I N T H I S E D I T I O N

PAGES 3 & 4

Commission in the spotlight at competition

conference

PAGES 5 & 6

Should the Commission be

bitter about the sugar

industry in South Africa?

PAGES 7 – 9

Does Telkom’s monopolyhave a detrimental effect oncompetition in the internetservice provision industry?

PAGES 9 & 10

Competition andRegulation: The debate

PAGES 11 & 12

InternationalDevelopments

PAGES 13 – 15

Commission Cases

PAGES 16 – 19

Introducing the Act and the

competition authorities

O n 1 September 2000 theCompetition Commissioncelebrated its first year ascompetition regulator and I

am proud to reflect on the past year inthe Commission’s first edition ofCompetition News.

The South African economy hasmoved from a fairly low base of competi-tion and competitiveness in 1994 to thebeginnings of an internationally compet-itive market. However, certain areas ofthe economy remain highly concentratedand anti-competitive, which hamperseconomic growth, development andemployment.

The Competition Act thus constitutesan important tenet of the government’seconomic policy. It creates a frameworkwithin which companies can competeagainst each other both locally and inter-nationally, which will ultimately benefit usall through increased product choice andlower prices.

The Competition Act also recognisesthe role of labour and historically disad-vantaged communities, as well as consumers in the broader economy. Itrequires the competition authorities toconsult with these stakeholders.

The Competition Commission hastaken its consultative role very seriouslyand has established a number of education and information initiatives toallow these important stakeholders toparticipate in proceedings. The recentmarch by NUMSA in respect of the Defy-Kelvinator merger is a case in point.

The Commission went out of its way toestablish contact with the trade union on

1

TO PAGE 2

Edition 1 • September 2000

‘The Competition Act is about fairness and

efficiency... aboutgiving people

a chance’Adv. Menzi Simelane

The First YearCelebrating an efficient & effectivecompetition authority

the merger. It is unfortunate that NUMSAwas unable to provide significant input ata time when a decision needed to bemade. However, we will be working withNUMSA and other trade unions toincrease the participation of workers inour proceedings.

Getting the job doneSince opening its doors on 1 September1999, the Competition Commission hascovered significant ground.

In the eleven months ending 31 July2000, the Commission was notified of488 mergers, of which 38 were largemergers. Decisions have been made in442 cases. Only ten mergers have beenprohibited so far – two of which werelarge.

In addition to mergers, theCommission received, during the sameperiod, 119 complaints of alleged prohibited practices.

Thirty-four cases are currently underinvestigation. Forty-one Notices of Non-Referral have been issued, implying thatthe Competition Commission does notconsider the matter to fall within theambit of the Act. Two consent ordershave been issued and three cases havebeen referred to the Tribunal.

The Commission has received 126requests for advisory opinions or clarifi-cations of the Act, to which 120 responses have been issued.

As the institutions have gained experi-ence in the application of the Act, diffi-culties in the application and interpreta-tion of the Act have arisen.

The Competition Commission and theCompetition Tribunal are currentlyreviewing the Act with a view to recom-mending amendments to the Minister ofTrade and Industry. Of greatest urgencyis the jurisdictional issue.

Section 3 of the present Act providesthat, ‘This Act applies to all economicactivity within, or having an effect within,the Republic, except...acts subject to orauthorised by public regulation; or...’

This provision, commonly known assection 3 (1) (d), has led to uncertaintyand confusion about the jurisdiction ofthe Act in respect to entities that are sub-ject to industry-specific regulation interms of other legislation.

The intention of the legislatureexpressed in this sub-section was toexclude from the ambit of theCompetition Act those acts which,although sometimes manifestly anti-competitive, are specifically sanctionedby public regulation.

However, the legislature’s intentionwas not to oust Competition Act juris-diction from all activities engaged in by aspecific enterprise, much less a specific

sector of industry.At a conference on competition and

regulation in April, hosted jointly by theCompetition Commission and theCompetition Tribunal, the competitionauthorities proposed the deletion of section 3 (1) (d), while adding a specificprovision for the Minister of Finance toprevent the competition authorities frommaking an order in relation to a mergerwhen it is in the interests of the stabilityof the financial system. This proposalhas been accepted by both the Ministerof Trade and Industry and the Minister ofFinance.

Furthermore, the Commission is currently reviewing its experience in rela-tion to mergers over the past year. Themerger provisions of the Act, Chapter 3,establish a scheme of review andapproval applicable to mergers over acertain size as determined by regulation. This may result in a recon-sideration of the thresholds. However,before any amendments are proposed, aconsultation process will be pursued.

From the above, it is thus clear that thefirst year of the Commission’s operationhas been very busy.

As expected, some initial difficultiesand teething problems were experi-enced, particularly with respect to theestablishment and refinement of proce-dures.

The Commission experienced a heavyworkload, especially with the additional125 transitional merger cases filed inNovember 1999, which had to bereviewed before the end of February2000. These mergers were done withinthe merger timeframe in the rules, overand above the normal merger caseload.We, therefore, achieved a lot in terms ofefficiency. Our internal processes havebeen streamlined and we have made upany backlog that might have developed.

I am confident that the Commissionhas laid a sound foundation for an

exemplary regulator: efficient and highlyeffective.

We will keep you informed of ourprogress through a variety of measures,including this newsletter. So, as is said inmedia circles, ‘Watch this space’.

This newsletter is an extension of theCommission’s role to develop publicawareness of the Act’s provisions.I believe that it will prove a useful reference. Your comments and feedbackwould be appreciated. Contact detailsappear on page 19.

Regards

2

FROM PAGE 1

‘On 1 September 2000 the Commission celebrated its firstanniversary and I am confident that it is firmly establishedas an exemplary regulator: efficient and highly effective.’

Adv. Menzi Simelane

Adv. Menzi SimelaneCOMMISSIONER: COMPETITION COMMISSION

T he conference brought toge-ther over 250 representativesfrom the private sector, government and regulatory

authorities, as well as internationalexperts and leading economists, to discuss the interface between competi-

tion and regulation and, in particular, theinstitutional question.

The Minister of Trade and Industry, MrAlec Erwin, opened the conference bycommending the Commission on itsachievements to date.

In his address, the Minister high-light-

ed the jurisdictional debate and empha-sised the pivotal role that the competitionauthorities play in transforming the econ-omy – an economy inherited in 1994 thatwas rigid, protected, locked up in ineffi-cient institutions, highly monopolisedand concentrated.

3

Competition and regulation in the spotlight:

The First Conferencehosted by the Competition Commission

and the Competition Tribunal

The Competition Commission and the Competition Tribunal jointly hosted a conferenceon competition and regulation from 17-18 April 2000 at Gallagher Estate in Midrand.

