CHALLENGING ANTI-COMPETITIVE BEHAVIOUR BY SMEs IN THE SOUTH AFRICAN MANUFACTURING SECTOR by JULIA ELISABETH KUPKA MINOR DISSERTATION submitted in partial fulfilment of the requirements for the degree MAGISTER COMMERCII in BUSINESS MANAGEMENT in the FACULTY OF MANAGEMENT at the UNIVERSITY OF JOHANNESBURG Supervisor: PROF ADELE THOMAS Co-supervisor: MS ANOOSHA MAKKA OCTOBER 2011
180
Embed
Challenging anti-competitive behaviour by SMEs in the ...
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
CHALLENGING ANTI-COMPETITIVE BEHAVIOUR BY SMEs IN THE SOUTH AFRICAN MANUFACTURING SECTOR
by
JULIA ELISABETH KUPKA
MINOR DISSERTATION
submitted in partial fulfilment of the requirements for the degree
MAGISTER COMMERCII
in
BUSINESS MANAGEMENT
in the
FACULTY OF MANAGEMENT
at the
UNIVERSITY OF JOHANNESBURG
Supervisor: PROF ADELE THOMAS Co-supervisor: MS ANOOSHA MAKKA
OCTOBER 2011
ACKNOWLEDGEMENTS
I would like to acknowledge and thank the following people:
My parents, Maria and Karl Kupka, for inspiring in me a love of learning and the
curiosity to seek out knowledge.
My research supervisors, Professor Adèle Thomas and Ms Anoosha Makka.
Without their expert guidance and thought provoking questions this study would
not have been possible.
iii
ABSTRACT
The South African Competition Act (Republic of South Africa, 1998) has
had little impact in diluting the dominance of big business in the agri-food
and steel value chains despite being in existence for over ten years. It is in
this context that the study seeks to create a picture of the impact of anti-
competitive behaviour on SME manufacturers in these value chains and,
from this, to determine whether the Competition authorities should focus
specifically on supporting SMEs as competitors.
The study adopted an inductive approach and fell within the positivist
research philosophy. The research methodology was based on work
undertaken internationally to create a database of evidence of anti-
competitive behaviour from newspaper reports. This research
methodology was qualitative in nature in so far as content analysis was
used to analyse the data, being English language newspaper reports and
Competition Commission press releases. The findings showed that anti-
competitive practices that were engendered during Apartheid have
continued into the modern South African agri-food and steel value chains,
despite state support and regulation in these value chains having ceased.
Anti-competitive behaviour in these value chains has not targetted SMEs
specifically; it has also increased the costs of doing business and
foreclosed opportunities for bigger businesses. However, SMEs do face
unique difficulties in fighting cases of anti-competitive behaviour.
The study concludes there is considerable scope for the Competition
authorities to facilitate the participation of SMEs in the economy without
having a specific focus on SMEs. They can do this by using tools such as
market inquiries, the Corporate Leniency Policy and structural remedies.
However, these tools are still relatively new and, accordingly, it is not yet
possible to assess the efficacy of the Competition authorities in creating a
more supportive market structure for SMEs.
iv
INSERT YOUR SIGNED AFFADAVIT HERE
v
DECLARATION OF ORIGINAL WORK
I, Julia Kupka, declare that this dissertation is my own unaided work. Any
assistance that I have received has been duly acknowledged in the dissertation.
It is submitted in partial fulfilment of the requirements for the degree of Master of
Commerce at the University of Johannesburg. It has not been submitted before
for any degree or examination at this or at any other University.
