Competition Commission distorts "public interest" at the expense of the public and the economy
17 November 2023
The arbitrary and capricious abuse of "public interest" considerations by the Competition Commission during mergers is unlawful and causes significant economic harm.
This is the crux of Sakeliga's commentary on the proposed guidelines by the Competition Commission.
According to Sakeliga, the regulations seek to expand measures such as BEE beyond those doing business with the state, by interfering with wholly private transactions.
"The draft guidelines confirm a practice that has emerged within the Commission to enforce government objectives such as BEE on companies under the veil of public interest considerations," explains Tian Alberts, Legal and Liaison Officer at Sakeliga. "Competition law in South Africa is becoming less about competition and more about leveraging regulatory power to interfere in companies' internal affairs and align them with government preferences."
Sakeliga has been involved in legal proceedings against the Commission for over a year due to their refusal to disclose various merger investigation reports, which could indicate irregular conduct by the Commission. Sakeliga's application under the Promotion of Access to Information Act (PAIA) was rejected by the Commission after several months, and Sakeliga is now preparing a court application.
According to Sakeliga, the Commission's failure is a sign that the Commission either does not have proper processes in place for considering merger applications or is aware of the fact that their current processes are susceptible to litigation and review.
"Despite the Commission's stubborn refusal to provide the necessary documents, we already see a concerning trend in the records available to us," says Alberts. "For example, between August 2011 and March 2021, 213 merger applications were rejected by the commission. However, since the term 'transformation' was first used as a consideration for prohibiting a proposed merger, a new trend emerged:
92 applications were rejected in the two years from March 2019 to March 2021, of which 80 (87%) referred to transformation as a reason or part of the reason for rejection.
In June 2019, after the Department of Trade and Industry formally became the Department of Trade, Industry, and Competition, and Mr. Ebrahim Patel took over as minister, rejections with reference to transformation accelerated: in the first 10 months of his tenure, 76 of the 80 rejections (95%) referred to transformation."
The Commission's draft guidelines, on which Sakeliga has now submitted comments, are indicative of an entity that considers itself a super-regulator that may interfere in transactions above a certain amount on a wide variety of spurious "public interest" grounds, such as BEE, local content, job creation, and more.
"Both the actions and the concept guidelines of the Commission indicate that the Commission sees itself as a quasi-political super-regulator. Like similarly inclined state entities, it promotes sectional interests at the expense of a thriving, competitive economy and a prosperous society. Sakeliga will oppose the Commission's unauthorized practices and harmful actions. We encourage business leaders not to acquiesce if the Commission tries to impose political objectives on their transactions," concludes Alberts.
Issued by Tian Alberts, Legal and Liaison Officer, Sakeliga, 17 November 2023
