Advisors from the Offices of the State Law Advisor, the Parliamentary Legal Advisors and the legal advisors to the Portfolio Committee briefed the Committee on the ramifications and possible interpretations of Clause 12 of the Competition Amendment Bill of 2008. This affected the onus in those criminal matters prosecuted in terms of Section 73A of the Competition Act. It allowed the courts to treat the findings of the Competition Commission and/or Tribunal as prima facie proof that a firm engaged in cartel conduct and was criminally liable. Members interrogated in depth the nature of a reversed onus in criminal trials and why this should be regarded as unconstitutional. After lengthy discussion, the Committee resolved unanimously to leave the Bill unchanged with no amendments.
Clause 12 of Competition Amendment Bill: re-consideration
The Chairperson noted that a number of legal advisors from the Office of the Chief State Law Advisor, the Department of Trade and Industry (dti), the Committee’s legal advisers and the Content Adviser to the Committee, Ms Margot Henley, had all expressed conflicting opinions about the possible interpretation of Clause 12(5) of the Competition Amendment Bill. The matter had been highlighted when the President wrote a letter to the Speaker of the National Assembly referring back the Bill for reconsideration. This Committee must therefore reconsider the clauses in contention and refer the Bill again to the National Council of Provinces (NCOP). Should both Committees approve the Bill, it must be referred back to the President, but if not then the matter must be dealt with according to the Constitution and the Rules of Parliament, which might even entail a joint sitting of both the Portfolio and the Select Committees. He added that the Department had received opinions also from Senior Counsel on the issues.
Advocate Johan Strydom, Legal Advisor, dti, reminded Members that subsequent to the A-version of the Bill being presented, there had been public hearings and submissions on the Bill, which led to the presentation of a B-version. This had proceeded to the NCOP, where there were further hearings and submissions, and the D-version of the Bill was then adopted by the NCOP and approved by this Committee, and this version was referred to the State President for signature and enactment. At that stage the President had received and considered further submissions and legal opinions from stakeholders. He therefore, in terms of Section 79 of the Constitution, referred the Bill back to the Speaker for further attention by this Committee and the National Assembly. In terms of Section 73(3) of the Constitution the NCOP was also required to consider the matter.
Basically the constitutionality of the Bill was being questioned on two grounds. The first had to do with procedure; namely whether the Committees should have called for further submissions and proposals on the amended versions of the Bill. The second related to the reverse onus being introduced by Clause 12(5) of the Bill, with concerns as to whether this might transgress the constitutional imperatives relating to a fair trial, Section 35 of the Constitution, and the right of an accused person to remain silent. The amendments had been introduced in an attempt to ease the task of the prosecution, but the question was whether the convenience it offered was not only practicable, but fully compliant with the Constitution. The views of the NCOP as well as this Committee must be sought. At present, however, it was the task of this Committee to reconsider the clause and take a stance.
Adv Koleka Beja, Parliamentary Legal Advisor, warned that if a stakeholder was either not afforded participation or was unsatisfied with the opportunity afforded there might still be a constitutional challenge.
Ms D Ramodibe (ANC) asked for further clarification on the reservations about the clause and the “reverse onus”.
Mr S Njikelana (ANC) asked for further clarity on the concept of participation, and asked if there were indeed gaps which might cause the Committee to reconsider the entire matter.
Ms M Ntuli (ANC) asked whether the perceived problem did not lie in the processes with the Bill, as there had been no public participation after the changes effected by versions B and C, with those amendments merely having received the approval of the NCOP.
Mr S Rasmeni (ANC) wondered whether there had been a need to request public participation at all stages of the proceedings of the Bill, and a necessity to consult the Provinces. Experiences with other pieces of legislation showed that this was seemingly required by the Constitution and had been the reasons for the determinations by the
Mr L Labuschagne (DA) stated that Dr Rasmeni had raised an interesting point, and he thought that it might be logically correct to say that the amendments incorporated into each new version of a bill may require public comment. This was a matter needing to be established as a precedent.
