and cases relating to the Covid-19 pandemic.

The Committee was informed that the Competition Act was substantially amended in 2018, especially in respect of dominant buyers and sellers and the effect they have in impeding the effective participation of SMMEs and firms of historically disadvantaged persons. The Amendment also gave the Minister powers to issue Notices in terms of Block Exemptions and against price gouging, both of which proved important during the fight against the pandemic.

The new Act also allowed for a much stricter penalty for a second offence in respect of cartels and prohibited practices. The Act contained two caps for an administrative penalty:10% of annual turnover for first contravention, and 25% of annual turnover for repeat conduct. The long-term exclusive agreements held by Shoprite Checkers and Pick ‘n Pay in shopping centres that disallowed competition in shopping centres, had been done away following extensive negotiations. 1 734 complaints and tip-offs had been received during the Covid-19 lockdown. The Dischem mark-up of masks was excessive but Dischem had since settled. One other firm had hiked the prices of masks by 592% in the first month and 987% in the second month of the pandemic. The Competition Commission ensured that corrective measures were put in place and that excessive profits were paid into the Solidarity Fund or other charities.

The Commission noted that the panic buying at the commencement of the Covid-19 lockdown had caused prices to rocket across the country. The Eastern Cape, in particular, had higher prices but transport was not always a factor in varying prices as apples grown in the Western Cape were more expensive in the Western Cape than in other parts of the country. Farmers were paid less for their products, but retail prices had risen substantially. It had also been established that it was not a myth that prices were quick to rise but very slow to come down.

1 734 complaints and tip-offs had been received during the Covid-19 lockdown, which was a greater number of complaints than usually received in a full year, and related mainly to masks, protective gear and certain food items.

Members had a number of questions. How did the Competition Act protect South African businesses and historically disadvantaged persons, especially against foreign traders? What was being done to address the weaknesses in dealing with monopolies? Was the requirement of a 20% price reduction for over-priced goods based on the original price or the increased price?

Members required an update on dominance in the fishery industry. What was the situation in respect of the state of competition in the private health care sector? How did B-BBEE policies influence the decisions of the Tribunal? Were there any examples of reported collusion? What was the outcome of the investigation into the ginger price rise?

How would the Commission manage the appointment of two Deputy Commissioners in the light of the contraction of budgets?
 

Meeting report

Opening Remarks
The Chairperson greeted the Committee Members and everyone who was connected on the online platform.

The Secretary confirmed that the meeting was quorate and representative. He presented the agenda.

The Chairperson welcomed Dr Molefe Pule, Deputy Director-General, Strategy, Monitoring & Evaluation and Operations Professional, dtic, and his colleagues from the Competition Commission and the Competition Tribunal.

Update on the implementation of the Competition Amendment Act, 2018
Dr Molefe Pule led the Department of Trade, Industry and Competition (dtic) delegation which included Tembinkosi Bonakele, Commissioner of the Competition Commission (CC), Hardin Ratshisusu, Deputy Commissioner, CC, and Ms Mondo Mazwai, Chairperson, Competition Tribunal (CT). He said that he might call on other members of the Commission if the need arose.

Dr Pule explained that the Competition Act had been substantially amended in 2018 with the promulgation of the Competition Amendment Act, 2018. Various sections of the Amendment Act were promulgated relating to: buyer power - section 8; regulations and price discrimination - section 9; regulations and COVID block exemptions - section 10(10); foreign acquiring firms - section 18A.

Section 8(4)(a) prohibits a dominant buyer from imposing unfair prices or trading conditions on SMMEs and HDP (historically disadvantaged persons) firms, and S9(1)(a)(ii) prohibits price discrimination by dominant sellers if it is likely to have the effect of impeding the effective participation of SMMEs and HDP firms.

The dtic Minister, in consultation with the Competition and Trade Authorities, published government notices relating to Block Exemptions which enabled the Competition Commission and Tribunal to undertake work on price gouging. The Minister also announced COVID-19 block exemptions for the healthcare sector, the banking sector, the retail property sector and the hotel industry in 2020.