-------------------------------------------- Julia Elisabeth Kupka October 2011
vi
TABLE OF CONTENTS
1 Chapter One: Introduction 1 1.1 Background and motivation for the study 1 1.1.1 The South African manufacturing sector 3
1.1.1.1. The importance of the manufacturing sector to economic growth 3
1.1.1.2 An historical context to the dominance of big business in the South African
economy
7
1.1.1.3 Ascertaining industry concentration levels in the South African manufacturing
sector
10
1.1.1.4 Overcoming the lack of quantitative data on industry concentration levels 12
1.1.2 The South African agri-food value chain 13
1.1.2.1 Impact of deregulation of the South African agri-food value chain 14
1.1.2.2 Evidence of oligopolies in the South African agri-food value chain 18
1.1.2.3 The role of retailers in the agri-food value chain 19
1.1.3 The South African steel value chain 22
1.2 The role of the South African Competition authorities in assisting SMEs
27
1.2.1 An overview of the South African Competition authorities 27
1.2.2 Types of anti-competitive conduct 33
1.2.3 The performance of the Competition authorities in assisting SMEs 35
1.3 Problem statement 38 1.4 Purpose of the research and research objectives 39 1.6 Brief outline of the research methodology 40 1.7 Outline of the remaining chapters of the dissertation 41
2 Chapter Two: Literature Review 42 2.1 Introduction 42 2.2 The analysis of competition in an industry 42 2.2.1 Overcoming the lack of quantitative data 42
2.2.2 Value chain analysis 43
2.2.3 The importance of governance in value chains 46
2.2.4 Problems of value chain analysis 47
2.3 The role of SMEs in the South African economy 49 2.3.1 A description of SMEs in the South African economy 49
2.3.2 The appropriateness of using competition legislation to achieve socio-economic
objectives
53
2.4 Statement of research questions 58
vii
3 Chapter Three: Research methodology 60 3.1 Introduction 60 3.2 Philosophical foundations 60 3.3 Research design 64 3.4 Research method 64 3.4.1 Electronic research tool 64
3.4.2 Data collection 67
3.4.3 Data analysis 68
3.5 Ethical considerations 71
4 Chapter Four: Presentation of findings 72 4.1 Introduction 72 4.2 The extent of anti-competitive behaviour against SMEs in the agri-
food and steel value chains 73
4.2.1 Cases of anti-competitive behaviour 73
4.2.2 Entities accused of anti-competitive behaviour 74
4.2.3 Complainants of anti-competitive behaviour 77
4.2.4 Types of anti-competitive behaviour 79
4.2.5 Duration of, and justifications for, anti-competitive behaviour 82
4.3 The need for a specific focus on SMEs by the Competition authorities
83
4.3.1 Impact of anti-competitive behaviour on SMEs 83
4.3.1.1 SMEs threatened by anti-competitive behaviour 85
4.3.1.2 SMEs co-opted into anti-competitive behaviour 86
4.3.1.3 SMEs restricted by anti-competitive behaviour 88
4.3.1.4 Cases where SMEs were proactive in fighting anti-competitive behaviour 89
4.3.2 Cases initiated by the Competition Commission 90
4.3.3 Assistance provided by the Corporate Leniency Policy 90
4.3.4 Role of structural remedies 91
4.3.5 Attitudes towards SMEs 93
4.4 Conclusion 94
5 Chapter Five: Discussion of findings 96 5.1 Introduction 96 5.2 The extent of anti-competitive conduct against SMEs in the agri-
food value chain 96
5.2.1 Cases of anti-competitive conduct 96
5.2.2 Entities accused of anti-competitive conduct 98
5.2.3 Complainants of anti-competitive conduct 99
5.2.4 Types of anti-competitive conduct 100
viii
5.3 The extent of anti-competitive conduct against SMEs in the steel
value chain 101
5.3.1 Cases of anti-competitive conduct 101
5.3.2 Entities accused of anti-competitive conduct 102
5.3.3 Complainants of anti-competitive conduct 105
5.3.4 Types of anti-competitive conduct 106
5.4 Answering of the first primary research objective 106 5.4.1 Extent of anti-competitive behaviour in the agri-food value chain 106
5.4.2 Extent of anti-competitive behaviour in the steel value chain 107
5.5 The need for the Competition authorities to focus on SMEs 108 5.5.1 Impact of anti-competitive conduct on SMEs 108
5.5.2. Facilitating the participation of SMEs 110
5.5.2.1 Investigations initiated by the Competition authorities 110
5.5.2.2 Impact of the Corporate Leniency Policy 110
5.5.2.3 Impact of structural remedies 111
5.5.3 Attitudes towards SMEs 113
5.6 Answering of the second primary research objective 115 5.6 Limitations of the study 118 5.7 Summary and conclusion 120
6 Conclusion and recommendations 122 6.1 Introduction 122 6.2 Objectives of the study and major findings 122 6.3 Recommendations for the field of competition policy 125 6.4 Suggestions for future research 125 6.5 Conclusion 127 References 129