The Chairperson then stated that it was clear that in the Parliamentary process there were certain guidelines, which were required to be maintained, and so the Committee was seeking guidance as to whether, in regard to this Bill, there had been sufficient consultation with the stakeholders. In fairness, however, there was opportunity provided for the stakeholders, who had the right to petition if they felt that their interests, submissions and comments had not been adequately considered.
Ms Ramodibe stated that there had been public hearings, with opportunities to comment, and that the submissions had been taken into account. Furthermore, she believed that at the NCOP stage there had been two further submissions which had also been taken into account,
Adv Beja explained that in the Doctors for Life case the
Adv Strydom added that it was important, in relation to this meeting, that Version D of the Bill be considered, for the issues about public participation resolved around this version. It could be argued that there was no public participation for this specific version, notwithstanding that this version grew out of previous versions, which had indeed been commented upon by the public. One of the issues was complex monopoly conduct, as was defined in the D-version. It might be argued that there had been no public participation about this definition, and that the stakeholders should have been given the right to give written and oral submissions. Needless to say there could be no comment about the policy objectives, which were decided by the Minister of the Department. However, Webber Wentzel, on behalf of MasterCard, had made submissions that were required to be considered and discussed, and a position taken by this Committee.
Mr Strydom reiterated that Version A of the Bill had been commented upon in a public participation process. The comments made led to the drawing up of Version B. This was submitted to the NCOP. Mr Peter Leon of Webber Wentzel sought permission to intervene on behalf of MasterCard and Business Leadership SA, and it had been held that at that juncture it was impossible for him to intervene in the proceedings of the NCOP. However, another version was produced from the NCOP deliberations, being Version C, which had introduced a definition of complex monopolies and conscious parallel conduct. He thought that it was unfair to suggest that the public had no right to participate, nor an opportunity to air their views. In his opinion the NCOP did not have the right to amend the Bill and refer it thus to this Committee. He thought that Clause 12(5) was the nub of the debate.
Adv Beja agreed in the main with Mr Strydom, adding that the
Mr Strydom stated that clearly the issue was one of law. He suggested that the Committee needed to reflect further on Version D. This amended Section 73A of the Competition Act (the Act) and introduced personal liability for Directors if they knowingly caused their company to breach certain of the conditions set out in Section 4. He submitted that this created a statutory offence (one created by Parliament), and that the supporting evidence needed to obtain a conviction was crucial. He respectfully suggested that laypersons might be familiar with the policy imperatives of the dti but not be familiar with the Courts’ requirements on admissibility or non-admissibility of evidence. The question was what weight was accorded to documents handed up by a Prosecutor to support the prosecution’s call for a conviction in terms of Clause 12(5) of the Bill, which related to Section 73A of the Act.
As the law presently stood, the Court was presently obliged to accept such documents, but was not obliged to give any evidential weight to them, admissible or not. The amendments being made by the Bill provided that the documents emanating from either the Competition Commission (CC) or the Competition Tribunal (CT) must be accepted as conclusive proof, unless the contrary was proved. This would require that an accused must address the issue, and this was criticised as being contrary to the accused’s right (under Section 35 of the Constitution) to remain silent. The Bill was worded in such a way that the documents were prima facie proof of the alleged wrongdoing, not evidence of the alleged wrongdoing, and that, in a nutshell, was the basis of the concerns by the State President. At issue was the Section 35 Constitutional right for every accused to remain silent, and to compel the State Prosecutor to prove beyond reasonable doubt that the accused was guilty of the charges. This was the basis for the principle that every person was presumed innocent, until found guilty by a court of law, of the offences with which that person was charged. It was suggested that the Courts would be loath to accept, and apply, the principle of prima facie evidence being regarded as conclusive proof. This was not necessarily his personal view, but was a synopsis of the current situation.
The Chairperson suggested that the phrase required amendment.
