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Certain Sections of Competition Amendment Act in Effect

July 15, 2019

The Presidency

15 July 2019

Certain sections of the Competition Amendment Act have come into effect.

The proclamation was published in Government Gazette 42578.

President Ramaphosa assented to the act in February 2019.

The bill was passed by parliament and sent for assent in December 2018.

The bill, designed to address concentration and drive transformation in the local economy, was published for comment at the end of 2017 and tabled in July 2018.

During its deliberations, the portfolio committee on economic development introduced a number of amendments to the bill including a new definition on margin squeeze, that the minister must make regulations in terms of section 78, a new subsection 4 on abuse of dominance prohibited and a new clause 11 on conditional approvals.

The select committee on economic and business development adopted the bill without amendments.

The act aims to amend the Competition Act of 1998, so as to introduce provisions that:

• clarify and improve the determination of prohibited practices relating to restrictive horizontal and vertical practices, abuse of dominance and price discrimination and to strengthen the penalty regime;
• introduce greater flexibility in the granting of exemptions which promote transformation and growth;
• strengthen the role of market inquiries and merger processes in the promotion of competition and economic transformation through addressing the structures and de-concentration of markets;
• protect and stimulate the growth of small and medium businesses and firms owned and controlled by historically disadvantaged persons while at the same time protecting and promoting employment, employment security and worker ownership;
• facilitate the effective participation of the National Executive within proceedings contemplated in the Act, including making provision for National Executive intervention in respect of mergers that affect the national security interests of the Republic;
• mandate the Commission to act in accordance with the results of a market inquiry;
• amend the process by which market inquiries are initiated and promote greater efficiency regarding the conduct of market inquiries;
• clarify and foster greater certainty regarding the determination of confidential information and access to confidential information;
• provide the Competition Commission with the powers to conduct impact studies on prior decisions;
• promote the administrative efficiency of the Competition Commission and Competition Tribunal; and
• provide for matters connected therewith.

Sections that come into effect include section 1 except for paragraph (d), section 2, sections 8 to 13, sections 15 to 26, section 34, sections 36 to 44 and section 46.

The sections came into force on the date of publication.

In a trade and industry department statement, the trade and industry minister, Ebrahim Patel, pointed out that the remaining sections of the act will be phased in once additional work has been completed.

“By November this year, following publishing of draft regulations and public consultation, we intend promulgation of sections of the Act that provide small businesses with remedies against price discrimination by dominant firms; or when dominant buyers abuse their power by imposing unfair prices and other trading conditions,” said the minister.

Meanwhile, in Notice 42578, the economic development department has published the definitions of “medium-sized business” and “small business” provided for in section 1 of the Competition Act.

In a separate matter, the department has published, in Gazette 42576, notification of complaint referrals received by the Competition Tribunal.

Respondents to complaints include Distell (Pty) Ltd, Eberspacher Exhaust and Others (BMW Model L6), Eberspacher Exhaust and Others (VW Passat), Ibiden and NGK Insulators (Ford) and Ibiden and NGK Insulators (General Motors).

In Notice 373, the department listed mergers approved by the Tribunal.

Mergers include the acquisition of the Honda, Citroen, Peugeot Motors Dealership by Kempster Sedgwick (Pty) Ltd; The Custody, Trustee, Derivatives Clearing Business by ABSA Bank Ltd; Southern View Finance Holdings (Pty) Ltd and Century Capital (Pty) Ltd by Palaeofin (Pty) Ltd and Lieben Logistics (Pty) Ltd and GLS Supply by Super Group Holding (Pty) Ltd.