ix
LIST OF FIGURES Figure Page
1.1 Location of sub sectors chosen for the study 6
1.2 Diagrammatic representation of the South African agri-food value
chain
14
1.3 Diagrammatic representation of the South African steel value
chain
23
1.4 Schematic representation of Prohibited Practices under the
Competition Act, 1998
35
2.1 The five forces driving industry competition 44
5.1 Cases considered in the agri-food value chian 96
5.2 Cases considered in the steel value chain 102
5.3 Actions of Allens Meshco to counteract anti-competitive behaviour
in the wire industry
104
5.4 Effect of the structural remedy in the Sasol fertiliser case 112
x
LIST OF TABLES Table
Page
Chapter 1 1.1 Contribution to GDP of the top three sectors in the South African
economy
4
1.2 Concentration ratios for total income in the manufacturing
industry, 2008
11
Chapter 2 2.1 Categorisation of SMEs 50
Chapter 4 4.1 Identification of cases according to priority sector 74
4.2 Details of companies from Who Owns Whom database 75
4.3 Entities accused of anti-competitive behaviour 76
4.4 The involvement of construction companies in anti-competitive
behaviour in the manufacturing sector
77
4.5 Categorisation of complainants 78
4.6 Total number of allegations of anti-competitive conduct per priority
sector
80
4.7 Instances of exclusionary conduct in the Food and Agro-
processing sector
81
4.8 Instances of cartel behaviour in the steel value chain 82
4.9 Duration of, and justification for, anti-competitive behaviour 83
4.10 Summary of the impact of anti-competitive behaviour on SMEs 84
4.11 Instances where SMEs were threatened by anti-competitive
behaviour
86
4.12 Cases where SMEs participated in anti-competitive behaviour 87
4.13 Cases where SMEs were restricted by anti-competitive behaviour 88
4.14 Instances where SMEs were proactive in fighting anti-competitive
behaviour
89
4.15 Summary of triggers of Competition Commission investigations
into complaints of anti-competitive behaviour
90
4.16 Cases where the Corporate Leniency Policy has assisted the
Competition Commission
91
xi
4.17 Summary of attitudes to the role of competition policy 93
4.18 Summary of opinions on the accessibility of the Competition Act
for SMEs
94
xii
LIST OF APPENDICES
Appendices Page
1 Literature search on the South African agri-food value chain 144
2 Literature search on the South African steel value chain 148
3 Literature search on South African competition policy and SMEs
151
4a Cases considered in the study, categorised according to the Competition Comission’s priority sectors
156
4b Cases considered in the study, categorised according to the Competition Comission’s priority sectors
157
4c Cases considered in the study, categorised according to the Competition Comission’s priority sectors
158
5a Types of anti-competitive behaviours 159
5b Types of anti-competitive behaviours 160
5c Types of anti-competitive behaviours 161
6a Impact of anti-competitive behaviour on SMEs 162
6b Impact of anti-competitive behaviour on SMEs 163
6c Impact of anti-competitive behaviour on SMEs 164
7 Cases where structural remedies were imposed 165
8a Opinions on the accessibility of Competition Act remedies to SMEs
166
8b Opinions on the accessibility of Competition Act remedies to SMEs
167
xiii
LIST OF ACRONYMS
AMSA Arcelor Mittal SA
CAC Competition Appeal Court
FPMC Food Price Monitoring Committee
GDP Gross Domestic Product
NAMC National Agricultural Marketing Council
MEC Minerals and Energy Complex
Porter’s FFF Porter’s Five Forces Framework
SAB South African Breweries
SCA Supreme Court of Appeal
SME Small and Medium Enterprise
1
CHAPTER ONE: INTRODUCTION
1.1 Background and motivation for the study
The legacy of Apartheid1 has left the South African economy dominated by
large businesses, which has made it difficult for smaller businesses to gain a
foothold and grow (Boyd, Spicer & Keeton, 2001:81; Chabane, Machaka,
2005:20). In addition, the period of sanctions against the country under
Apartheid led the state to develop key industries through subsidies,
protective tariffs and market controls (Chabane et al., 2003:8; Kampel,
2005:20).
These factors have resulted in an economy characterised by firms that may
not have achieved their dominant positions for reasons typically used to
justify dominance: economies of scale, technical innovation or efficiency
(Hartzenberg, 2006:684). Rather, in many cases, dominance has been a
consequence of big business being protected from competition through state
support, Apartheid policies and remoteness from other markets (Iheduru,
2004:4; Ramburuth & Roberts, 2009:7).
