SIYABULELA MAKUNGA | Competition Commission explains its regulation processes

Navigating regulatory processes can be daunting and, frankly, the legalese can be confusing at the best of times.

In the words of one of the world’s most decorated lexicographers, Noah Webster: “Language is not an abstract construction of the learned, or of dictionary makers, but is something arising out of the work, needs, ties, joys, affections, tastes, of long generations of humanity, and has its bases broad and low, close to the ground.”

In this column, I make an attempt to demystify and explain our competition regulation processes.

To start off, maybe it is important to remind readers that the Competition Act 89 of 1998 (as amended) caused the establishment of three independent competition statutory bodies in the country — the Competition Commission, Competition Tribunal and Competition Appeal Court.

Often, readers will hear that the commission has referred a case to the tribunal. But what does this exactly mean?

Each of the three competition authorities play a different role in the regulation process.

The commission investigates complaints of potential anticompetitive conduct.

Upon completion of our investigation and find there are contraventions of the Competition Act 89 of 1998 (as amended), the case is then “referred” to the tribunal.

This means that the firm or firms believed to have engaged in anticompetitive conduct will have an opportunity to present their case, often during a hearing, to the tribunal.

Simply put, the commission holds investigative and prosecutorial powers in the competition regulation value chain.

Akin to the high court, the Competition Tribunal will then review the case and through processes that may include a hearing, impose interim relief, levy administrative penalties, order divestitures and so on 

The commission’s referral of a matter often contains recommendations, and we will ask the tribunal to confirm a proposed consent agreement or, to use the legalese, “confirm as an order” a consent agreement.

Let me also hasten to mention that I often get asked where the penalty fee goes and how that is determined. Let me explain this a little more. First, the Competition Act clearly stipulates that a fine or penalty cannot be more than 10% of a firm’s annual turnover. Second, that penalty or fine is returned to Treasury.

Importantly, decisions of the tribunal can also be appealed to the Competition Appeal Court, a special division of the high court.

In terms of M&A, the commission can adjudicate on small and intermediate mergers, but in the case of large mergers it can only make a recommendation to the tribunal after investigating the merger. The tribunal can choose to approve, conditionally approve or prohibit the large merger.

The Competition Act allows for the commission’s decisions on small and intermediate mergers to be taken on review to the tribunal, and the Competition Appeal Court.

Our processes ensure transparency and accountability throughout the review of complaints, investigations of potential anticompetitive conduct, and the enforcement of adhering to the Competition Act.

Makunga is spokesperson for the Competition Commission of SA