5 Nov 1998



5 November 1998

COMPETITION BILL

Apartheid and other racist laws and practices under the NP Government led to ownership
and control of large portions of the economy by a few white-owned companies. Apartheid
encouraged anti-competitive practices and unjust restrictions on full and free
participation in the economy by all South Africans. Under the ANC Government, the economy
is open to wider ownership by a wider spectrum of South Africans, credible competition
laws will be put in place with effective structures to administer the laws. The Bill will
create an efficient competitive environment, which balances the interests of workers,
owners and consumers, to benefit all South Africans. The economic environment will be
focussed on development.

The Objectives of the Bill

The Competition Bill will:

  • provide all South Africans with equal opportunities to participate fairly in the
    country`s economy
  • achieve a more effective and efficient economy in South Africa
  • provide for markets in which the people have access to the quality and variety of goods
    they want
  • restrain trade practices which undermine a competitive economy
  • create a better capability and an environment for South African businesses to compete
    effectively in international markets
  • control the transfer of economic ownership and establish independent bodies to monitor
    competition

The Aims of the Competition Bill

The purpose of the Bill is to promote and maintain competition in South Africa which
will:

  • promote the efficiency, flexibility and development of the economy
  • provide people with competitive prices and product choices
  • promote employment and the social and economic welfare of people
  • expand opportunities for participation in the world economy
  • ensure that small and medium businesses can participate in the economy
  • promote a wider spread of ownership so that disadvantaged people will own more shares in
    companies

The Competition Commission will be administered by a Commission
Management Board
and will function mainly through a Competition
Inspectorate
and a Competition Tribunal.

The Competition Inspectorate will investigate alleged contraventions of restrictions
laid down in the Bill, applications for exemptions from restrictions and proposed mergers.
The Bill gives search and seizure rights to the Inspectorate.

The Competition Tribunal will grant exemptions from restrictions, authorise or stop
mergers, judge whether any conduct is a restricted practice and impose corrective measures
in respect of anti-competitive acts. The Bill ensures that inquiries by the tribunal are
carried out in public.

The Competition Bill defines restrictive practices

The Bill prohibits conduct which prevents competition unless it can be justified on
certain grounds set out in the Bill. Such behaviour can either be between suppliers or
between suppliers and their customers.

The Bill also prohibits behaviour which has been found to be anti-competitive in the
past without the opportunity for justification. Prohibitions in this category include:

  • fixing a buying or selling price or trading condition
  • establishing production quotas, or restricting production
  • restricting technical innovation or development
  • avoiding or restricting investment
  • collaborative tendering

The Commission will not have to prove that companies are engaged in unfair practices
when the companies involved in an unfair practice have one or more directors in common.

The Bill Prevents Firms form Dominating the Markets

Under Apartheid, very large firms had the power to control prices, exclude competition
or act independently of their competitors. They abused their positions to the disadvantage
of their competitors and consumers. Under the ANC, dominant firms are, apart from the
restrictions mentioned earlier, also prevented from:

  • limiting output, production or technological development to the disadvantage of
    consumers
  • charging unnecessarily high prices to the disadvantage of consumers
  • refusing to give a competitor access to a necessary product when it is economically
    reasonable to do so
  • acting in any way that hinders or prevents the entry of a competitor into a market
  • engaging in an act which is known to exclude competitors unless it can justify that the
    pro-competitive gains from this act outweighs the anti-competitive effects of the act

Key Political Messages

The NP Government passed racist laws which ensured that blacks were kept outside the
country`s major economic activities, which resulted in a situation where a very small
minority owned and controlled the bulk of the economy.

The ANC Government is committed to opening the economy up for greater ownership and
control by a greater number of South Africans. The ANC will ensure that everyone has an
equal opportunity to participate freely and fairly in the national economy.

Under Apartheid, there was poor management and enforcement of anti-competitive trade
practices. With the Competition Bill, the ANC will ensure that effective structures are
put in place to administer the law that governs competition in our economy.

Under the previous Government, big companies were allowed to dominate the markets
through anti-competitive behaviour, such as over-charging, to the disadvantage of the
people who buy goods or services. The Bill will outlaw this behaviour to the advantage of
the people.

The Bill will place our competition law on the same footing as some of the most
successful developed nations.

Step by step the ANC is making South Africa a better place for all its
citizens.

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