Competition Amendment Bill of 2017

Proposed amendments generally strengthen provisions of the Competition Act of 1998

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The letter and the spirit of the Competition Amendment Bill of 2017 (of 1 December 2017, “the Bill”) seem completely aligned on the issue of transformation. The proposed amendments generally strengthen provisions of the Competition Act of 1998 (Act 89 of 1998, “the Act”) relating to collusion, abuse of dominance, price discrimination, merger control, exemptions from prohibited practices and market inquiries.

It is clear the Bill seeks to give further effect to the important objectives of the Act. Interested parties need to note that South African competition law differs from international systems, as it focuses not only on competition issues, but also on certain public interest and social goals, such as the promotion of small businesses, the interests of employees and black economic empowerment. The Preamble to the Act states that the people of South Africa recognize that our country’s past discriminatory laws resulted in excessive concentrations of ownership and control within the national economy, and that the South African economy has to be opened to a greater number of South Africans through ownership and opportunity.

It is indisputable therefore that the goal here is to enable the competition authorities to take steps aimed at ending the exclusion of the majority of South Africans from owning a stake in the economy.

Concentrated markets that inhibit new entrants and that, accordingly, exclude large numbers of black South Africans from the opportunity to run successful enterprises, are not a basis for strong and sustained growth. They continue to limit the talent pool of entrepreneurs on which the growth potential of the economy relies. An inclusive growth path requires that these barriers to entry are addressed with great effectiveness and efficiency. Some of the important objectives of the Act are to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the economy; and to promote a greater spread of ownership, in particular to increase the ownership stakes of historically disadvantaged persons.

There will obviously be conflicting submissions in the consultation process from other interested parties like, “the Competition Act is not the right tool for solving economic exclusion”, “the low level of black business ownership is due to systemic factors that need a different approach”, “new competition legislation will harm large businesses”, etc. The process resulted in the identification of five priorities which inform the rationale for the proposed amendments, one of which is that 1) special attention must be given to the impact of anti-competitive conduct on small businesses and firms owned by historically disadvantaged persons. In a forward-looking and innovative manner, the amendments in the Bill address these identified priorities.

The Bill recognizes that at the same time as tackling economic concentration, it is imperative to address the persistently racially-skewed profile of ownership of the economy. Additionally, that instruments and mechanisms addressing economic transformation must ensure inclusive and meaningful change and avoid being superficial so as to circumvent undesirable practices like fronting.

Khumisi Kganare, Founder and Director at Kganare and Khumalo Incorporated Attorneys www.kkinc.co.za

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