The Council for Built Environment (CBE) acting on behalf of the Engineering Council of South Africa (ECSA) has applied to the Competition Commission to be exempted from certain provisions of the Competition Act, No 89 of 1998 (Act) that outlaw prohibited practices.
The exemption application relates to certain professional rules of ECSA in term of which work that may be undertaken by engineers are identified and regulated. The CBE asserts that this exemption is necessary to maintain professional standards or the ordinary function of the profession and, in addition, certain legislative provisions of the Council for Built Environment Act, No 43 of 2000 (CBE Act) requiring cooperation between CBE and the Commission.
Schedule 1 of the Act allows for the exemption of the rules of professional associations by the Commission, where such rules have the effect of substantially preventing or lessening competition but are reasonably required to maintain professional standards, or the ordinary function of the profession.
In June 2014, the ECSA (amongst other firms), applied for the exemption of the fee guidelines published by it (which effectively constitute price fixing) and the Commission's decision in respect of this exemption remains pending.
Previously, various professional bodies have relied on this provision of the Act to apply for the exemption of their professional rules, which usually are perceived to have the effect of lessening or preventing competition in a market. Most notably, the Health Professions Council of South Africa has unsuccessfully applied for exemption from the application of the Act in respect of certain of their professional rules. Subsequently, a private complainant has taken a complaint against the Health Professions Council of South Africa and Professional Board of Optometry to the Tribunal alleging that their professional rules, specifically those rules that prohibit lay ownership and investment in the business of a health professional, are anti-competitive. The Tribunal has not, yet, released its decision in respect of this complaint.
It is clear that the professional rules are recognised as being capable of having an anti-competitive effect in the markets that are subject to these rules. Nevertheless, the competition authorities' approach is in no way clear, with the Commission being overall reluctant to grant exemptions under Schedule 1 of the Act and professional bodies, as a result, experiencing great uncertainty as to the permissibility of their professional rules.