Industrial Development Amendment Bill; Trade Practices Amendment Bill: Deliberations; Companies Amendment Bill: Voting

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Trade, Industry and Competition

26 June 2001
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

26 June 2001

Chairperson :

Dr R Davies (NA), Mr M Moosa (NCOP)

Relevant documents:

Industrial Development Bill [B32-2001]
Companies Amendment Bill [B35-2001]
Trade Practices Amendment Bill [B34-2001]
Consumer Affairs (Unfair Business Practices) Amendment Bill [B28-2001]

Proposed amendments to B28-2001 (see Appendix)

The Portfolio and Select Committees will finalise the Industrial Development and Trade Practices Amendment Bills in Parliament's next session starting in August 2001. The Portfolio Committee adopted the Companies Amendment Bill unanimously without amendments. The Select Committee adopted the Consumer Affairs (Unfair Business Practices) Amendment Bill with amendments. Eastern Cape voted against it and Mpumalanga abstained.

The issue of National Treasury's opposition to the increase in the debt equity ratio of the Industrial Development Corporation as is provided for in the Industrial Development Amendment Bill has been resolved as they no longer oppose this.

The Select Committee Chairperson was concerned that Portfolio Committee members were prioritised when choosing members for overseas trips. Sixteen Portfolio Committee members, including the clerk, were going on the Geneva/Ireland tour in July whereas only three Select Committee members were going.

In this joint meeting, the Portfolio Committee dealt with the Industrial Development Amendment Bill, the Companies Amendment Bill and the Trade Practices Amendment Bill. The Select Committee dealt specifically with the Consumer Affairs Amendment Bill but also engaged on some of the issues regarding the other Bills.

Industrial Development Amendment Bill
The Committee asked for a report back from the Department of Trade and Industry (DTI) on the controversial Clause 2(b) which would permit the Industrial Development Corporation to increase its debt equity ratio from 75% to a 100% (without the approval of the shareholders). DTI had indicated in an earlier meeting that the National Treasury objected to this clause.

Mr Sibisi (DTI) stated that the National Treasury no longer opposes the increase of the Industrial Development Corporation's debt equity ratio as is set out in Clause 2(b) of the Bill. In previous discussions the National Treasury had opposed this increase as they had had certain concerns relating to risk.

The Committee nevertheless decided to delay the passing of the Bill and agreed to finalise it in August 2001.

Companies Amendment Bill
The Committee voted and passed the Bill without any amendments.

Trade Practices Amendment Bill
Mr Johan Strydom (Legal Adviser, Department of Trade and Industry) stated that Clause 1(d) was inserted as a measure to address the problem of ambush marketing. The clause reads as follows:
Clause 1: Amendment of section 9 of Act 76 of 1976
"Section 9 of the Trade Practices Act, 1976 (hereinafter referred to as the principal Act), is hereby amended by the addition of the word "or" at the end of paragraph (c) and the addition of the following paragraph:

The Chairperson (NA) said he had no problems with the Bill. He asked for members to comment on the Bill.

Mr N Fihla (ANC) was concerned about small businesses marketing their goods at big events without proper authorisation. He asked what is the impact of the Bill on a small business practitioner at a big event?

The Chairperson (NCOP) asked why there is a need to criminalise the practice of small businesses or vendors promoting products that are otherwise patented by bigger companies. He suggested that the matter is better left to the civil courts to resolve.

Mr Strydom replied that civil litigation is an option but this is not always an effective option. Civil courts are not always accessible and are also very expensive. If the practice of ambush marketing were to have a criminal sanction attached to it, the chances are that the practice would stop. The idea is to have an extra deterrent in addition to the civil court option.

Dr Davies felt it better to delay the passing of the Bill. Mr Strydom and the Committee agreed.

Consumer Affairs Amendment Bill
The Select Committee commenced dealing with the Consumer Affairs Amendment Bill. Mr Strydom referred to the newly proposed amendment to Clause 8B (see Proposed Amendments document). It reads as follows:
Clause 8B: Interdict by High Court
"Notwithstanding section 8A, the Minister may apply to a High Court for an interdict suspending a business practice, or such other remedial action, pending the outcome of any investigation by the Committee."

Mr Strydom explained that the purpose of the clause is to provide for the Minister to apply to a High Court for an interdict to suspend a business practice.

Mr Moosa asked if members had any objections to the clause.

Mr A De Wet (ANC, EC) said that the Eastern Cape is not in favour of the clause. They are concerned about the discretionary powers of the Minister. Mr De Wet argued that the Minister should be required to apply for a court interdict in every instance where it is possible that a business practice may be suspended. He asked why the decision to suspend a business practice should lie solely in the hands of the Minister in most instances.

