Tuesday, July 31, 2012

Consumers will be the losers in the absence of more clarity over the Competition Commission’s ability to investigate suspected anti-competitive practices.
Jefrey Phahlamohlaka, corporate attorney, has appealed for clarity in the wake of the spate of recent decisions by the Supreme Court of Appeal, and various competition-law authorities – decisions that have overturned certain Competition Commission investigations.

“Over the past 12 months, at least three such investigations have been overturned,” says Phahlamohlaka. “They involved companies in the dairy industry, the flexible polyurethane market and the fertilizer sector.”
The Commission was told that:

it could only investigate suspected prohibited or anti-competitive practices if it had reasonable suspicion and objective grounds for doing so; and

it had to target specific companies, and not just the industry in general.

“Basically, the courts are saying that the Competition Commission cannot just go on a fishing expedition in the hope that they might find something anti-competitive,” says Phahlamohlaka. “It’s not just enough to have strong suspicions.”
However, he points out, this approach is allowed in other countries, citing the UK’s Office of Fair Trading’s wide powers to launch investigations into both companies and industries on the mere suspicion of unfair business practices.
“It is reasonable to assume that the Commission must feel that its hands are tied, and that it is unable to properly fulfill its role of protecting the South African consumer against anti-competitive business practices. .
“In fact, the Commission is currently appealing the implications of these recent decisions at the Constitutional Court, and is seeking clarity on the role it is supposed to play in the economy.”
An amendment to existing competition legislation was enacted in 2009; one that would give the Competition Commission more teeth and similar powers to its UK counterparts. However, it has not yet come into effect.
“The sooner clarity is reached on this issue, the better for the South African consumer.”