(See Presentation)

Briefing by the Competition Commission and the Competition Tribunal
Tembinkosi Bonakele, Commissioner of the Competition Commission (CC), made a presentation on the implementation of the Competition Amendment Act.

Mr Bonakele informed the Committee that the original Competition Act of 1998 had been hugely successful.  For the past 20 years, competition authorities have successfully dismantled cartels in many markets, including cement, construction, steel and food, levying fines of over R7 billion and establishing funds to support small firms in some of the affected markets. However, the CC had not been successful in reigning in dominance by certain cartels. That had led to the Amendment to the Act in 2018 which addressed, very specifically, the high levels of economic concentration in the economy and the skewed ownership profile of the economy.

The Act specifically did away with section 4(a)(1) that had simply warned cartels of their behaviour. The new Act also allowed for a much stricter penalty for a second offence. The Act contained two caps for an administrative penalty which applied to all prohibited practices:10%of annual turnover for first contravention, and 25% for repeat conduct.

SA had had huge debates about excessive pricing and that section of the Act had been rewritten. A new feature of the Amended Act was price discrimination against smaller businesses which tended to be the usual victims of price discrimination. ‘Abuse of Dominance’ was clearly defined and there was a shift in the burden of proof to the dominant firm to show that a price was “reasonable” if there were a prima facie case of excessive pricing. Another major change allowed the Minister to declare block exemptions and those powers had been effectively used in addressing the crisis of Covid-19.

Market inquiries had been boosted by section 43 to make market inquiries enforceable. The long-term exclusive agreements held by Shoprite Checkers and Pick ‘n Pay in shopping centres that had disallowed competition in shopping centres, had been done away with.

The impact of the expanded mandate on operations could be seen in the changes to the Commission’s operations which had an expanded mandate with a significant impact on workload and expenditure versus budget. The Commission continued to receive an increasing number of cases, despite prioritised areas of focus. However, the impact on the Commission’s workload could mean that some of the work pertaining to the amendments might not be fully realised.

(See Presentation)

Covid-related Cases before the Competition Commission
Block exemptions were immediately put in place to enable SA to source supplies and arrangements were made for the Tribunal to hear Covid-related cases on an urgent basis. The Minister of Trade, Industry and Competition published regulations addressing price gouging in terms of the excessive pricing provisions of the Competition Act.

1 734 complaints and tip-offs had been received during the Covid-19 lockdown, which was a greater number of complaints than usually received in a full year, and related mainly to masks, protective gear and certain food items. The Commissioner had made it clear that the Act did not allow the CC to investigate micro-enterprises that had profiteered in selling masks and protective equipment as a firm had to have a minimum threshold of a R5 million turnover to be accused of dominance.

The Dischem mark-up of masks was excessive and the penalty against Dischem had been appealed but while the CC had been awaiting the outcome of a review, Dischem since settled. The intention of the Commission, throughout the pandemic, had been to ensure that corrective measures were put in place and that excessive profits were paid into the Solidarity Fund or other charities. (See Competition Commission Media Releases on latest decision).

The CC had since changed its focus to PPE procurement by the public sector and the excessive prices charged. Two cases had been referred to the Tribunal. The Auditor-General had also been involved in identifying cases of overcharging. The Commissioner commented that he would have expected the public sector to protect itself

Mr James Hodge, Chief Economist, CC, stated that the panic buying at the commencement of the Covid-19 lockdown, had caused prices to rocket. Guidelines were sent to companies regarding the CC’s approach to pricing increases. There were significant price increases in the wholesale market and the 1 734 complaints showed that pricing had varied considerably across the country. The Eastern Cape, in particular, had higher prices. It would be expected that transportation costs would be responsible for higher prices in outlying provinces but, for example, although apples were grown in the Western Cape, they were more expensive in the Western Cape than in other parts of the country. Farmers had complained that they were being paid less for their products, but the retail prices for the same goods had risen substantially. It had been established that it was not a myth that prices were quick to rise but very slow to come down.

