On 1 December 2017, Minister of Economic Development published the Competition Amendment Bill (the Amendment Bill) for comment. Pursuant to input from various interested parties an updated version of the Amendment Bill was tabled in Parliament on 11 July 2018.
The Amendment Bill seeks among others to address the issue of economic concentration and to drive transformation of the South African economy, as well as to strengthen the provisions of the Competition Act (Act) relating to prohibited practices.
Changes introduced by the Amendment Bill include the following:
- Importantly, the Amendment Bill does away with the so-called "yellow card", which allowed for penalties not to be imposed for certain first time offences. Going forward, parties found to have contravened any of the prohibited practice provisions of the Act face the imposition of a penalty of up to 10% of turnover. Repeat offenders face a penalty of up to 25% of turnover. In determining the appropriate penalty, the turnover of parent entities may be taken into account.
- The Bill stipulates that the Commission should publish guidelines regarding the application of the sections regarding horizontal and vertical prohibited practices.
- The abuse of dominance provisions have been amended to include concepts developed from case law regarding predatory and excessive pricing and margin squeeze. The provisions have further been amended to include abuses by firms who are dominant customers. The price discrimination provisions have been amended with the objective of making it easier for smaller firms to sustain a complaint against a dominant firm.
- There are amendments to the exemption provisions to enhance the objectives of transformation and participation of small and medium sized businesses in the economy, including enabling the Minister to exempt agreements or practices to give effect to the purposes of the Act. Procedurally, a one-year time limit has been introduced within which the Commission must decide whether to grant or refuse an exemption application.
- The merger provisions have been amended to introduce new factors to be considered in the assessment of mergers between firms, including cross-ownerships and cross-directorships between parties to a merger, and importantly, any other mergers that a party to a merger has undertaken for a specific period. There are also amendments to clarify the importance of public interest provisions in the assessment process, and to bring those provisions in line with the objectives of transformation and deconcentration in the economy.
- An important addition relates to foreign entities making acquisitions. It is proposed that a Committee be constituted to consider whether such proposed acquisitions affect South Africa's national security interests, and this Committee may prohibit such mergers.
- There are amendments that seek to enhance the market inquiry process to include measures to address concentration, transformation and the promotion of small and medium businesses. The complex monopoly provisions (which have never been implemented) have been deleted, although some concepts have been carried through into the market enquiry provisions. The powers of the Commission are expanded and include the ability to order divestiture.
- The Amendment Bill introduces the concept of impact studies, enabling the Commission to assess the impact of previous decisions taken by the Competition Appeal Court, the Competition Tribunal and the Commission themselves.
The Minister has indicated that he anticipates the parliamentary process for considering the legislation to be concluded before the end of the year.
20 July 2018 Update: Invitation to comment
The Parliamentary Portfolio Committee on Economic Development has today issued an invitation to comment on the Bill. The deadline for comment is 17 August 2018.