Since the advent of democracy in 1994, there has been an awareness of the
importance of small and medium enterprises (SMEs) and their promotion has
become a formal policy goal of the South African government (Bradford,
2007:97; Ligthelm, 2008:368; Luiz, 2002:53). SMEs are described in the
National Small Business Act (Republic of South Africa, 1996), as businesses
with annual turnovers of between R2 million and R50 million and employing
up to 200 people. SMEs are recognised for their abilty to create jobs where
the formal sector cannot absorb all labour seekers (Bradford, 2007:97;
Ligthelm, 2008:367; Luiz, 2002:54; Ndabeni, 2008:259); for their ability to 1 Apartheid was a legal system under which races were segregated in South Africa during the period 1948 to 1994. The aim of Apartheid was to entrench minority White rule at the expense of curtailing the legal rights of Black, Coloured and Indian citizens.
2
increase income levels and contribute to black economic empowerment
(Iheduru, 2004:6; Luiz, 2002:54; Ndabeni, 2008:259) and for their ability to
counteract the economic power of big business (Abor & Quartey, 2010:218).
South Africa is not unusual in identifying SMEs as vehicles for economic
growth (Bradford, 2007:97; Ligthelm, 2008:368). SMEs carry similar
expectations in other developing economies with large wealth gaps. A
notable example is in Latin America, where a strong SME sector is seen as
key to eradicating income inequality and achieving more transparency in
business activities (Berry, 2002:105).
A formal manifestation of the South African government’s intention to develop
SMEs is found in the objectives of the Competition Act (Republic of South
Africa, 1998:Section 2). One of these objectives refers to facilitating the
participation of SMEs in the economy (subsection 2(e)), while another refers
to promoting a wider spread of ownership in the economy, particularly of
previously disadvantaged individuals (subsection 2(f)). These objectives are
socio-economic goals motivated, not only by the need to develop a more
efficient economy, but also by considerations of equity (Wise, 2003:17).
However, despite being in existence for more than ten years, the Competition
Act (Republic of South Africa, 1998) has not been successful in diluting the
dominance of big business in the South African manufacturing sector
(Chabane, Goldstein & Roberts, 2003:46; Kampel, 2005:21), and in fact the
dominance of such entities has continued to grow (Competition Commission,
2009b:5). As a result, the Competition authorities have been criticised for
making little progress in increasing the participation of previously
disadvantaged individuals and companies in the economy (Chabane et al.,
2003:5; Mohamed & Roberts, 2008:42).
In 2006, the Competition Commission took a strategic decision to switch its
focus to proactively tackling anti-competitive behaviour (Competition
3
Commission, 2009b:71). Underpinning the new focus was the identification of
priority sectors for investigation based, inter alia, on the strong likelihood of
anti-competitive behaviour being found in these subsectors (Competition
Commission, 2010:5). The prioritisation had the effect of concentrating the
Commission’s resources in areas where they would have their greatest
impact. This is important for tackling anti-competitive behaviour in the form of
cartels which, due to the secret nature of cartels, requires more resources to
enforce than the review of merger application (Wise, 2003:59).
This study explores competition policy in terms of its usefulness in facilitating
the participation of SMEs in two manufacturing value chains that fall within
the Competition Commission’s priority sectors. These are the agri-food value
chain, which falls into the Commission’s Food and Agro-Processing priority
sector, and the steel value chain, which falls into two priority sectors, namely
the Intermediate Industrial Products and the Construction and Infrastructure
priority sectors. The relevance of the research topic stems from the high
profile and on-going nature of investigations and prosecutions by the
Competition authorities into the aforementioned priority sectors. The topic is
further relevant as it contributes to research on the transformation of the
South African economy into an economy that is more diversified and
conducive to the participation of SMEs.
1.1.1 The South African manufacturing sector 1.1.1.1 The importance of the manufacturing sector to economic growth
The manufacturing sector is an important contributor to South Africa’s Gross
Domestic Product (GDP). GDP measures the total value of economic output
by firms and individuals in an economy (Nattrass, Wakeford & Muradzikwa,
2003:9) and changes in GDP are indicative of growth or a slowdown in the
economy (Fourie, 2007:8). The relative importance of the manufacturing
sector in the South African economy is shown in Table 1.1. This table
illustrates that, since 2005, manufacturing has ranked second in contribution
4
to GDP after the Finance, Real Estate and Business Services sectors in the
economy. The General Government Services sector has not been included in
calculation of the total GDP figure, as the emphasis of this study is on the
private sector of the economy.
Table 1.1: Contribution to GDP of the top three sectors in the South African economy.