(See Presentation)

Covid-related Cases before the Competition Tribunal (CT)
Ms Mondo Mazwai, Chairperson, CT, stated that initially during Covid-19, staff had been requested to work from home and cases were heard virtually. 87 cases had been heard during March to September 2020. 45% of the work had been Covid-19-related cases. On the one hand, merger filings reduced as economic activity slowed, and on the other hand there was a spike in consent orders. Most of those concerned the excessive pricing of personal protective equipment (PPEs) and essential foods. Penalties in the amount of R8.3 million had been imposed. That did not include the amounts donated to the Consolidation Fund or charities.

The case against Babelegi Workwear was contested because it had stated that it was not a dominant firm and therefore could not be found guilty in terms of the Act, despite the 592% and 987% increases in the first two months of the pandemic. However, the restrictions issued by the Minister had not permitted such increases because the firm had dominated the market at that particular time. The company was penalised by R76 000. The company had appealed and the judgement was awaited. The second case was the Dischem case. There were two cases pending in relation to companies that had supplied the South African Police Service (SAPS).

Ms Mazwai discussed other cases that the Tribunal had heard. She indicated that the cases relating to mergers had resulted in the saving of a large number of jobs.

(See Presentation)

Discussion
The Chairperson thanked the presenters for their input.

Mr W Thring (ACDP) appreciated the work done by the Department, the CC and the CT. Some of the presentations did not tally with the presentations that had been sent to Members prior to the meeting. He requested that Members be sent copies of the missing slides or complete presentations.

Mr Thring had found during his country-wide travels that many SMMEs were owned by foreigners and not South African nationals and the employees were also not South African nationals. That worked against historically disadvantaged South Africans and local business. How did the Act protect SA businesses and historically disadvantaged persons? Some of the foreigners were in the country legally, but many were in the country illegally and the majority of the goods sold in those shops were illegal imports.

He noted that the Commissioner had stated that one of the weaknesses of the Competition Act was in dealing with monopolies. Those conglomerates could more properly be called oligopolies but whether they were monopolies or oligopolies, they were just as damaging to local business as cartels. What was being done to address the weaknesses in prosecuting them?

Thirdly, Mr Thring said that the victims of price fixing were the taxpayers and the indigent and poor amongst them. Fines were levied against those found guilty, but the victim was not recompensed. That was morally wrong. Ways had to be found to compensate the victim. It could, perhaps, be done by lowering the price of a specific item for a specific period and using the fines to help grow the SMMEs.

On the corrective action taken, he wanted to know if the 20% price reduction was based on the original price or the increased price. If the 20% reduction were based on the price that had been increased by 500% to 800%, the firms would still be smiling all the way to the bank.

Mr Thring asked what intervention could be used to address the price stickiness in the wholesale/retail sectors spoken of by the Chief Economist.

Mr F Mulder (FF+) stated that the CC and CT had an important role to play. His party was very much in favour of localisation and the support of the SMMEs against the cartels and monopolies. However, when the original Act was written in 1998, the main agenda was to address the cartels and the highly concentrated markets as well as the exclusion of black people in the economy. The Act had intended to focus on new businesses and small, medium and micro businesses and to open up space for black-owned businesses.  If SA really wanted to create job opportunities for SMMEs to strive, and an ideal business environment, it was necessary to educate the population so that there was a group of highly skilled entrepreneurs. The entrepreneur should not be working according to a culture of entitlement but according to good business principles.

He said that State Capture and corruption had left the economy in a very weakened and unfavourable position, which Covid-19 had made much worse. To meet the ideals and the goals of state competence, economic growth was necessary. Economic growth was necessary in such circumstances but SA had not experienced economic growth for some time. In a weak economic environment, a very delicate balance had to be found as far as sustainability and buying power was concerned.