‘I am staggered at the amount of crucial policy information that emergesfrom the Competition Commission,’he said.

‘We’ve had insights into the workingsof this economy that we just did nothave until the Competition Commissioncame into being. It’s confirmed my per-sonal view that this is fundamentallypart of the economic policy. It is crucialfor maintaining the adaptability of theeconomy.’

Minister of Public Enterprises, MrJeff Radebe, expressed strong supportin his address for the important role ofthe competition authorities as well asdrawing on international experiences inthe restructuring of state-owned enter-prises. The Minister highlighted threeprinciples concerning competition andregulation:

• The promotion of competition and com-petitive markets should be an integralelement of any restructuring strategy.

• In business areas where competition isnot feasible (in the case of residualnatural monopolies), a regulatoryframework will need to accompany anyrestructuring initiatives.

• Restructuring proposals should incor-porate a rigorous cost-benefit analysisof their impact on overall social welfare.

Minister Radebe emphasised that com-petition authorities and sector-specificregulatory agencies can co-exist but that they have different objectives andmethods for achieving those objectives.

Sector-specific regulation is generallyimplemented as a substitute for compet-itive forces (by defining the conditionsthat simulate a competitive market envi-ronment through controlling access or

pricing), whereas economic regulation isaimed at protecting and enhancing analready existing competitive process, aswell as setting boundaries for acceptablebusiness conduct.

The conference proved valuable to the competition authorities and todelegates. It attempted to address thenature of the role of a competitionauthority in the regulation of public utilities, such as electricity andtelecommunications; the importance ofcompetition in sectors, which havebeen deregulated or which are beingprivatised; as well as the extent towhich competition and public interestconsiderations need to be balanced inspecific sectors, such as the financialservices and the media or broad-casting sector.

The ultimate theme of the conferencewas, ‘Where is competition regulationbest placed?’

The approach that seemed to surfacefrom the various breakaway panels wasthat of continued collaboration betweenregulators.

Other luminaries at the conferenceincluded Mr Moss Ngoasheng,Economic Advisor to the President, whochaired the final plenary discussion onthe regulatory framework for competitionlaw; international speakers such Mr IanAlexander, a World Bank Private SectorDevelopment specialist; as well as MrAlan Asher of the Australian Competitionand Consumer Commission (ACCC).

A host of senior South African speak-ers; speakers from the OECD; the USFederal Trade Commission andDepartment of Justice; the Office ofUtilities Regulation in Jamaica; as well as representatives from SADCcountries also addressed the confer-ence, which is set to become an annual event.

4

FROM PAGE 3

Public Enterprises Minister Jeff Radebeaddresses the conference delegates.

‘Competition authorities and regulatoryagencies can co-exist,’ he said.

Trade and Industry Minister Alec Erwinopened the conference by commendingthe Commission on its achievements.

‘The ultimate theme of the conference was: Where is competition regulation best placed? The approach that

seemed to surface from the various breakaway panels wasthat of continued collaboration between regulators.’

Industrial users of sugar say theSouth African Sugar Association(SASA) is a cartel operation thatis fixing prices significantly higherthan the current world price.

Attempts by these users to import sugarare frustrated by the fact that tariffs aretriggered upward in response to a downward movement in the world priceof sugar. This, it is claimed, stunts theability of domestic industrial consumersto add value to sugar, to export compe-titively and to create new jobs. A prelim-inary examination of the industry revealsthat, internationally, the sugar industry ishighly regulated and protected.

The importance of sugarThe diverse SA sugar industry combinesthe agricultural activities of sugar canecultivation with the industrial productionof molasses, as well as raw and refinedsugar. Products include raw sugar,refined white sugar and refined brownsugar.

Forward linkages to downstreamindustries are numerous. Sugar is useddirectly and indirectly in various food-stuffs such as soft drinks, mineral water,confectionery products, fruit and veg-etable items, as well as in various cerealand dairy products. Sugar is also used in

the production of basic chemicals, beerand wine.

The price of sugar thus may influenceproduct prices in other sectors of theeconomy.

Although the forward industrial use ofsugar is relatively small compared todirect retail sugar consumption, theimpact of the link between the sugarindustry and other industries may haveimportant and broader implications foreconomic growth, efficiency and devel-opment. While indirect consumption ofsugar only constitutes 30% of totalsugar consumption, demand fromindustrial use for the twelve-year periodfrom 1987 to 1999 did increase by morethan 10%.

Structural characteristicsof the SA sugar industryA small group of large players in thesugar industry account for most of thecountry’s domestic sugar production.

There are 47000 registered canegrowers, made up of 2000 large-scalefarmers – responsible for more than66% of total sugar cane production –and 45000 small-scale growers farmingon tribal authority land, who produceapproximately 17.5% of the total crop.Milling companies constitute the

remaining 16%.The majority of the 16 mills operating

within the South African sugar industryare owned by two companies. IllovoSugar Limited owns eight mills,Tongaat-Hulett Sugar Limited owns five,Transvaal Sugar Limited owns two,while a group of smaller growers ownone co-operative.

This highly concentrated ownershipstructure is enhanced by the regulatoryframework that exists in South Africa.

The regulatory frameworkThe production, marketing and export-ing of sugar, as well as its domesticprice, is controlled and regulated by theSugar Act (Sugar Act 28 of 1936,repealed by Sugar Act 9 of 1978). TheAct provides for the establishment of theSouth African Sugar Association(SASA), which administers a proceeds-sharing partnership between the SouthAfrican Cane Growers’ Association andthe South African Sugar Millers’Association Limited.

SASA is autonomous and operatesfree of government control in terms ofthe Sugar Act and a Sugar IndustryAgreement, which the Sugar Act provides for in order to regulate theindustry’s affairs. The Sugar Industry

5

Should the Competition Commission be

bitter about the sugarindustry in South Africa?

The South African sugar industry has been accused of operating as a cartel. TheCompetition Commission examined the structure, conduct and performance of thishighly protected industry to investigate these claims...

Agreement is binding on all those whogrow sugar cane and produce sugar andrelated products.

The South African Sugar Act No 9 of1978 makes provision in section 6 for thefollowing:(a) The Sugar Association may, by notice

in the Gazette, prescribe the maxi-mum industrial price at which anysugar industry product, other thanspecialty sugar, may be sold;

(b) Such prices may vary in respect of dif-ferent grades, kinds, quantities andqualities of the product concerned.

The South African sugar industry oper-ates through a single channel marketingand pricing mechanism. SASA has thesole and final authority over the setting ofprices, and these amounts are automati-cally supported by the tariffs adminis-tered by the Board on Tariffs and Trade.

In addition, the Sugar Act (1978) provides for high import tariffs, therebyprotecting the industry from import competition.

The SA tariffs currently automaticallyadjust to a Rand-referenced price ifthere is a deviation of more than 10% inthe world price of refined sugar. If theworld price decreases, the tariff willincrease to make up the difference.Alternatively, if the world price increases,the tariff will decrease.

Conduct in the SA sugarindustrySASA justifies its pricing authority usingthe following:• The distorted nature of the world price.• The high levels of jobs, both direct and

indirect, dependent on the industry inSouth Africa and the Southern Africanregion.

• Sugar cane and beet are bulky, low-value products that are expensive totransport. The grower has little optionbut to sell his crop to the miller nearestto him. The resulting monopoly is oneof the reasons governments aroundthe world regulate sugar industries.

It is argued that, in the context of the lowand distorted world price, a free traderegime in sugar would push down prices

and put many growers (an estimated 47 000 cane growers) out of business.

The Department of Trade and Industrysupports the ‘continuation of a tariff andthe single channel exporting of sugar foras long as the world market is significantly distorted, recognising thatunbridled free trade will harm existingindustries in SADC as well as underminethe long-term potential for developmentin the region’.

It must also be pointed out that themajority of sugar-producing countrieshave some form of institutional price setting mechanism in place.

The international sugarmarketThe world market price of sugar is one ofthe most volatile of all commodity pricesbecause of the residual nature of theglobal market.

World prices for raw sugar have beensteadily decreasing since 1995. Thisworldwide drop can be mainly attributedto an over-supply in many major marketsbecause of good harvests, together withreserves from previous years.

The world price of sugar is establishedon the New York and London sugarexchanges and is, by definition, adumped price. Most domestic sugarprices are higher than the world pricebecause of protection afforded to localproducers. Protection is given becausesugar industries around the world areconsidered of strategic importance onthe basis of foreign exchange earnings,employment absorption, low importneeds and diverse linkages.

Brazil, the European Union, Australia,Thailand and the Caribbean effectivelysupply 70% of the world’s free marketsugar. South Africa contributes approxi-mately 2% to world production and 3%to world exports of sugar.

Global sugar prices and productionlevels are distorted by several factors,the most important of which are the following:• The regulation and protection of

domestic sugar production in manyindustrialised countries restrictsimports from more efficient and lower-cost producers.

• Subsidies as well as support

programmes for farmers in producingcountries distort the world and domestic prices.

• The Uruguay round of negotiations atthe WTO failed to produce real reductions in tariffs and other trade-distorting practices in sugar indus-tries.

• Sugar production is vulnerable to climatic change, while production levels are unpredictable and volatile.

Performance of the SAsugar industryThe average increase of SASA whitesugar prices between 1990 and 2000was 9.05% as opposed to a CPI average of 9.3%. SASA argues that thecontinued long-term trend of priceincreases that are consistently below theCPI reflects the increasing productivity of the industry.

Industrial sugar users, however, haveaccused SASA of operating as a cartel,which consistently sets sugar pricesabove the world price.

ConclusionThere can be no doubt that the SouthAfrican sugar industry is a legislatedcartel empowered to fix prices, andwhich is further protected through hightariffs.

This raises a number of concerns, themain one being that the domestic sugarprice is higher than the world price.

Another area of concern is that ownership in the milling and refiningsub-sector is highly concentrated.

Finally, strong vertical integration ispresent in the industry a feature of aprotected, uncompetitive market.

While the introduction of more competition into the sugar market wouldundoubtedly benefit consumers andexport-oriented downstream industries,there are no simple answers.

The features of the South Africansugar industry and its environment canbe found internationally in most sugar-producing countries. Without an international agreement on tariff liberal-isation, it is unlikely that unilateral liber-alisation in South Africa would havelong-term economic benefits.

6

FROM PAGE 5

T he South African Telecom-munications Regulatory Auth-ority (SATRA) conducted public hearings during June

2000, aimed at setting up guidelines forprivate companies offering servicessuch as internet access, data networksand video conferencing. These hearingswere also binding on ICASA, the newregulatory body.

Industry players such as the InternetService Providers’ Association (ISPA)have urged SATRA not to introduce newrules which could be seen as an attemptto further regulate the telecommunica-tions industry at a time when the authorities should be preparing toremove Telkom’s monopoly.

ISPA has emphasised the need to cre-ate an environment which moves awayfrom the protection of this monopoly. It isclaimed that Telkom’s presence has aserious detrimental effect on competitionin the internet service provision industry.

How does Telkom’s monopoly affectcompetition in the ISP industry? Shouldthe Competition Commission be con-cerned about these accusations?

Controlling accessIn 1997, Telkom was granted a five-year

monopoly licence for the provision of so-called ‘basic services’, with explicitperformance targets, including universalaccess.

The South African TelecommunicationsRegulatory Authority (SATRA) was estab-lished to, inter alia, monitor Telkom’s performance and service delivery.

The main competition issues revolvearound access to the essential infra-structure which Telkom controls, namelytelephone lines. These lines constitutean essential facility to internet service aswell as internet network providers.

The diagram (see page 8) illustratesthe relationships. A typical private or corporate user (level 4) will either go toan Internet service provider (level 3) for access to the WWW network, or contact an Internet network provider(level 2) directly.

The Internet service provider leasescapacity from Internet networkproviders, who depend on access to thetelephone network (PSTN or PublicSwitched Telephone Network) fromTelkom (level 1).

Internet service providersThere are six Internet network providersin South Africa and more than 70Internet service providers. Internet network providers include InternetSolution, Pipex Internet Africa, SprintSA, SAIX, OpenNet, and UniNet.Internet service providers include companies such as Internet Solutions,UUNet, Internet Africa, GIA, M-Web,SAIX, Intekom, and Yebo-net. SAIX andIntekom are Telkom companies.

The price that consumers have to payto their service providers (e.g. M-Web orYebo-net) is made up of two parts:

1) The price these companies chargefor their services, and

2) The price Telkom charges them forcommunication lines.

Unlike consumers of ‘normal’products, Internet network providers cannot shop around for the best pricefor access to telephone lines becauseTelkom has a monopoly on this infra-structure. The charges are determinedby Telkom and regulated by SATRA.

Competition issuesThe main problems for competition inthis setting can occur when the infra-structure provider (in this case, Telkom)is also competing in the related or‘downstream’ markets for Value AddedNetwork Services (VANS) such asInternet service provision.

A problem of this nature emerged in1996 when Telkom launched the ‘SouthAfrican Internet eXchange’ (SAIX), anInternet network provider, and furtherformed a wholly-owned subsidiary,Intekom (Pty) Ltd., which is an Internetservice provider.

The formation of these two compa-nies was perceived as a threat by theother Internet service providers, whosubsequently organised themselvesinto the Internet Service Providers’Association (ISPA).

Telkom vs ISPAThe Internet Service ProviderAssociation lodged a complaint againstTelkom with the Competition Board inJuly 1996 on behalf of the 72 independ-ent Internet service providers.The particular concerns raised with the

7

Competition in the InternetService Provision Industry

The debate over Telkom’smonopoly, its use of itsmarket position, as wellas the impact thereof onthe South African econo-my, has been going onfor some time.

TO PAGE 8

Board included:1. Cross-subsidisation

SAIX, as a division of Telkom, wasalleged to benefit from unfair cross-subsidisation. Profits made in the pub-lic-funded monopoly were used tolower SAIX and Intekom prices.

2. Predatory or discriminatory pricing byTelkom

Telkom could discriminate against theindependent ISPs by charging SAIXless (or not at all) for internationalbandwidth, as well as for certain capi-tal costs.

3. Technical barriers raising competitors’costs The ISPA alleged that SAIX enjoyedbetter access to the exchanges, whichhad important quality, cost and techni-cal advantages.

4. Non-price discriminationWith regard to access to infrastructure,there is an incentive for infrastructureproviders active as competitors in thedownstream services market to pro-vide inferior technical access to phonelines for independent ISPs. Telkom, itwas said, apparently discriminatedagainst competitors by delaying theinstallation and maintenance of lines,as well as giving Intekom prioritywhen it came to new connections. Ifthese allegations are found to be true,this could constitute denial of accessto an essential facility under theCompetition Act.

Furthermore, confidential informationmay have been misappropriated byTelkom to its competitive advantage (e.g.Telkom could have identified who ISPA’scustomers were and passed this infor-mation on to Intekom, who would thenhave contacted the prospective cus-tomers and, having had access to theirbilling records, made them better offers).

These concerns illustrate the competi-tion issues involved when the networkoperator also provides a range of relatedservices (i.e. vertical integration intelecommunications).

Basic service?Telkom, on the other hand, argued thatValue Added Network Services, includ-ing Internet provision, are so-called

‘basic services’ and are therefore part ofits monopoly.

Problematic in this regard is the factthat Telkom’s licence does not define the‘basic service’ for which exclusivity wasgranted.

The Competition Board suggested thatthe uncertainty regarding the extent ofTelkom’s exclusive rights required ademarcation of these rights by SATRA 1.

SATRA ruled in 1997 that the Internetis a Value Added Network Service andnot a basic service - and therefore opento competition in terms of theTelecommunications Act.

In a subsequent notice, SATRA stipu-lated that Telkom should ensure that allVANS operators have equal access to itsfacilities.

Furthermore, Telkom was to maintainaccounting records pertaining to its

VANS activities separately from itsPSTN (telephone network) activities andset up mechanisms to prevent monitor-ing or disclosure of any informationabout VANS operators.

A moot point was the issue of univer-sal access (in this context meaning theprovision of Internet access toblack/rural areas) – a central theme ofTelkom’s argument in favour of anInternet provision monopoly. SATRAdecided that, if Telkom were to be givensuch a monopoly, it would be under noobligation to roll out universal Internetaccess to underprivileged areas, andwould therefore not ensure universalaccess of Internet services.

Consumers’ interests would have suffered if Telkom’s exclusive rights hadbeen interpreted as to include VANS.

Furthermore, under no circumstance

8

FROM PAGE 7 INTERNET SERVICE PROVISION

T E L K O M

INTERNET NETWORK PROVIDERS

INTERNET SERVICE PROVIDERS

USERS

INDEPENDENT SERVICE PROVIDERSTELKOM OWNED

SAIX

INTEKOM

should a government-funded provider ofan essential facility (or a basic service)be allowed to discriminate against itscompetitors in related markets, or bepermitted to cross-subsidise its activitiesin that area with revenues from itsmonopoly rights in other areas.

In the interim, SATRA had to directTelkom to refrain from claiming to be ‘theexclusive provider of Internet access’until the dispute was settled, andordered an audit of Telkom’s books.

The ISPA laid a further complaint withSATRA when they learnt that Telkomhad decided it would ‘no longer supplyany new international bandwidth to theSouth African Internet service provider(ISP) community’.

Telkom appealed to the Pretoria Highcourt to set aside SATRA’s ruling,arguing procedural irregularities. Datesfor further legal proceedings have yetto be established. The case is to date(three years later!) tied up in court, sofar having dealt only with the procedure involved (‘validity of the ruling’) and not with the principle of thedefinition of a basic service (‘merits ofthe ruling’).

EffectsInternet service providers in South Africafeel the effects of cost-raising in two ways:1.The inflated cost of infrastructure.

Telkom is mandated to cross-subsidisebetween phone calls to finance theroll-out of infrastructure, thereby mak-ing local and international calls moreexpensive.

2. The inflated cost of Internet access.It is in this area where Telkom’s com-panies are accused of being favouredat the expense of independent ISPs.

The regulatory uncertainty that hasbeen created by this case has had detri-mental effects on investment rates in theISP industry.

Ironically, the current dilemma couldhave been avoided if the Tele-communications Act, which gives Telkomexclusive rights to provide basic servic-es, had defined these services moreclearly. Telkom’s licence is equallyambiguous, opening the floodgates toindefinite litigation procedures. Mostimportantly, SATRA is confronted withthe challenge to outline and clarify itsjurisdiction in this matter.

What can the CompetitionCommission do?Unfortunately the Competition Com-mission would face similar jurisdictionalissues at this stage.

It could investigate abuse of dominance and denied access to an essential facility but would soon run intothe same problem of definition of basicservice.

If VANS constitute basic services,Telkom is not at fault when it refuses tosupply infrastructure to ISPs or lurescustomers away from other Internetservice providers. This would bebecause it would be the sole legal supplier of Internet services.

Only once the court case onSATRA’s jurisdiction is settled, andSATRA and the Competition Com-mission agree on the approach, canthe Commission confidently initiate aninvestigation.

What is clear, however, is that theTelecommunications Act may have to beamended to clarify these issues.

1 Brookes, 1997.

9

Competition & regulationWho has jurisdiction?

I t is worth pointing out that this is adebate which is not unique toSouth Africa. In fact, many coun-tries have been forced from time to

time to wrestle with deciding on theappropriate role for competition law

enforcement. As a result, one could findthat the jurisdictional boundary betweenthe competition authority and regulatorsin promoting competition varies betweenand within countries (see box for variousmodels).

The high profile case of the proposed takeover ofStanbic by Nedcor has highlighted the debate over theappropriate demarcation of jurisdiction between com-petition authorities and sector-specific regulators...

What is regulation?Regulation, as defined by Wienert(1997), is ‘the various instrumentsused by governments to controlsome aspect of the behaviour of aprivate economic act’. Regulationcan take many forms: technical regulation, economic regulation,competition regulation and publicinterest regulation.

TO PAGE 10

The Competition Act (‘the Act’) appliesto all economic activity within (or ‘havingan effect within’) the Republic of SouthAfrica. This means that no area of eco-nomic activity should be excluded fromthe Act’s provisions. There are, however,a few exceptions.

Section 3 (1) (d) sets out that ‘actssubject to or authorised by public regula-tion’ fall outside the ambit of the Act.

It is this particular section of the Actthat has raised the issue of jurisdiction-al conflict and which has sparked alively debate on jurisdiction demarcation in South Africa, as well as thepossibility that various areas of theeconomy could potentially be excludedfrom the scrutiny of the CompetitionAuthorities.

Broadly speaking, the rationale forregulation can be found in market failures and in equity considerations.Sector-specific regulation, in particular,has been justified in industries that areclassified as ‘natural monopolies’ as wellas mandated monopolies such as ‘legalmonopolies’.

On a general level, the objective ofcompetition legislation is to address theissue of market failure as a result of anti-competitive behaviour and to provide a

framework for the regulation of mergeractivity in an economy.

Rapid technological change has, how-ever, facilitated the introduction of com-petition into markets that were onceclassified as natural monopolies.

Apart from changing the notion of whatconstitutes a ‘natural monopoly’, this alsoincreases the scope for the introductionof competition regulation into specificsectors to ensure competitive outcomes.

Opinion dividedThe legal wrangle over section 3 (1) (d)can be highlighted with reference to twoparticular cases: the proposed takeover

of Stanbic by Nedcor and the applicationfor interim relief against an alleged anti-competitive practice brought by SouthAfrican Raisins (Pty) Ltd and SADHoldings.

Apart from the fact that there wasdivided opinion expressed by theSupreme Court of Appeal on the appli-cation of section 3 (1) (d) to the extentthat it heightened the legal uncertainty,it would also appear that parties in both

cases put forward weak evidence ofregulatory duplication – as well asoverlapping of the Competition Act andother legislation – to support their contentions.

In both cases the Competition Act wasfound not to apply.

This discussion has sought to highlight some of the issues aroundcompetition and regulation and the roleof the competition authority in this context. It is by no means exhaustive.

The view of the Commission is thatsection 3 (1) (d) should be removed fromthe Act.

The rationale behind such a proposalis to ensure that where statutes gov-erning sector-specific regulators specif-ically include jurisdiction over anti-competitive behaviour and mergers,such jurisdiction should be exercisedconcurrently with the Commission.

Competition threatsIn conclusion, it is the view of theCommission that, in the presence of a sound regulation and competition law regime, competition should not beseen as a threat to the pursuit of otherobjectives.

10

FROM PAGE 9

‘On a general level, the objective of the competition legislation is to

address the issue of market failure as a result of anti-competitive

behaviour and to provide a frame-work for the regulation of merger

activity in an economy.’

Models of RegulationThere is no single or uniform strategy for jurisdictional demarcation and regulatoryinteraction. The OECD (1999) highlights five alternative approaches or models thatcan be followed:a) Competition authorities as exclusive regulator

The competition authority is granted all sectoral regulatory functions in a partic-ular sector.

b) Division of regulatory responsibilitiesCompetition law enforcement is separated from sector-specific regulation. Thecompetition authority therefore adjudicates on competition issues and the regulator addresses regulatory matters.

c) Shared but distinct jurisdictionThe sector-specific regulator is responsible for technical, economic and compe-tition regulation of the natural monopoly aspects of the sector.The competition authority is responsible for competition regulation in all otherparts of the sector.

d) Concurrent jurisdictionThe sector-specific regulators and the competition authority have concurrentjurisdiction in respect of competition issues.

e) Sector-specific regulator as exclusive regulatorThe sector regulator retains exclusive jurisdiction over technical, economic andcompetition issues.

The Canadian CompetitionBureau recently released adiscussion paper dealing withproposed amendments to the

Canadian Competition Act. As part of apolicy of continued legislative review, theproposed changes are intended toimprove the enforcement of theCompetition Act by taking into accountchanges in the global marketplace.Broadly speaking, the proposed amend-ments encompass the following issues:

• Illustrating abuse of dominance in retailmarkets

Although the Canadian Act contains pro-visions that seek to curb the behaviourof firms in a dominant position, the pro-posed amendment will seek to illustrate

the anti-competitive acts that will beincluded under this provision.

• Informing consumersThese measures are designed to protect consumers from ‘scams’ sentthrough the mail.

• Facilitating co-operation between competition authorities

This provision is intended to allow theCanadian Minister of Trade to enter intomutual legal assistance agreementsallowing for the exchange of evidence bycompetition authorities on civil matters.

• Providing for better dispute resolutionThese amendments are intended to allowfor private rights of access to the Tribunal,

costs awards and the introduction of newcease and desist powers.

• Facilitating strategic alliances andimproving the investment climate

The intention of these amendments is todraw a line between ‘egregious criminalbehaviour that is caught by conspiracyprovisions’ and arrangements amongcompetitors that could be betterassessed under civil law.The Canadian Competition Act implement-ed certain amendments last year, includ-ing a streamlining of the merger reviewprocess through pre-merger notification,as well as amendments that made deceptive telemarketing a criminal offence.For further information, see http://strate-gis.ic.gc.ca/SSG/ct01250e.html

11

International developments

Proposed changes to Canadian Competition Law

The Cruickshank Report on the UK banking industry

T he findings of the Cruick-shank Report into the UKbanking industry, released inApril this year, are timely, par-

ticularly in light of recent movestowards consolidation in the SouthAfrican banking industry. The Report,which was commissioned by theChancellor of the Exchequer, was aninvestigation into the level of competi-

tion in the main UK banking market(excluding investment banking). Theparticular markets that raised competi-tion concerns were:

• Money transmission services• Services to personal customers• Services to small and medium-sized

businesses (SMEs).

The review sought to set out a new policy framework for government policy inbanking markets by providing a set of policy recommendations, which includeincreasing the transparency in bankingsupervision; getting institutional incentivesright; delivering effective competitionscrutiny; and eliminating regulatory distortions. For full details of the report,visit www.bankreview.org.uk

The Ernst and Young (E&Y)Report reviewing merger andacquisition activity in 1999notes a record US$ 3.4 trillion

worth of M&A deals announced lastyear, which represents a 42% increaseon the previous year in internationalM&A activity.

While the US M&A market was the

largest, the Report notes that as a resultof increased globalisation, the EuropeanUnion and Asian markets are experi-encing flourishing rates of growth interms of M&A activity.

In contrast to the international trend,local trends point to a drop in the level ofM&A activity, as measured in terms ofrand value of transaction, for the first

time since 1993. This represents adecrease of 26% in the total value ofM&A activity in 1999.

The Report attributes this mainly tothe significantly lower average value ofwhat is termed the ‘mega-deal’ - dealsvalued in excess of R5 billion.

For full details on the report, seewww.ey.co.za

12

E lectronic scanning at checkoutcounters in South Africanretail outlet stores hasbecome commonplace. The

finding of a recent survey on the accu-racy of price scanning in Canada shouldtherefore be of interest to South Africanconsumers and retailers alike.

A survey undertaken between 1996and 1999 of 35 stores in different retailcategories found, in its initial 1996study, that there was a combined

300

250

200

150

100

50

0 30.8 43.5 62.3

166.2

314.7

231.6

RA

ND

VA

LUE

OF

TR

AN

SA

CT

ION

(B

ILLI

ON

)

1994 1995 1996 1997 1998 1999

Trends in Merger and Acquisition (M&A) activity – The Ernst and Young Report

average error rate of 6.3% - made up ofa 3.0% overcharge rate and a 3.3%undercharge rate.

In the last of a series of follow-up monitoring surveys in 1999 on specificcompanies that exhibit overcharging ofgreater than 5%, the Bureau found that,although certain retail outlets hadimproved, there was a combined overcharge rate of 8.9%.

The Bureau notes that it is generallyhuman error that causes most pricing

errors, i.e. it is the failure to make timely and appropriate changes onshelf stickers and on updates to the computer system.

The price accuracy errors impact onconsumers when overcharging occurs,and retailers when undercharging happens, because this affects profitmargins.

For further information on the complete report, see http://strategis.ic.gc.ca/SSG/ct01250e.html

A report on price scanning by the Canadian Competition Bureau

agreement would have resulted in NSBcontrolling the production of 98% ofSouth Africa’s commercially brewedsorghum beer.

Subsequent to the prohibition, the parties negotiated a revised merger proposal with the CompetitionCommission, which removed the

13

Commission CasesCompetition News reports back on some of the cases dealtwith over the past year...

licensing of certain TBI brands to NSB.As NSB lacked the capital to pay for the

acquisition, the proposed transaction invol-ved a highly restrictive licensing agreement,which would effectively place the pricing ofall commercially brewed beer productsunder the partial or full control of SAB.

In addition, the proposed licensing

Commission rejectsSorghum Beer mergerThe Competition Commission rejected theproposed acquisition by NationalSorghum Breweries (NSB) of TraditionalBeer Investments (TBI), a SAB subsidiary.The licensing agreement involved the

14

restrictive conditions of the licensingagreement. The Competition Tribunalsupported the negotiated settlement andthe transaction was approved.

United PharmaceuticalDistributors (UPD) /Independent HealthDistributors (IHD) caseThe Competition Commission has formally accepted a complaint fromUnited Pharmaceutical Distributorsagainst Independent Health Distributorsand its principals. A full investigation intothe case was launched on Thursday, 1June 2000. The Commission has, overthe past few months since the complaintwas lodged, covered significant groundin its preliminary investigation.

Significant resources have been allo-cated to the case and outside expertisedrawn in where necessary.

Nedcor/Stanbic mergerThe Competition Commission reviewedthe transaction regarding the proposedmerger between Nedcor and Stanbic.

Uncertainty over the CompetitionCommission’s jurisdiction in respect ofthis transaction resulted in Stanbic initiating a process to gain legal clarity.

On 31 March 2000, Stanbic’s appealto an earlier decision was dismissed,implying that the Competition Com-mission did not have jurisdiction in thismatter, except to the extent permitted interms of the Banks Act of 1990.

This transaction was therefore dealtwith on a consultation basis with theSouth African Reserve Bank, in terms ofSection 37 of the Banks Act.

The Commission forwarded its recommendation to the South AfricanReserve Bank on 14 April 2000. Thematter was then passed to the Ministerof Finance, who gave his decision on 21 June: the merger was prohibited onpublic interest grounds.

The report is available on the Com-mission’s website: www.compcom.co.za

Smithkline Beecham/Glaxo Wellcome merger

On 25 April 2000 the CompetitionCommission prohibited the South Africanleg of this international merger for the following reasons:• The parties did not sufficiently clarify

the employment effects of the transac-tion; and

• The proposed transaction would sub-stantially prevent or lessen competitionin at least two relevant markets.

The two relevant markets identified by theCommission as raising competition con-cerns were two therapeutic private sectormarket segments, namely for TopicalAntibiotics and for Anti-virals. TheCommission’s view was that the parties’market shares would be so high in thesecategories that they would either enhancemarket power or facilitate its exercise. Forexample, in the Topical Antibiotics market,the post-merger market shares of the parties would stand at 65%, whilst thenearest competitor’s market share wouldbe no more than 14% of the market. In thelight of the high market shares and in theabsence of acceptable efficiency gains, itwas the view of the Commission that the transaction would have significant anti-competitive effects.

In arriving at its decision, the Com-mission consulted its counterparts in theEU and the USA, who were also reviewingthe transaction. In both instances, theCommission was advised that the prod-ucts in question had raised concerns,although no firm decisions had been takenon the merger in the respective jurisdic-tions at the time that a decision was duefrom the Competition Commission.

Subsequent to the Commission’s deci-sion, the parties lodged an appeal with theCompetition Tribunal. The parties and theCommission entered into negotiationsaround the issues, which had raised con-cerns. From further information providedby the parties, it emerged that the employ-ment effects of the transaction were notsignificant. The parties agreed to out-license two products in the therapeuticcategories, which had been raised as

competition concerns. Subsequent to aTribunal hearing on the matter, a thirdtherapeutic category, Anti-emetics, wasadded to the out-licensing agreement.Anti-emetics are drugs used to treat nau-sea and vomiting.The last therapeutic cat-egory is used in the treatment of HIV/Aidsand related illnesses. An agreement wassighed between the Commission and theparties on 19 July 2000 and endorsed bythe Tribunal on 28 July 2000.

Concerns about the proposed mergerhad been raised by the Treatment ActionCampaign (TAC). TAC made submissionto the Competition Tribunal, recommend-ing that the merger be approved with thefollowing conditions:• That the merged firm should allow

generic competition for all medicinesneeded for treatment of opportunisticinfections in HIV/AIDS and anti-retroviralfor HIV; or

• Alternatively that the companies agree to reduce their prices to generic price levels of anti-retrovirals and medicinesneeded to treat AIDS related opportu-nistic infections.

The Commission found, in response tothe concerns around particular productsraised by TAC in their submission, that theonly area of overlap in products used forthe treatment of HIV/Aids and related ailments existed in the Anti-emetics thera-peutic category. This category had beenincluded in the out-licensing agreementwith the parties. The Commission, how-ever, noted with concern other issuesraised by TAC. In particular, these issuesrelated to allegations of price discrimin-ation and excessive pricing in the pharma-ceutical sector. The Commission under-took to engage with TAC and to reviewwhether it would be necessary to initiatean investigation in terms of Chapter 2 ofthe Competition Act no 89 of 1998, whichrelates to prohibited restrictive practices.

The Sports Shop vsBillabong [alleged section

8(c) abuse] A complaint was lodged with the Com-mission by the Sports Shop, a retailer of

Commission Cases continued…

sports wear, regarding the refusal ofBillabong, an importer of surf wear, tosupply it with its product. It wasalleged that Billabong was dominant.

Enquiries showed that Billabongwas not dominant. Moreover, thecompany’s distribution policy was tofavour surf shops wherever possible,which it did in the complainant’s geographic area. Evidence fromabroad showed that a too-wide distribution of surf wear into generalsports shops had a negative effect onsales since the products were verymuch a niche purchase with an imageattached thereto.

On the basis of the aforementioned,the Commission issued a Notice ofNon-Referral.

D J Mine Services vs PalaboraMining Company

[section 8(c) abuse] A complaint was lodged by D J Mine Servicesagainst Palabora Mining Company (Palabora)in respect of an exclusive supply and distribu-tion agreement that had existed for some timebetween Palabora, the largest producer of vermiculite in this country and ChemservePerlite Limited. The latter company is both aconverter and distributor of vermiculite.

The dominance of Palabora was never atissue. As a result of the Commission’s interven-tion in the matter, the agreement was terminatedon 31 October 1999. A consent order was signed.No penalties were levied by the CompetitionTribunal whilst damages were also not claimed.

Sphinx Acrylic Bathroom-ware vs Acrylic Products

The complaint centred around a supplyagreement between Acrylic Products, asubsidiary of Chemserve Limited and acompetitor of Sphinx in terms of which thecompetitor was assured of lower prices.The supplier’s dominance in the marketwas not questioned.

As a result of the Commission’s inter-vention, the preferential supply agreementwas terminated. A consent order wasentered into between the Commissionand Acrylic Products. Damages were paidto the complainant. No further fines werelevied by the Competition Tribunal.

15

16

T he Competition Act 89 of 1998(‘the Act’), which came intoeffect on 1 September 1999,and which replaces the

Maintenance and Promotion ofCompetition Act, 1979, provides a farmore powerful competition law regime

than the one that South African businesses and consumers were previ-ously accustomed to.The Act sets out both the instrumentsand institutions that have been estab-lished for its implementation. The needfor the new Competition law regime is

highlighted by a number of factors,including the perceived ineffectivenessof the previous Competition Act in anumber of areas of application; globali-sation and trade liberalisation, whichhave exposed the domestic economy toa number of forces; high concentrationlevels in certain product and geographicmarkets (see table 1); as well as con-centrated ownership structures.

Policy BriefIntroducing the Act and the Competition authorities

This being the first edition of Competition News, the Commission considered it worthwhile to highlight the Act, the Commission’s structure and contact details.

Overview of the Competition Act and its provisions

CR4 refers to the market share of the top 4 firms in an industry: the Concentration Rating of the top 4 companies.

It is clear from Table 1 that there has been an upward shift in the number of manufacturing industries that fall into the highly-concentrated category, e.g. in 1988 more than one third of all industries had a CR4 higher than 0.80. This effectively means thatin these industries the largest four firms controlled more than 80% of the market.

TABLE 1. DISTRIBUTION OF INDUSTRIES ACCORDING TO CONCENTRATION LEVEL

CONCENTRATION CATEGORY NUMBER OF INDUSTRIES PERCENTAGE

CR4 1982 1985 1988 1982 1985 1988

0.00-0.20 8 9 5 4.5 5.1 2.8

0.20-0.40 33 33 32 18.6 18.6 18.1

0.40-0.60 34 35 39 19.2 19.2 22.0

0.60-0.80 52 38 40 29.4 21.5 22.6

0.80-1.00 50 62 61 28.2 35.0 34.5

17

T he functions of the Compe-tition Commission (‘the Commission’) are mainlyinvestigative in nature.

As such, the Commission is chargedwith investigating and evaluating alleged anti-competitive practices andcontraventions of the Act; approving,prohibiting or referring proposed mergers; granting or refusing exemptionapplications; promoting the consistentapplication of the Act; and advising anyregulatory authority.

The Competition Tribunal is taskedwith granting exemptions from the provisions of the Act, as well as theassessment of complaints and largemergers referred to by the Commission.

The Competition Appeals Court hasthe authority to confirm, amend or set

aside any decision of the Tribunal thathas been appealed against.

It should be emphasised that althoughthere is interaction among all three bod-ies, they are independent of each other.

By drawing on some of the mostimportant features of competition law inother jurisdictions, the Act focuses ontwo main areas as far as competitionissues are concerned:

1) Prohibited practices and2) Merger control.

Prohibited practicesThe prohibited practices provisions aredealt with under Chapter 2 of the Act.

Agreements between companies that restrict competition either throughan agreement between parties in a

horizontal relationship, or a vertical relationship, are prohibited.

Horizontal restrictive practices includeprice fixing, dividing markets in terms of specific allocations and collusive tendering.

A vertical restrictive practice, on the other hand, includes the practice of minimum resale price maintenance(although non-binding recommendedprices are excluded).

The second part of this chapter seeksto highlight the situations under which adominant firm may be abusing its particular position in a market andbehaving in an anti-competitive manner(see box).

Currently the abuse of dominance provisions apply to firms with an annual turnover or assets of R5 millionand over.

The Competition authoritiesThree institutions were established in terms of the Act andtasked with the effective implementation and enforcement ofthe Act. These were the Competition Commission, theCompetition Tribunal and the Competition Appeals Court.

ENTE

RPRI

SES

APPEAL COURT

TRIBUNAL

COMMISSION

APPEAL OF

TRIBUNAL

DECISIONSREFERRAL OF COMPLAINTS& LARGE MERGERS

APPEAL OFTRIBUNAL DECISIONS

APPEAL OF EXEMPTIONS, INTERMEDIATE MERGERS ORNON-REFERRAL DECISIONS

EXEMPTION APPLICATIONSCOMPLAINTSMERGER NOTIFICATIONS

18 3

Market power is a central concept in theeconomic assessment of competitionbut determining whether a firm has mar-ket power is not a straightforward task.

While there are measures of marketconcentration, one needs to be cautiousabout drawing direct inferences aboutmarket power from such measures.

Firms can apply to the Commission tohave certain agreements and practicesexempt from the provisions of Chapter 2.In having regard to such applications,the Commission can exempt firms bycarefully weighing the anti-competitivepractice against the following publicinterest criteria:

• Promotion of exports• Promotion of SMEs as well as the

businesses of historically disadvan-taged individuals

• Halting the decline of an industry• Promotion of the economic stability of

a particular designated industry.

MergersChapter 3 of the Act sets out the mergercontrol provisions by defining a mergerunder the Act, the notification requirements and the procedure for consideration of mergers by theCommission.

Compulsory notification and notificationfees are required of parties to a mergerthat falls within the prescribed thresholds(see classification box).

Filing with the Commission needs totake place within seven days of eitherthe completion of the merger agreement,the public announcement of the pro-posed merger, or the acquisition of acontrolling interest in a party.

Notification of a merger must also begiven to trade union or employee repre-sentatives of the merging firms.

Section 16 of the Act sets out the statutory standard for merger evaluationby the Commission.

The determination of the likely effectsof a merger on competition in a relevantmarket requires that one considerwhether that merger will substantiallyprevent or lessen competition in thatmarket. This is assessed by consideringthe effect that the merger will have onthe market.

The Commission’s process of assess-ment includes:

1) Taking into account factors that arerelevant to competition in the identi-fied market by considering, inter alia,actual and potential level of importcompetition, ease of entry, counter-vailing power, dynamic characteristicsof the market, as well as the removalof an effective competitor.

2) Considering defences such as technological, efficiency or pro-competitive gains that could offset anypotentially anti-competitive effectsresulting from the merger, should itappear that the merger is likely to substantially prevent or lessen competition in that market; and

3) Taking into account whether or not amerger can or cannot be justified on public interest grounds (see following section).

The Commission’s decision on mergersis based on the filings of the mergingparties, as well as submissions receivedfrom other relevant parties to thetransaction.

The ability of companies to deliver relevant and complete information on a particular transaction in a timely man-ner is particularly important to theCommission’s evaluation of a merger.

Public interest considera-tions in merger evaluationRegardless of whether a merger is likelyto substantially prevent or lessen competition, in terms of section 16 (3) ofthe Act, the Commission must considerthe effect that the merger will have on:

• A particular industrial sector or region• Employment

Classification of a mergerAn intermediate merger is classified as follows:

1) Combined annual turnover or assets (or a combination of turnover and assets)in South Africa or merging firms of at least R50 million but less than R3.5 billion, and

2) Annual turnover (or asset value) of the ‘target’ firm must exceed R5 million.

A large merger is classified as follows:

1) Combined annual turnover or assets (or a combination of turnover and assets)in South Africa of the merging firms is valued at or more than R3.5 billion and

2) Annual turnover (or asset value) of the ‘target’ firm must exceed R100 million.Filing fees are payable based on the combined turnover figures of the mergingparties.

An assessment of the abuse ofdominance provisions under the Actrequires that one examine the con-cepts of dominance and abuse. It isuseful to look more closely at theconcept of dominance. Dominancein terms of the Act is defined in anyone of the following ways:

• Market share of at least 45%• Market share of at least 35% but

less than 45%, unless a firm canshow it does not have marketpower

• Market share of 35% with marketpower.

The abuse of dominance concept

TO PAGE 19

19

• The ability of small businesses, orfirms controlled or owned by histori-cally disadvantaged persons, tobecome competitive; and

• The ability of national industries tocompete in international markets.

The public interest considerations underthe Act were designed to take intoaccount the issues of industry compe-titiveness, as well as taking due cognisance of the socio-economic

impact of the merger. The inclusion ofsuch provisions into competition law isnot unusual.

A brief history of competition law fromother jurisdictions would reveal thatother competition authorities have beencalled upon to consider and assess

public interest objectives such as theprotection of small businesses or concerns for employment.

It must be remembered that the over-riding goal of the Competition Act is to

create a fair and efficient economy.This in turn requires that one have

regard for both the macro and micro-economic context within which the Act is applied.

In attempting to assess the variousissues before it in the context of the

Competition Act, whether it is a potentiallyprohibited practice or a prospective merg-er, the Competition Commission is oftenrequired to weigh up and, on balance,consider various issues and interests.

The Commissioner

Mergers &Acquisitions

Division

Enforcement& Exemptions

Division

ComplianceDivision

Policy &ResearchDivision

LegalServicesDivision

CorporateServicesDivision

The Division conducts merger

reviews in terms of Chapter 3 of

the Act.

The Division investigates

contraventions of Chapter 2 of the

Act and grants exemptions from

the provisions of the Act.

The Division aims to encourage

and facilitate voluntary

compliance with the provisions of

the Act through education and

information programmes, non-

binding advisory opinions and

general communications.

The Division is responsible for

analysing and evaluating market

conditions, structures and trends;

developing sector profiles;

facilitating policy generation and

review, as well as providing

economic data and other

information to other divisions in

the Commission.

The Division provides legal

advice internally to the

Commissioner and other

divisions and assists in

developing strategies for cases,

as well as in preparing and

conducting cases before the

Tribunal and Appeal Court.

The Division is responsible for

Finance & Administration; Human

Resources & Training; Information

Technology; and the Registry.

‘It must be remembered that the overriding goal of theCompetition Act is to create a fair and efficient economy.’

THE STRUCTURE OF THE COMMISSION

FROM PAGE 18

Where to get hold of usVisit the Competition Commission online at www.compcom.co.za for more information about the Commission and the Act, as well asrules and amendments to the Act. Please also forward enquiries, comments or letters to:

THE EDITORCompliance DivisionPrivate Bag X23Lynnwood Ridge0040

Competition News is issued quarterly and if you would like to receive future copies, please forward your particulars to enable us to addyour details to the distribution list. This edition and future ones can also be viewed on our website.

Email: CCSA@compcom.co.zaTel: (012) 482 9000Fax: (012) 482 9003

Towards a free and faireconomy for all