On 8 March 2013, the Presidency promulgated that the market inquiries chapter of the controversial Competition Amendment Act No. 1 of 2009 (the “Amendment Act”) will be effective from 1 April 2013. The promulgation extends solely to the market inquiry provisions with no reference to the balance of the provisions in the Amendment Act, including the introduction of criminal liability for cartel conduct.
The implication is that the Competition Commission (the “Commission”) will now have significant additional powers when instituting market inquiries, not currently provided for in terms of the Competition Act, No. 89 of 1998. As of 1 April 2013, the Commission will be free to, of its own initiative or in response to a request from the Minister of Trade and Industry, conduct a formal inquiry into the general state of competition in a market in accordance with the relevant provisions in the Amendment Act.
The concept of a market inquiry is not completely unfamiliar to South African business. The banking inquiry which continued for nearly two years and which concluded in May 2008 was the Commission’s first market inquiry launched pursuant to public concern regarding the high levels of charges by banks and other payment providers. Much to the surprise of the public, the banking inquiry did not yield any staggering anti-competitive findings or restructures to the industry.
The new market inquiry provisions will enable the Commission to force participation and summons parties to appear and/or provide relevant documents to the Commission. This is in stark contrast to the banking inquiry where the Commission relied solely on the voluntary participation and co-operation of market players.
The new market inquiry provisions also introduce various possibilities to use the information obtained during a market inquiry either to initiate complaints or enter into consent agreements with the respondents concerned. The Commission may, of course, elect to take no further action after the conclusion of a market inquiry. This sparks some hope that future market inquiries will not all reach empty conclusions but will give the Commission the necessary teeth to effect change in anti-competitive markets.
The Commission’s imminent launch of its inquiry into the private healthcare sector, as a result of the rising costs of healthcare, is no doubt the impetus behind the rather abrupt promulgation of the market inquiry provisions and we can see why. The private healthcare sector has added complexities such as the multitude of participants operating at different tiers of the industry (such as doctors, medical aid schemes and hospitals). This requires an intricate probe of the various levels of competition in this market. Accordingly, voluntary co-operation by numerous market participants in the private healthcare sector (as opposed to the banking sector) may not be easy to achieve. The additional powers will no doubt assist with this.
Further, healthcare is an emotional issue at the forefront of concerns for all South Africans. In tackling a mammoth probe into the private healthcare sector, South Africans would want to see changes once the probe concludes, which can far more effectively be achieved with the teeth given to the Commission as a result of these new provisions.
The new market inquiry provisions have received mixed reactions. Some argue that the powers afforded to the Commission are too invasive which may result in technical legal challenges being brought once the Commission starts flexing its muscles. Others are waiting to see just how effective these provisions will be in the upcoming healthcare inquiry. With rumblings of the healthcare inquiry commencing on 1 April 2013, South Africa will be watching all developments with baited breath.
What is clear is that a mere inquiry this time around will not be satisfactory – all eyes will be watching to see if the inquiry gives rise to any actual changes and/or the elimination of anti-competitive structures.