Mr Mulder suggested that the Competition Act should be used to sustain business and not just to redistribute businesses according to legally enforced quotas and racially-based numbers. He asked the Commissioner if he could oversee a fair business environment and not concentrate mainly on redistributing existing resources. The aim of the Commission should be to balance the economy and not just to ensure a change of ownership. It should be about a fair business environment and not just about transfer to black ownership.

Ms T Mantashe (ANC) addressed the question of the extended mandate of the Competition Commission. How would the Commission manage the appointment of two Deputy Commissioners in the light of the contraction of budgets? How were they going to manage? She appreciated the saving of jobs during the period of Covid-19, but would the CC and CT be able to save jobs even after the pandemic had passed, if it ever did?

Ms Mantashe had noticed the price hikes during that period and she had requested CC to investigate the price increase in eucalyptus chest oil which had jumped to three times the original price. She did not know whether it was because she had submitted her request as an individual, but she had not received an answer. She asked that her request be considered.

Mr S Mbuyane (ANC) asked the CC to update the Committee on the issue of possible dominance in the fishery industry. Secondly, cases were prolonged and small businesses continued to suffer while the case went on. What measures could be implemented immediately in such cases or was there a need to develop a regulation in relation to that matter? Thirdly, the state of competition in the private health care sector was a concern as there were regulatory failures and high barriers to entrance in that sector. Hospital licences were controlled by a few big players that controlled the entrance to the sector.

Mr Mbuyane asked about the turn-around time of cases in the Tribunal as cases were being prolonged.
He asked how cartels got involved in water and sewer issues. How did B-BBEE policies influence the decisions of the Tribunal? Were there any examples of reported collusion?

Ms J Hermans (ANC) thanked the CC and the CT for the good work that they were doing. She had seen how the Minister’s ability, through legislation, to impose bloc exemptions had assisted the country’s ability to deal with competition during the Covid-19 State of Disaster. It had given the authorities the space to quickly respond to challenges. It was a good thing that the Amendment was in place. She thought that the 10% administrative penalty for companies found guilty by the Tribunal was too low a penalty and the penalty should be more punitive. The Portfolio Committee should address the penalty. A 10% of annual turnover administrative penalty was a slap on the wrist for big players that would simply do the same thing again. The Portfolio Committee should address that penalty so that the big players who transgressed could be made to feel what their wrong doing did to the sector.

Ms N Motaung (ANC) asked the CC how the pandemic had impacted the fiscus of the CC with the increase in the number of cases, especially as the entity had a limited number of investigators, which, in turn, led to delays.

The Chairperson requested Dr Pule to lead the responses.

Response by dtic
Dr Pule responded to the question about foreigners owning SMMEs. The matter had previously been discussed. The difficulty was around recognising that there were foreign nationals who were legitimately living in SA. Those who were living in the country should be dealt with in terms of the law. The Competition Act did not say anything about legal foreign nationals. It was about what the Act stood for. The emphasis should be on emphasising the positivity of the Act for the economy as opposed to individual cases. How did one work within the laws of the land to ensure that everyone could participate in the economy in a fair and just manner?

He noted that specific recommendations that had been identified coming out of activities such as the grocery marketing inquiry, would result in the CC looking at ways of addressing specific behaviours in the economy that were anti-competitive. One of the recommendations coming out of the grocery marketing inquiry was the illegality of certain goods. Where findings or recommendations had to be followed up, the Department or the CC worked with the relevant companies and stakeholders. One often underestimated the importance of advocacy in changing behaviour. The CC was currently engaged with the SA Revenue Services to address the question of illegal products. The dtic had to look at the bigger context and handle the matter with sensitivity, especially in the light of the recent examples of xenophobia.

