Towards a fair and efficient economy for all

Towards a fair and efficient economy for all

Outline

• Overview

• Priority sectors

• Division reports and expenditure

• Competition Amendment Act

• Strategic priorities


Overview

• Focus on enforcement

• Highlights • Construction – 10 investigations initiated; 2 mergers prohibited

• Food – 5 investigations initiated

• Finance – banking enquiry completed

• Ansac case finalised

• Merger activity decline (from 513 to 414)

• Appointment of Deputy Commissioner (1 Nov 2008)

• Best Company to Work For

• Expect a continued focus on enforcement


Infrastructure and construction

• The concrete pipes cartel

– Initiated in December 2007, referred in February 2009

– Uncovered collusion in concrete pipes, manholes and culverts

– Aveng paid R 46 million for its Infraset division

• The plastic pipes cartel

– Referred in February 2009

– Merger assessment uncovered the cartel

– Uncovered cartel in plastic pipes dating back to the 1980’s

– Commission is talking settlement with some respondents


Infrastructure and Construction

• Prohibited wire products merger

– Aveng intended to buy steel reinforcing companies

– Would result in high market shares and enhance existing collusion

– Commission prohibited the merger

• Prohibited asphalt merger

– Much Asphalt would have merged with Gauteng Asphalt and others

– Commission prohibited the merger because (1) high market shares; (2)

Gauteng was a viable competitor; (3) high barriers to entry


Food, agro-processing and forestry

• Bread

– Settled with Foodcorp in bread: paid R45 million

– Pioneer case heard in Tribunal

• Milling

– Better understanding of cartel in the value chain

– Possible cartels in flour and in maize meal

– Possible regional arrangements to cement national arrangement


Food, agro-processing and forestry

• Milk

– Referred to the Tribunal in December 2006

– Collusion and abuse of dominance by processors: (Clover, Parmalat,

Lancewood, Woodlands, Nestle, Milkwood, Ladismith)

– Settled with Lancewood, Clover got leniency in part

– Technical points raised on summons and initiation procedures:

– Clover and Ladismith (to the Tribunal, CAC and SCA)

– Milkwood and Woodlands (to the Tribunal and CAC)


Intermediate industrial products

• Sasol – Initiation in piped gas (Egoli, Spring Lights, Coal, Energy and Power

Resources)

– Initiation in petroleum products (SAPIA, SABITA)

• Mittal

– Harmony and Mittal case settled

– Commission investigations into tin plate pricing, steel cartels

– Challenges in excessive pricing


Financial services

• Banking report finalised in June 2008

• Report made 28 recommendations, some requiring regulatory

changes

• Established a steering committee and 4 working groups

• Steering committee consists of Treasury (chair), the DTI, Reserve

Bank and Commission

• Committee will review and oversee the implementation of the

recommendations


Number of cases initiated in 2008/09, by sector


Number of cases in 2007/08 and 2008/09


• 11 complaints referred to the Tribunal

• 118 complaints not referred to the Tribunal

Corporate Leniency Policy


• Corporate Leniency Policy (CLP) amended in May 2008

• Consulted with stakeholders and international best practice

• Amendment provides: – Legal certainty : process is more certain

– Marker procedure: potential applicants can request a marker

– Role in the cartel: does not exclude instigators

– Oral submissions: applicants can give oral statements

– Responsibility: E&E is now the responsible division

Leniency applications Jan 04 – Jul 09


1 2 1 111

3 6

1

1

7

9

3

1

7

11 2

1

2

4

1

0

2

4

6

8

10

12

14

16

18

20

22

24

Jan - Jun '04

Jul - Dec '04

Jan - Jun '05

Jul - Dec '05

Jan - Jun '06

Jul - Dec '06

Jan - Jun '07

Jul - Dec '07

Jan - Jun '08

Jul - Dec '08

Jan - Jul '09

Transport & energy

Other

Construction & Infrastructure

Industrial products

Food

Merger decisions by sector


Thresholds and fees

• Thresholds were increased with effect from 01 April 2009

• Filing fee for intermediate and large mergers increased

• Commission introduced a merger calculator and issued a guideline for small merger notification

• Expect decrease in merger filings


Threshold Combined turnover/asset value

Target firm turnover / asset value

Lower threshold R560, 000, 000 R80, 000, 000

Higher threshold R6, 600, 000, 000 R190, 000, 000

Intermediate merger Large merger

R100, 000.00 R350, 000.00

Administrative penalties from 06/07 – 08/09


Expenditure on litigation from 02/03 – 08/09 (R’000)


Policy and Research


• Worked on 109 cases in the year

• Activities included:– Submissions on regulatory matters (5)

– Presentations and seminars (32)

– Internal briefing papers (9)

– Conference papers (7)

– Submissions to international for a (5)

Stakeholder relations


• Compliance renamed Strategy and Stakeholder Relations• Working closely with the Commissioner’s Office• Engaged with:

– Government – public sector forum (1), bid rigging workshops (2)– Business – Amendment Bill (2), workshops for SME’s (13)– Consumers – workshops and presentations (11)– Practitioners – meetings and presentations (3)– Trade Unions – workshops and training (5)– International organisations – interactions with OECD, ICN, SADC,

UNCTAD, Lesotho and Sudan Govt– Academics – workshops at Universities (2)

Staff allocation to divisions at 31 March 09


Category Mergers & Acquisitions

Enforcement & Exemptions

Legal Services

Strategy and Stakeholder Relations

Policy & Research

Corporate Services

Commissioner’s Office

Total

Technical staff (lawyers & economics)

10 12 9 5 11 17 2 66

Admin & management

8 7 7 4 4 7 3 40

Consultants 0 1 0 0 0 6 0 7

Graduate trainees

6 3 4 1 3 2 0 19

Total staff 24 23 20 10 18 32 5 132

Expenditure on human resources


Total expenditure: R 110, 638m • 49.6% of total expenditure spent on HR

(R54,938m)

• 75.7% of HR cost spent on salaries for staff• 5.7% of salaries spent on training of staff

Competition Amendment Act


• Implications of the Amendment Act

– Concurrent jurisdiction

– Incorporation of the leniency policy

– Complex monopoly conduct

– Market inquiries

– Personal criminal liability

Strategic priorities

• Achieve demonstrable competitive outcomes in the economy – Deepening prioritisation in sectors and cases to achieve

meaningful impact on specific industry sectors

• An improved competitive environment for economic activity – Engaging with and influencing stakeholders for competitive

outcomes in the economy

• Realise a high performance competition regulatory agency – Strengthening and building leadership and management

capability


THANK YOUShan RamburuthTel: 012 394 3332

E-mail: [email protected]


Documents

Towards a fair and efficient economy for all