Mr Strydom responded that the Committee had asked for the provision to give the Minister the authority to apply for an interdict only in exceptional cases. The rest of the time the Minister will use his own discretion. This is the way the Committee had requested the provision to read.

Mr Moosa felt that the clause had captured the Committee's intentions. In the old Act the Minister had unfettered discretion. The new Bill however sets out guidelines, which the Minister will be required to follow.

The Select Committee voted by province on the Bill and it was accepted with amendments. The Eastern Cape voted against it and Mpumalanga abstained.

Mr Davies adjourned the meeting for Portfolio Committee members. The Select Committee continued the meeting.

Mr Moosa stated that the Select Committee would be dealing with the Industrial Development Amendment Bill and the Trade Practice Amendment Bill in August. He also asked members to keep their constituents abreast on the implications of the Companies and Corporations Amendment Bills.

The Committee continued with discussions on the upcoming trip to Geneva and Ireland that is planned for 22 July - 2 August. He was highly concerned that only three NCOP members where accommodated on the trip whereas sixteen members of the Portfolio Committee, including the Committee clerk, would be making the trip. Mr Moosa insisted that the Select Committee investigate the matter.

Mr Moosa informed the Committee that the Department of Trade and Industry had invited the Committee to visit their offices in Pretoria. The Committee accepted the invitation to visit DTI on the 23 and 24 August 2001.

The meeting was adjourned.

B 28-2001
1. On page 2, in line 8, to omit "the person summonsed" and to substitute:
[that] the person summonsed or any person testifying on behalf of the person summonsed,

Clause rejected.

1. That the following be a new Clause:
Insertion of section 8A and 8B in Act 71 of 1988
The following sections are hereby inserted in the principal Act after
section 8:
"Prohibition of business practice pending investigation by Committee
(1) Subject to subsection (2) the Minister may on the recommendation of the Committee by notice in the Gazette at any time before the Committee reports formally on the result of an investigation in terms of section 8(1) -
(a) prescribe such action as may be necessary to stay or prevent a practice
which is the subject of the investigation for a period of up to six months calculated from the date of the notice; and
(b)order the attachment of any money or other property, whether movable or immovable, which relates to such investigation and which is held by any person on behalf of or for the benefit of the Person mentioned in the notice, or of a customer, debtor or creditor of such person, until a curator contemplated in section 12(2) takes possession of such money or property or until the expiry of the period of six months, whichever occurs first.

(2) (a) Before the Committee makes a recommendation to the Minister in terms of subsection (1), it shall inform the Person who will be affected by its recommendation of its intention to make the recommendation and give the person an opportunity of a hearing by the Committee.
(b) Before the Minister publishes a notice contemplated in subsection (1). the Minister shall take into account any argument at the hearing
and must be satisfied that
(i) the practice in question amounts to or is likely to amount to an unfair business practice;
(ii) there is no alternative remedy;
(iii) the prospect of harm to consumers if the notice is not published outweighs the potential prejudice to the affected person if the notice is published; and
(iv) the person mentioned in the notice has or will have the intention to defeat the interests of consumers by concealing or dissipating assets.
(3) A copy of a notice contemplated in subsection (1) shall -
(a) as soon as practicable be published in the Gazette, and
(b) be sent by registered post to any person mentioned in the notice together with a written statement-
(i) setting out the reasons for the decision to publish the notice; and
(ii) advising the recipient that he or she has the right in terms of
section 13(1) to appeal to a special court or to take the decision on review to an appropriate court.
(4) If the Minister orders the attachment of any immovable property in terms of subsection (1 )(b). .
(5) A notice contemplated in subsection (1) may be amended or withdrawn by the Minister at any time on the recommendation of the Committee.
(6) Any person who contravenes or fails to comply with a notice contemplated in subsection (1) shall be guilty of an offence.

Interdict by High Court
Notwithstanding section 8A, the Minister may apply to a High Court for an interdict suspending a business practice, or such other remedial action, pending the outcome of any investigation by the Committee.

1 That the following be a new Clause:
Amendment of section 13 of Act 71 of 1988, as amended by section 9 of Act 33 of 1993 and section 9 of Act 23 of 1999
Section 13 of the principal Act is hereby amended by the substitution in subsection (1) for paragraph (a) of the following paragraph:
"(a) a notice under section [8(5),] 8A or 12(1)(b), (c) or (d); or".
the Minister shall as soon as practicable thereafter notify the registrar of deeds of the attachment
(d) in connection with a sponsored event, make publish or display any false or misleading statement, communication or advertisement which represents, implies or suggests a contractual or other connection or association between that person and the event, or the person sponsoring the event, or cause such statement, communication or advertisement to be made, published or displayed."



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