Dr Pule responded to the question of whether the Deputy Commissioners had placed a burden on the fiscal budget. He had to acknowledge how critical the posts were but the DG always made the point that fiscal austerity was a priority at the current time. The DG and the Minister would guide any matter that impacted on the fiscal environment of the Commission. One acknowledged the importance of the posts but that importance had to be acknowledged in a context of what was affordable and not just what was required. The DG and the Minister had to make a decision in the light of the medium-term expenditure framework and the economic recovery. He added that the Commission was in the middle of determining performance management plans and it was a good time to look at the impact of the two Deputy Directors-General. He emphasised that it was a ministerial prerogative as to what decision would be made, although the DG would advise. The dtic acknowledged the importance of the point made by Ms Hermans about the lack of severity of the 10% of annual turnover administrative penalty and noted that the Minister might wish to take it further.

Response by the Competition Commission
Commissioner Bonakele, requested the Chief Economist at the CC to respond to the stickiness of prices going down as that was an economic question.

Mr Hodge stated that the announcement made by the Commissioner that day about the agreement with ShopRite Checkers and Pick ‘n Pay with respect to ending restrictive leasing was an important part of addressing price stickiness because currently the extent of competition in those shopping centres was limited. Convenience and the exclusion of specialist stores in shopping centres where only the supermarket sold fresh produce, bakery goods and butchery items saw higher prices in those products in the supermarkets. Nationally prices of those goods were higher, so the agreements were very important. Allowing competition for supermarkets in the shopping centres would lower prices.  

He added that fairness was another goal of the Commission. The food value chain was a focus of the CC. It was important to allow those that had recently entered the market to expand and eventually become competitive. That would assist newer players in the market and would provide further competition.

Mr Hodge gave an example of how, immediately after the lockdown was announced, a number of dairy processors had imposed levies on dairy farmers and had removed some of the price benefit premiums. That was done without any knowledge of how the pandemic would impact on the dairy industry. The changes had been implemented unilaterally without consultation with the farmers or the market, nor with an understanding of the cost implications of the pandemic. The CC had engaged in a discussion with the processors in terms of the legislation and the adjustments were reconsidered in consultation with the market and producers, and so there was far less of an impact on such products and the shock to the sector was greatly reduced. Had the intervention not happened, the prices would have gone down for dairy farmers but not for retailers.
The Act facilitated such issues as the balance is between the famer and the market.

Mr Ratshisusu spoke about distribution of resources, which was the core of the Competition Act and what the Competition Commission did. The Competition Act was specifically designed to address the exclusion of black people during apartheid and to distribute economic opportunities more fairly. Even today the market was highly structured and excluded SMME’s and black people. The Amendments were specifically intended to promote fair opportunities for SMMEs to participate in the market. The Act was not intended just to look at monopolies, although the two were not exclusive.

Mr Ratshisusu stated that there were monopolies in the economy, and new monopolies were continually developing. The Commission had started to see some successes in the courts. It was eagerly awaiting the
ruling in the Babelegi Workwear case which would give the Commission clarity on where it was. If the case did not give clarity, the Commission would be in serious difficulties.

He responded to the question from Mbuyane on private health care. An inquiry had been conducted into private health care and the report had already been released. He understood that the Committee had already been briefed on the issue. There were huge challenges in the sector relating to licensing and competition that had to be attended to but it would take some time to address the issue. The eucalyptus matter would be looked at again. He suggested that Ms Mantashe provide further information to the Commission.

In response to Mr Thring’s question, Mr Ratshisusu agreed that the norm was a 20% cut in price to protect the market, but where excessive increases had occurred, the Commission had required significant drops in prices. He had seen successes because there had been a lot of price stability, particularly in pharmaceutical goods. There were, of course, other issues but he could not go into extensive detail as he was looking at the time.

The Commissioner asked the manager responsible for complaints such - as put forward by Ms Mantashe – to respond.

