Comments on the Competition Amendment Bill Presentation to the Portfolio Committee on Trade and Industry Cas Coovadia The Banking Association of South Africa

Introduction Banking Industry welcomes efforts to strengthen competition regime – beneficial to the SA economy Concerns about amendment not about principle of strengthening competition, but rather approach and content Proposed amendments were rushed consequently NO consultation, resulting in amendments that have not been, with respect, thoroughly considered.

Introduction Recent track record of Competition Commission Banking enquiry Steel cartel case Bread cartel case ….. Competition authorities highly effective in detecting, investigating and prosecuting anti-competitive activities and exploring new instruments i.e. market inquiries We suggest the Competition Commission is beginning to exercise effectively the tools at its disposal and will continue to do so. We believe it is thus unnecessary to introduce additional sanctions, which could have the effect of delaying efficient processes and actions being currently adopted.

Overview of BASA Comments Policy problem Proposed solution BASA support Inherited monopolies and complex monopolies Market inquiry provisions Complex monopoly provisions ✔ ✗ Cartel enforcement Legal certainty around corporate leniency Criminal sanctions and director liability Inordinate emphasis on merger activity Reduce thresholds (not in amendments) Concurrent jurisdiction Amendments to expand powers of competition authorities Anti-competitive legislation Competition authorities should be consulted – but no amendments proposed Capacity of other institutions Capacity of Commission to be addressed – but no proposals

Complex monopolies No evidence of complex monopolies in economy; Market inquiries are most appropriate tool for investigating sectors where the outcome is anti-competitive, even though the actions may not constitute contraventions; Current provisions extremely wide – they will capture almost all sectors of economy and prohibited actions appear to be deliberately broad, thus indicating a lack of consideration towards a more targeted approach. The Competition Commission is showing success, recently, in a more targeted approach. No basis for the proposed amendments and they are badly phrased – recommend deletion of section 10A

Market inquiries Supportive of principle BUT believe some changes required: There should be a clearer basis for the initiation of a market inquiry Inquiry should be limited to published Terms of Reference (TOR) – changes to TOR should be published Report should be published and comments should be invited (should be a legal requirement) Need for the publication of rules and procedures for market inquiries

Criminal sanction and director’s liability Need for criminal sanction questionable, given positive track record of Competition authorities; Criminal sanctions will be difficult to enforce, given challenges of judicial system and courts; IF provisions are to be retained, need for changes: Burden of proof for criminal sanctions is higher – principle should be continued – cannot apply lower standard of administrative procedure to criminal cases; If consent orders can be used to prosecute individual directors, it will have negative impact on consent orders We remain convinced the increasingly successful results being obtained by the Competition Commission, without imposition of criminal sanctions, negates any need for such sanctions. Instead, imposition of criminal sanctions could result in impediments to a process that is proving to be effective.

Conclusion To reiterate: The Competition authorities are much more effective than presented; Authorities are starting to use instruments A few of the proposals are unwarranted, excessive and too discretionary The Banking Association SA supports strengthening competition regime, but instruments should be carefully targeted.