Mr Strydom suggested that no matter how the phrase was amended there would still not be acceptance by the Courts of evidence of guilt, for even statutory offences required that a conviction could only be obtained if there was evidence of wrongdoing by the accused “beyond a reasonable doubt”, which the State must establish. In view of the Constitution’s Section 35, there was no requirement that the accused must prove his innocence. He added that although the State could still use the documents from the CC or CT in court proceedings, the State would still be required to prove all the elements of the charge. He conceded that the State had a cumbersome and onerous process to go through in order to achieve a conviction but this was a constitutional requirement.
Mr Labuschagne found Mr Strydom’s enunciation of the principles most interesting and he wished that there had been such a clear exposition of the principles at an earlier stage of the hearings. He added that although the legal opinions differed (which was common in the legal profession) both opinions agreed that the constitutionality of reversal of the onus was problematic. The attempts by the Committee to make it easier for the State to achieve convictions by defining or determining liability were running into some difficulty. Any attempts to ease the path of swift justice should not abrogate the rights of citizens. There was still the possibility of plea bargaining, and he suggested that there would probably not be hundreds of cases of this nature.
Mr S J Maja (ANC) said that Parliament must be cautious on the matter. It seemed that nobody really wanted this clause. Members were not sitting as lawyers. He suggested that this clause was seemingly what Parliament wanted and this must be explained to the President.
The Chairperson interposed that the clause under discussion was not for the benefit of the President, but for
Adv Beja said she wished to take issue with Mr Labuschagne on two points. The Department was not conceding the principle of the Bill was incorrect or that the reverse onus was unconstitutional and must be amended or deleted. In the worst case scenario the Bill might need to be referred for further public hearings. The phrase in the President’s letter “may not suffice” also required to be checked.
Dr P Rabie (DA) suggested that the Committee should look to the wider context and have regard to the opinion of Adv Semenya on the reverse onus. He did not think that this should be retained as it was in Clause 12 (5) and suggested that there are other ways of dealing with white-collar crime.
Another Legal Advisor expressed the view that a criminal matter would be focusing on the conduct of the accused, not the State, and that it was for the accused to disprove all the elements of the charges laid against him. Currently, the State would bring all the findings of other Tribunals, such as the Competition Commission or the Competition Tribunal, to the attention of the Court. However, the Order of other tribunals would be prima facie evidence of consent by the company, not an admission of personal guilt by the accused. To counter such prima facie evidence, the accused might elect to adduce his own evidence. The State Law Advisor expressed the opinion that this was not unconstitutional nor was it a reverse onus since the accused was defending himself.
Mr Strydom intervened that this was of great importance for it could lead to the Court making further assumptions. In terms of Section 79(4) of the Constitution, the President was required to assent to legislation, but if he did not assent to and sign a Bill he could elect to refer the legislation to the
Ms Zodwa Ntuli, Deputy Director General, dti, responded to comments made by Mr Labuschagne around the MasterCard issues. The issue was not only around the procedure. Complex monopoly conduct had not been properly defined, whereas the issues around parallel conscious conduct had been resolved. Another issue was to do with the late submission by Webber Wentzel, and the Section 35 issues. She thought that the opinions by Senior Counsel had in fact clarified the point. The Department did not consider the concentration on Clause 12 (5) justified or warranted. There could be no “diminution” of constitutional rights, because such rights were not absolute. The Parliamentary Legal Advisors were saying that prima facie evidence should be regarded as proof. However, it was necessary to distinguish different situations. Poor people, for instance, would be affected by collusion in the price of bread and other necessary commodities, and their rights would take precedence over the rights of company executives. She thought that the State Law Advisors should reconsider the position.
Mr D Olifant (ANC) suggested that their reasoning be set out for the guidance of Members.
Another legal advisor submitted that it would be useful to draw an analogy. Where contraventions of the gambling law were concerned, it was the position that if a person was discovered in close proximity to gambling equipment, then there was a rebuttable presumption that such person had been engaged in gambling. If police were obstructed in entering the room then there was a presumption that those in the room had been participating in gambling. He said that Judge Kate O’Regan had made statements on this.
Mr Labuschagne said he still wanted clarity between prima facie evidence and prima facie proof.
Mr Strydom clarified that in law there was a concept of prima facie evidence, yet all evidence must still be proved beyond reasonable doubt. This was an intricate and complex concept. He added that Parliament was justified in restricting rights of individuals, even constitutional rights, provided there had been full and proper consideration and that all interested parties had had an opportunity to make their representations, and the participation had been extensive.
Adv Beja stated that the reverse onus was thus not necessarily unconstitutional. The
Mr Njikelana added that he had listened very carefully to all views and concluded that the reverse onus and the notion of comparative monopoly were problematic. However, he could not see that a ruling by the Competition Commission or Tribunal could be problematic for the Courts. For instance, in transgressions such as price-fixing, it would be necessary to go beyond the company involved and prosecute the individuals who made or acceded to the policies. He was disturbed by Mr Labuschagne’s views around the relative weights of ease of prosecution and rights of the accused. The activities of colluding companies were harming the poor, who were most adversely affected by price increases, and that this must be checked at all costs.
Dr Rabie stated that his party supported the proposal but questioned the relevance of Clause 12(5).
Mr Olifant stated that his party supported the motion unreservedly.
The Chairperson read out the proposal: That the Competition Amendment Bill [B31D-2008] would remain unchanged, irrespective of the reservations expressed about certain clauses.
The Committee indicated their unanimous acceptance and the matter would now be referred to the NCOP.
National Industrial Participation Programme (NIPP) Briefing.
Mr Sipho Zikode, Acting Deputy Director General:
The Chairperson pointed out that it was common cause that much of this was controversial, especially how the figures are reflected in provincial distribution, and wondered whether this Committee could do something about the skewing of the figures, especially as the programme was winding down. However he would like the EID to deal with questions around where the benefits and progress could be seen.
Mr Zikode replied that he was prepared to take the members on an inspection in loco. In slide 9 (see attached presentation) there was a reflection on the concluded projects and those still remaining, from which it is apparent that there were a small percentage still to be concluded. Slide 10 reflected the Gautrain project, and he cautioned members that his Division was dependent on where the operating company wished to install projects, on the Strategic Partnership Agreement (SPA), and had no prescriptive powers. Slide 12 reflected the obligated companies while Slide 13 reflected the numbers of jobs created as 16 500. A large proportion (10%) of these were continuing jobs Slide 14 reflected the performance so far and noted that the off set programme had created jobs. Slide 15 showed the countrywide spread and the majority of the jobs were in
The Chairperson interjected to ask whether the reasons for the failures had been identified and whether any lessons had been learnt from them.
Dr Rasmeni asked whether there had been any intervention by Government in the failures to prevent them.
Mr Zikode then gave an explanation of the South African Royal Manufacturers (SARM) matter, which concerned the manufacture by hand of gold chains. He pointed out that the intention was to provide work for 500 women. Initially the women had worked on silver chains, and 300 had been trained. Working with gold had been introduced. The developers claimed that the gold chains were required in the
The Chairperson then pointed out that this had been reported three years previously and he asked why it was included again in the Annual Report.
Mr Zikode said that this was to emphasise the Gold Project, where Standard Bank was involved, and that matters had gone swimmingly until a new member of staff at Standard Bank had taken over, had been dissatisfied with the security offered and had pulled Standard Bank out of the project, which now could neither advance nor retreat. The EID was now negotiating with the Industrial Development Corporation (IDC) to replace Standard Bank.
Mr Zikode then addressed Slide 17 and said that this reflected all provinces and all sectors of the economy with the collaboration of overseas investors. Addressing Slide 20, he claimed that the Hlangamani project would benefit all communities, as would the Gautrain tourism. Slide 21 reflected those benefiting from the obligations. Slide 24 reflected an age analysis of all projects over the preceding eight years. He said that 200 projects had benefited, and where necessary the expertise of the dti had been co-opted. He added that the next focus is on the Bus Rapid Transport (BRT) systems to be introduced in all major areas.
Ms Ntuli said she felt that this was another version of the same “tired old story” indicating neglect of the rural areas, and disadvantaged groups, particularly women and children. She questioned the sustainability of the projects and the worth of the jobs allegedly created. She would have liked details of new trading partners and markets, how many projects there were, their real impact and, most importantly, how poverty would be halved by 2014. With regard to skills transfer she questioned what type of skills were being transferred, and exactly how the formerly disadvantaged would benefit.
Dr Rasmeni said he wished to have details of the alleged close monitoring, for he could not see any evidence of this in his area, as well as the value of the projects in their totality. While he wanted to know what had been achieved he also wanted to know the effect on black economic empowerment, for all projects seemed to be concerned with the same people.
Ms Ramodibe wished to know about the value of projects and the reasons for withdrawal, where this had occurred. She wanted to know more about the
Ms M Khunou (ANC) requested more detail on the transfer of skills, especially with regard to the Gautrain project, and details of the creation of jobs, both the types of jobs and the numbers. She noted that much was said of the money being spent by Government on Gautrain, but little about reciprocal commitment from the contractors, and she questioned whether it was worthwhile. In regard to the two failures in the Free Sate she said it seemed that there was both too little planning and bad management.
Mr Olifant remarked upon the 16 500 jobs created and said that when the programme had been introduced the then-Minister stated that 100 000 jobs would be created. He said the job tallies did not correlate. He also wished to know what projects were still outstanding and why.
Mr Maja asked what projects there were in the rural areas and how poverty was being fought in such areas. He said it seemed to him that the old Homelands had done a better job of creating jobs and fighting poverty. With regard to slide 16 he sought clarity on how many projects were contributing to the numbers stated.
Ms Khunou asked whether the benefits were offered to
Mr Zikode said he had learned much from the questions. He said the programme was mainly intended to make an economic impact and at the end of the year there was an assessment of the impact upon the Department of Defence and also civilian departments, and in general the impact upon jobs. He added that the companies brought projects to avoid penalties and it was difficult, if not impossible, for the dti to be prescriptive.
Dr Rasmeni requested an explanation of the monitoring role.
Mr Zikode explained that there were two committees monitoring the projects. One committee evaluated the business plans and the other committee evaluated and monitored for the dti, which required verification. All jobs and skills were intended to benefit
Mr Njikelana said that if his calculations were correct there were only 50 000 jobs, not 100 000.00
Mr Mathe said that he felt that the companies were being allowed to select their projects without regard to the real interests of South Africa, the dti and that the EID was remiss in this regard. He added that beneficiation should be a more important consideration by the dti and the EID because
Ms Ntuli expressed concern and dismay that the South African goal of reducing poverty by 2014 was not going to happen.
Ms Khunou asked for details of the Government departments’ roles, and, most importantly, how the taxpayer’s money was being spent.
The Chairperson said it was the responsibility of South Africans to ascertain how their money was spent and what benefits there were from the arms deal. Policy was determined by the ruling party, but there must be accountability in that regard, and performance must match and surpass the rhetoric. The Department could not determine policy, and that was why there is a call for reporting on the status quo on an ongoing basis. The real issue was that Members were motivated by the need to do the best for the country, and to decide how everyone could do better.
The meeting was adjourned.
- Business Leadership SA Letter to President (4 Nov 2008) on Competition Amendment Bill
- President’s Letter to Speaker of Parliament (27 Jan 2009) on Competition Amendment Bill
- National Industrial Participation Programme presentation
- Opinion by Adv I A M Semenya SC, dated 23 January 2009 [Part 2]
- Opinion by Adv I A M Semenya SC, dated 23 January 2009 [Part 1]
- Consolidated Memorandum by Adv A E Bham SC, dated 28 Nov 2008 [Part 2]
- Consolidated Memorandum by Adv A E Bham SC, dated 28 Nov 2008 [Part 1]
- Competition Act No 89 of 1998
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