Ms Khanyise Qobo, Divisional Manager: Advocacy, CC, said that the CC had looked into the price increase in eucalyptus oil following Ms Mantashe’s complaint. Eucalyptus oil was a product used pharmaceutically for colds and flu symptoms and so was pertinent at the time of the pandemic. The complaint related to a seemingly excessive price hike from R50 to R150 for a 50 ml bottle. Initially, the trader had sourced the product from Massmart but Massmart ran out of stock and there was a general shortage of the product, so he sourced the product from an informal trader in the area, known only by his first name. The pharmacist was a small trader with turnover of around R600 000. He could not even give financial statements so he agreed to reduce the price by 20%. He had only sold about 30 or 40 bottles of the eucalyptus oil in the months under question. The thresholds were far too low to press any charges.

Ms Qobo explained that her team had initially sent a courtesy letter to Ms Mantashe in relation to the complaint and would respond with a follow-up letter once the matter had been finalised.

The Commissioner noted that the DDG had addressed the matter of foreigners. He added that the Amendment to the Bill gave the Minister the right to determine whether foreigners could trade in sectors specifically relating to the security sector. However, the Commission was also keeping its eye on a Bill introduced by Gauteng Province to restrict economic participation by foreigners in townships, etc.

He recalled that the Chief Economist had discussed the relationship between farmers and processors who buy the milk from farmers and dictate the price to farmers as well as the price in the market. Essentially, that was about distribution and the interventions of the CC did have an effect on the surplus and where it went. The issues of distribution included race but went far beyond that. Many dairy farmers, black and white, said that CC should promote distribution in the milk industry because the power lay unfairly with the processors. Competition, by its very nature, impacted on distribution.

The Commissioner noted that the issue of the budget had been responded to by the DDG. He responded to the question by Ms Motaung. It would be unfair not to indicate that the lockdown period had been challenging for the staff. They had had to undertake investigations that were not in the original plans. People had to be moved to other divisions to cope with the work. Although investigations took staff all over the country, planes were not flying, so people had to drive long distances to conduct investigations, sometimes in risky places. Covid-19 had also had a psychological impact on the staff who had to work at home and psychologists had been introduced to the CC to help staff cope with the situation and mental health issues.

He agreed that there had been a huge pressure on the budget. He personally felt under a great deal of strain. The Acting Deputy Commissioners were working on two jobs; that came with a lot of work and they were under a great deal of strain.

The CC had been engaging with the fishing industry. Dominance in the fishing industry was as a result of the way in which fishing rights were allocated by the responsible department. The fishing industry was a concentrated sector but through the engagement of the Commission with the relevant department, fishing rights were now being allocated to small companies from the fishing villages. There had been a lot of consolidation, especially in the processing side of fishing. The fishing sector was regulated by the state and the way in which permits were issued and regulations enforced could have a significant impact on the sector.

The Commissioner told Mr Mbuyane that he could have taken an hour to relate all of the cases as there were a lot of problems. On the question of fines and penalties, he noted that the question always came up as to why the penalties went to the national revenue but that was a matter of regulation and the CC could not do other than send the funds to national revenue.

Regarding the sewerage and water matter, he stated that there were issues around the supply of water treatment materials in a fairly concentrated market with only a few players, so the CC was looking at this. There were concerns from the Department itself but investigations into water treatment, especially in terms of the chemicals used, had not yet been finalised. He suspected that there were cartels in the engineering spaces in that regard. It would be a major project for the CC in the future.

Mr Mbuyane asked how the B-BBEE policy influenced adjudication in the Tribunal. That matter had not been responded to. He had raised the water and sewers and private healthcare issues before. He had raised this many times but he never received a response on what had been done. He thought that the Department and the Commission knew there were issues there but they were not being addressed. How did some people have dams and others had no water to drink?

Mr Thring stated that one of the presentations had referred to ginger. Before lockdown, the price was around R70 per kilo and within the space of a week, it had increased to R140 in the major supermarkets. What was the outcome of the investigation into the ginger price rise?

