Competition Commission Meeting Our Objectives Presentation to Portfolio Committees Cape Town 13 June 2001 ADV. MENZI SIMELANE

Objectives To provide An overview of our achievements to date Economic information

Background Commission became operational on 1 September 1999 – 20 months old The Competition Act has been amended twice Most recent amendment became effective 1 February 2001 Thresholds increased dramatically, reducing merger workload by 60% Jurisdiction became concurrent with other regulators – has increased merger & investigation activity

Meeting Our Objectives Objectives of the Act To promote efficiency, adaptability and development of the economy To provide consumers with competitive prices and product choices To promote employment and advance social and economic welfare of South Africa To expand opportunities for South African participation in world markets and recognise the role of foreign competition in the Republic To ensure that SME’s have an equitable opportunity to participate in the economy To promote a greater spread of ownership, in particular to increase the ownership stakes of historically disadvantaged

Meeting Our Objectives Our Activities Merger evaluations Investigations into prohibited practices Exemption evaluations Advisory opinions Education & Information Policy & research (non-case) Legislative reviews

Meeting Our Objectives Mergers 1999/2000 2000/2001 Total No of cases notified Intermediate Small Large Transitional 331 20 175 136 407 19 337 21 738 39 51 No of cases finalised 236 12 91 133 414 24 387 3 650 36 478 No of cases prohibited 5 (2.1%) 1 6 (1.4%) 11 (1.7%) 4

Meeting Our Objectives Mergers Type of merger No of mergers Percent Purely Horizontal 178 62% Purely Vertical 25 9% Conglomerate 63 22% Management Buy-out 6 2% Horizontal/vertical mix 13 5% Total 285 100% Acquisition by a foreign firm 55 19% Failing firm argument Anticipated job losses 19 6% Sample of mergers between April - December 2000

Meeting Our Objectives Mergers Sector % of Total (9/99-3/00) % of Total (4/00 – 2/01) Mining and Construction 6% 4% Financial Services 13% ICT1 14% 11% Transport 10% Manufacturing 22% 33% Services Real Estate 8% Wholesale - 12% Retail Other 3 18% 5% TOTAL 100%

Meeting Our Objectives Investigations Type of Complaint No of Complaints Received No of Complaints Resolved Horizontal (Collusion) 13 10 Vertical 8 5 Abuse of Dominance 67 46 Multiple Provisions 64 36 No jurisdiction 26 TOTAL 176 123

Meeting Our Objectives Investigations Sectoral Distribution (cases under investigations Agriculture 6% Services 10% Manufacturing 25% Wholesale 15% Retail 17% Sale, repair & maintenance of motor vehicles 2% Transport Medical Schemes

Meeting Our Objectives Investigations Sectoral distribution (resolved cases) Forestry 1% Manufacturing 24% Wholesale 6% Retail 19% Transport Services 16% Medical aid Schemes Agriculture Telecommunications 2% Real Estate Insurance 3% Mining IT 9%

Meeting Our Objectives Exemptions 9 applications (4/2000 – 3/2001) 3 pharmaceutical manufacturing 2 healthcare services 4 manufacture of transport equipment, cement products, liquid fuels and shipping lines All relating to restrictive horizontal practices

Efficiency Cost per Output Merger Evaluations Investigations Exemptions Evaluations Advisory Opinions Total Cost R11 172 560 R8 299 335 R1 297 254 R1 412 605 Outputs 419 mergers 27complaints 7 exemptions 132 advisory opinions Cost per output R26 664 R65 342 R185 321 R10 701

Efficiency Turnaround Time Case Type Av Turnaround Time Mergers 31 days Complaints 91 days Exemptions 145 days Advisory Opinions 25 days

Interesting Information Ownership Concentration Company Number of ownership interest out of 59 sample sectors Percentage ownership control Anglo -American 21 35% Sanlam 13 22% Old Mutual 12 20% Rembrandt 11 18% Sasol 5 8% Unilever 4 6% Tiger Brands 3 5% Parmalat Ellerine Holding 2 3%

Interesting Information Problem Sectors

Interesting Information Mergers & Employment In 125 cases evaluated a net loss employment of 197 jobs occurred Industries with combined market share of 60%-100% resulted to 77% of the above job losses Competitive industry with low levels of concentration resulted to only 18% of the above job losses Concentrated industries at Cr4 above 60% & competitive industries at Cr4 below 40% resulted to 4 times more job losses 100% employment gains were within Cr4 in the ranges of 20% to 60%

Questions & Clarification

How to contact us Website: www.compcom.co.za E-mail: CCSA@compcom.co.za Tel: (012) 482-9000 Fax: (012) 482-9003