Issue No. 49
5 November 1998
Apartheid and other racist laws and practices under the NP Government led to ownership and control of large portions of the economy by a few white-owned companies. Apartheid encouraged anti-competitive practices and unjust restrictions on full and free participation in the economy by all South Africans. Under the ANC Government, the economy is open to wider ownership by a wider spectrum of South Africans, credible competition laws will be put in place with effective structures to administer the laws. The Bill will create an efficient competitive environment, which balances the interests of workers, owners and consumers, to benefit all South Africans. The economic environment will be focussed on development.
The Objectives of the Bill
The Competition Bill will:
- provide all South Africans with equal opportunities to participate fairly in the country’s economy
- achieve a more effective and efficient economy in South Africa
- provide for markets in which the people have access to the quality and variety of goods they want
- restrain trade practices which undermine a competitive economy
- create a better capability and an environment for South African businesses to compete effectively in international markets
- control the transfer of economic ownership and establish independent bodies to monitor competition
The Aims of the Competition Bill
The purpose of the Bill is to promote and maintain competition in South Africa which will:
- promote the efficiency, flexibility and development of the economy
- provide people with competitive prices and product choices
- promote employment and the social and economic welfare of people
- expand opportunities for participation in the world economy
- ensure that small and medium businesses can participate in the economy
- promote a wider spread of ownership so that disadvantaged people will own more shares in companies
The Competition Commission will be administered by a Commission Management Board and will function mainly through a Competition Inspectorate and a Competition Tribunal.
The Competition Inspectorate will investigate alleged contraventions of restrictions laid down in the Bill, applications for exemptions from restrictions and proposed mergers. The Bill gives search and seizure rights to the Inspectorate.
The Competition Tribunal will grant exemptions from restrictions, authorise or stop mergers, judge whether any conduct is a restricted practice and impose corrective measures in respect of anti-competitive acts. The Bill ensures that inquiries by the tribunal are carried out in public.
The Competition Bill defines restrictive practices
The Bill prohibits conduct which prevents competition unless it can be justified on certain grounds set out in the Bill. Such behaviour can either be between suppliers or between suppliers and their customers.
The Bill also prohibits behaviour which has been found to be anti-competitive in the past without the opportunity for justification. Prohibitions in this category include:
- fixing a buying or selling price or trading condition
- establishing production quotas, or restricting production
- restricting technical innovation or development
- avoiding or restricting investment
- collaborative tendering
The Commission will not have to prove that companies are engaged in unfair practices when the companies involved in an unfair practice have one or more directors in common.
The Bill Prevents Firms form Dominating the Markets
Under Apartheid, very large firms had the power to control prices, exclude competition or act independently of their competitors. They abused their positions to the disadvantage of their competitors and consumers. Under the ANC, dominant firms are, apart from the restrictions mentioned earlier, also prevented from:
- limiting output, production or technological development to the disadvantage of consumers
- charging unnecessarily high prices to the disadvantage of consumers
- refusing to give a competitor access to a necessary product when it is economically reasonable to do so
- acting in any way that hinders or prevents the entry of a competitor into a market
- engaging in an act which is known to exclude competitors unless it can justify that the pro-competitive gains from this act outweighs the anti-competitive effects of the act
Key Political Messages
The NP Government passed racist laws which ensured that blacks were kept outside the country’s major economic activities, which resulted in a situation where a very small minority owned and controlled the bulk of the economy.
The ANC Government is committed to opening the economy up for greater ownership and control by a greater number of South Africans. The ANC will ensure that everyone has an equal opportunity to participate freely and fairly in the national economy.
Under Apartheid, there was poor management and enforcement of anti-competitive trade practices. With the Competition Bill, the ANC will ensure that effective structures are put in place to administer the law that governs competition in our economy.
Under the previous Government, big companies were allowed to dominate the markets through anti-competitive behaviour, such as over-charging, to the disadvantage of the people who buy goods or services. The Bill will outlaw this behaviour to the advantage of the people.
The Bill will place our competition law on the same footing as some of the most successful developed nations.
Step by step the ANC is making South Africa a better place for all its citizens.