Ms Mondo Mazwai, Tribunal Chairperson, said that there were two aspects to look at in respect of whether the Tribunal had met its timelines – the merger side and prohibited practices. Regarding mergers, the CT had met the gazetted timeframes. In the matter of other prohibited practices, there was no timeframe for completion in the legislation. Factors that impacted on those timeframes, from the CT perspective, were numerous. One factor that impacted on the timeframe was the complexity of the case. Cases in respect of cartels and behaviour that violated competition practices, were egregious cases supported by the Commission’s leniency policy moved more quickly because the evidence was there and parties came forward to confess.

Ms Mazwai said that cases in respect of abuse of dominance required complex economic and legal analysis. Those cases took a long time to reach the Tribunal because the parties contested various aspects of the case even before the case reached the Tribunal. Another factor was inter-locutory proceedings. In such cases, parties brought applications for information and documents before the Commission could proceed to assess the merit of the case. Sometimes there were appeals to higher courts before the case could be considered. The more complex the case, the more there was contestation even before the proceedings could begin.

Thirdly, was the issue of capacity. The Tribunal operated under very tight numbers. There were four Tribunal members, including herself as the Chairperson, the Deputy Chairperson and two Tribunal members. The cases during lockdown had rested primarily on the shoulders of those four members and three members were required to hear each case. Even as she was attending the parliamentary meeting, all other members were sitting in a case. In addition to hearing the cases, there was a lot of writing up and research to be done.

Ms Mazwai added that there were six part-time members who had helped while they were at home during lockdown, but she was not in control of their time and availability, nor did the Tribunal know when matters would come before them. There had been constraints and, as the DDG had said, they were feeling the pinch.

She requested Mr Mbuyane to repeat his question.

Mr Mbuyane asked how the B-BBEE policy influenced the Tribunal adjudication in terms of mergers and public interest.

Ms Mazwai responded that in terms of the Act, the Tribunal was obliged to consider B-BBEE policies in all merger assessments. She had referred in her presentation to ways in which the B-BBEE policy had impacted on the adjudication. On slide 17, she had referred to one of the new amendments in relation to the Simba (Pty) Ltd and Pioneer Food Group Ltd merger where the Tribunal had looked at worker-ownership in the merged entity. There was to be a moratorium on merger-related retrenchments for a period of five years and the merging parties would create 500 jobs and 2 500 job opportunities. Small businesses were also taken into account in mergers. The B-BBEE policy was a constant lens through which the CT looked at all cases.

Mr Hodge explained the increase in the price of ginger. The matter was contained in the produce pricing report. In the wholesale food markets, ginger had gone up to R90 per kilogramme in the first week of lockdown. The regulations looked for an increase in the margin charge and if it did not change, there was nothing that the CC could do. The CC had looked at the price margin prior to the increase and it had remained the same after the price increase. The only change had been in producer price and that limited the ability of the CC to take any action, although the CC had noted the issue of margin costs in significant price hikes.

Ms Mazwai said that some of the complaints laid with the Tribunal had been related to the pricing of ginger and some of those increases had been found to be excessive. Constraint orders were issued in those cases.

Mr Bakhe Majenge, Bakhe has a accountPrincipal Legal Counsel, Competition Commission, responded to the question of water ownership which he said was linked to land ownership. Those were mainly regulatory issues that were addressed in the National Water Act so those issues had not presented themselves before the CC. Issues relating to sewers were reticulation and environmental issues that were addressed in other regulatory frameworks.
Dr Pule summed up and thanked the Committee on behalf of the Minister and the DG for the opportunity to present to the Committee and to bring Members up to speed on competition matters. He noted the issue raised by Ms Hermans in respect of the administrative penalty and that would be taken up at the appropriate forum.

The Chairperson stated that in the next update on the matters, dtic and its entities should move forward from the current report.

Concluding remarks
The Chairperson concluded the discussion and stated that there were no further engagements on the agenda. He informed Members that the next scheduled meeting would be on 21 October 2020 and thanked them for their participation.

The meeting was adjourned.
‚Äč

 

Share this page: