Sakeliga: Competition Amendment Act allows Government to selectively fix prices

15 November 2018

In terms of proposed amendments to the Competition Act, authorities will gain the power to decide how much black-owned suppliers, amongst others, should be paid. They will also be able to prescribe how much consumers can be charged and even who certain businesses’ customers and suppliers should be. This according to Daniel du Plessis, legal analyst at Sakeliga, in a submission to the parliamentary committee for economic and business development on Wednesday 14 November 2018. This ushers in the next phase of Black Economic Empowerment (BEE).

The Competition Amendment Bill of 2018 was tabled by Ebrahim Patel, Minister of Economic Development, to Parliament on 11 July this year. It now only needs to be passed by the National Council of Provinces before it is assented to. On a previous occasion, the department of economic development said the amendment act was the most important piece of economic legislation to be dealt with by Parliament in 2018. Sakeliga is of the opinion that it will certainly be one of the most far-reaching laws of 2018.

“The competition authorities can, through the operation of the act following amendment, determine, largely unilaterally, how much some businesses should pay their suppliers and who those suppliers should be. Designated  businesses will, ironically, be unable to make the most competitive decisions on price. This promises to radically limit businesses’ ability to create value for their customers. Ultimately, the extra costs will be borne by the consumer. The state will, therefore, be sacrificing the well-being of the country to achieve its counterproductive policy of race-based empowerment.

“Once the Competition Amendment Act has come into operation, it will be deemed ‘anti-competitive’ for so-called ‘dominant companies’ to purchase supplies and other inputs too cheaply, provided their suppliers are deemed to be ‘previously disadvantaged’ amongst other things. Even worse – it will also be illegal for dominant businesses to avoid such suppliers after, owing to the operation of the act, their products have become too expensive. You will have to buy from them and at the prices the competition authorities regard as ‘fair’.”

“However, apart from these specific problems, there also are serious problems inherent in the underlying principles of the act. For example, more – and more drastic – emphasis is placed on ‘public interest’ as criterion for decision-making by the competition authorities on mergers and exemptions. This concept, however, is still largely vague and undefined – and can be used to justify all sorts of arbitrary decisions.” Du Plessis concluded.

Issued by Gerhard van Onselen, Senior Analyst, Sakeliga, 15 November 2018