Slide1: Presentation to the National Council of Provinces SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS by Shan Ramburuth Competition Commissioner 6 March 2007


Why competition policy?: Why competition policy? Fairness and access Prices and Quality Innovation Consumer Choice


Competition Commission’s activities: Competition Commission’s activities Prosecution of anti-competitive behaviour Merger control Advocacy


Application of the Act: Application of the Act All economic activity within or having an effect within South Africa Conduct of all enterprises: public or private Concurrent jurisdiction: -Sector regulators -“Forum Shopping” -MOUs with ICASA, NER, Postal Services Regulator, negotiating with the SARB and FSB


The Competition Authorities: The Competition Authorities The Competition authorities E X T E R NA L P A R T I E S Competition Commission Competition Tribunal Competition Appeal Court Appeal of Tribunal decisions Referral of complaints & large mergers Exemption applications, complaints and merger notifications Appeal of Tribunal decisions Appeal of exemptions, intermediate mergers or non-referral decisions, defence of referral decisions


Enforcement: 2005/2006: Enforcement: 2005/2006 Complaints (105) Investigations (134) Non-refer after screening/further investigation (74) Referral (6) Respondent defends Respondent successfully defends Interlocutory applications Consent order (8) CT approves/ agrees with CC


Price fixing: 2005/2006: Price fixing: 2005/2006 General Motors, Daimler Chrysler, Nissan, Volkswagen, Citroen: Minimum resale price maintenance Settlement, consented to penalty totaling R25 150 000 Subaru and BMW: Fixing of prices and/or trading conditions Settlement, consented to penalty totaling R 8 500 000 Lufthansa Fixing of trading conditions Settlement, consented to penalty of R8 500 000


South African Airways (SAA) cases: 2005/2006: South African Airways (SAA) cases: 2005/2006 Litigation in Tribunal (Nationwide complaint) Abuse of Dominance: Travel agents’ incentives Tribunal imposed penalty: R25 million Consent Agreements: Collusion, code sharing with Lufthansa: R20 million Collusion, fuel levies with SA-Airlink,-Express, Comair: R20 million Abuse of Dominance, travel agents’ incentives (Comair complaint): R15 million


Current cases: Current cases Harmony Gold/Mittal Steel Excessive pricing Tribunal’s decision pending SAVA/Telkom Access to essential facility Litigation in the High Court over jurisdiction Ansac/Botash Fixing of trading conditions Many interlocutory applications, appeals Tribunal must still hear the merits of the case


Current cases: Current cases


Current cases: Current cases CC vs Blue Ribbon, Sasko and Albany Fixing of prices and trading conditions Western Cape investigation widened to national Big Daddy vs South African Breweries Dividing markets, minimum resale price maintenance and exclusionary conduct Barnes Fencing vs Mittal Steel (Long steel) Price fixing and price discrimination


Exemptions: Maintenance or promotion of exports Promotion of SMMEs & business owned by HDIs to become competitive Stop decline in an industry Economic stability of a designated industry Intellectual property rights Professional rules Exemptions


Corporate Leniency Policy: Corporate Leniency Policy Introduced 6 February 2004 Regulate cartel behaviour Indemnity to firms providing information on cartel “First through the door” Assist CC in case against other cartel members Not instigator 10 applications to date, 6 granted conditional leniency


Merger control: Merger control Change of control Small, intermediate and large Test: -Substantial lessening or preventing of competition -Technological, efficiency and pro-competitive justifications -Public interest grounds: Effect on particular industrial sector or region Employment SME’s or firms owned by HDIs to become competitive Ability to compete in the international market


Merger notifications: Merger notifications


Prohibited mergers: 2005/2006: Prohibited mergers: 2005/2006 4 out of 394 Eyethu/Ultra Registrars Small merger, abandoned Sasol/Engen Large merger, prohibited by Tribunal Foskor/Sasol’s phosphoric acid business Large merger, abandoned Medicross/Prime Cure Large merger, prohibited by Tribunal, allowed by CAC


Conditional approvals: 2005/2006: Conditional approvals: 2005/2006 14 out of 394 IntelSat/PanAmSat Intermediate merger, behavioural conditions AP Moller-Maersk/Royal P&O Nedlloyd NV Large merger, structural conditions Tiger Bands/Ashton Canning Large merger, employment-related conditions


Current merger cases: 2007: Current merger cases: 2007 Telkom/BCX Prime Media/Khaya FM Pick ‘n Pay/Fruit and Veg City Mila Nutri/Yara SA


International contributions: International contributions International Competition Network Hosted 2006 conference Organization for Economic Development Observer status since 2006 United Nations Committee for Trade and Development Competition Committee


Advocacy: Advocacy FAIS ombud’s referral: Changes to the Short Term Insurance Act - “untying” insurance and bond Pension Funds Adjudicator’s ruling on switching retirement annuity funds Postal Regulator’s competition guidelines Comments on the MIDP Workshops with Estate Agents Board Joint working committee with ICASA


The banking inquiry: The banking inquiry National Treasury’s research Competition Commission’s research Market transparency Voluntary submissions Public hearings Recommendations on: -Access to payment system -Bank charges


Way forward - strategic planning: Way forward - strategic planning Increase staff morale and motivation Align structure and work processes with strategy Importance of approach and methodology Knowledge management Communication and advocacy