ManufacturingFinance, real estate
& business services
Wholesale, retail,
motor trade,
accommodation
GDP at market
prices
Contribution to GDP R22 579 R216 747 R161 503
Percentage contribution to GDP 17 16 12
Ranking in contribution to GDP 1 2 3
Contribution to GDP R259 101 R295 504 R195 012
Percentage contribution to GDP 16 18 12
Ranking in contribution to GDP 2 1 3
Contribution to GDP R280 190 R385 491 R218 570
Percentage contribution to GDP 15 21 11
Ranking in contribution to GDP 2 1 3
R1 834 293
2000
2005
2010
R1 301 813
R1 571 082
Source: Compiled from Stats SA (2011:8). Figures are in R millions and are at constant 2005 prices.
The importance of manufacturing for economic growth is provided by
Kaldor’s engine-of-growth hypothesis, which has been found to hold true in
economies such as the United States (Atesoglu, 1993:69); Turkey (Bairam,
1991:1279) and China (Hansen & Zhang, 1996:685), as well as in South
Africa (Millin & Tennassie, 2005:49). Kaldor’s hypothesis positively correlates
an expansion in manufacturing output with growth in GDP (Hansen & Zhang,
1996:682; Millin & Tennassie, 2005:49; Thirlwall, 1983:345). The positive
correlation arises from the fact that by drawing labour and resources from
other sectors in an economy, manufacturing will stimulate growth in those
sectors and hence in the economy as a whole (Hansen & Zhang, 1996:683;
This study examines two manufacturing subsectors classified according to
the Standard Industry Classification (SIC) used by the Department of Trade
and Industry, namely the food and beverage subsector (SIC 300) and the
iron and steel and metal products subsector (SIC 350). The subsectors were
chosen for a number of reasons. First both derive their primary raw materials
from industries that were heavily regulated and supported by the Apartheid
government. Primary agriculture and agro-processing were regulated through
control boards and the number of players in those industries were restricted
(Mather, 2005:610), while South Africa’s steel production capacity is due to
significant state funding and tax breaks in the past (Roberts & Rustomjee,
2009:54). There was furthermore a political undertone to this support. In the
agricultural and agro-processing sector the intention was to guarantee stable
incomes for whites living in rural areas (Seeking, 2007:383). In the case of
primary steel production, the intention was to provide employment for white
workers (Bezuidenhout & Cock, 2009:87) and guarantee the supply of a
strategic resources needed for mining and for arms manufacture (Roberts &
Rustomjee, 2009:56).
The legacy of the state support has left the modern South African economy
with high levels of industry concentration in both of these subsectors. In
primary agriculture such concentration occurs for example at level where
mills process grain (Abu & Kirsten, 2009:355), while in the steel industry the
concentration is located at the level where raw materials such as iron ore and
coal are converted into primary steel (Walker & Jourdan, 2003:28). SMEs
have been prejudiced by the high levels of industry concentration in these
subsectors. Thus, the poor performance of SME millers in the food and
beverage subsector of the economy has been attributed to large millers and
bakers dominating the agro-processing of grain (Louw, Geyser, Troskie, van
der Merwe Scheltema and Nicholson, 2010a:110). In the South African steel
subsector the growth of SME steel fabricators is restricted by the dominance
of primary steel producers, such as Arcelor Mittal SA (Kesper, 2000:24;
Walker & Jourdan, 2003:41).
6
Finally, the aforementioned sectors have been chosen because they fall
within the Competition Commission’s priority sectors for investigation
(Competition Commission, 2009:39). Thus the Food and Beverage subsector
falls within the Commission’s Food, Agro-Processing and Forestry priority
sector. The Forestry portion of the aforementioned priority sector is excluded
from this study, as instances of anti-competitive behaviour in the forestry
industry fall under SIC Code 302: the Wood, Wood Products and Paper
subsector. Hence for the purpose of this study, the name of the
aforementioned priority sector is contracted to the Food and Agro-Processing
sector. The Iron and Steel and Metal Products subsector falls within two
priority sectors, namely the Intermediate and Industrial Products sector (as
steel is a an important industrial input) and the Infrastructure and
Construction sector (as products manufactured from steel are used in this
sector). The Food and Beverage and the Iron and Steel and Metal Products
subsectors of the economy can be linked to the Competition Commission’s
priority sectors as illustrated by Figure 1.1.
Manufacturing Sector Priority Sectors
The South African Economy The Competition Commission
Food, Agro-Processing & Forestry
Intermediate Industrial Products
Infrastructure and Construction
Banking Services
Manufacturing Sub-Sectors• SIC 300 – Food & Beverages• SIC 301 – Textiles, Clothing, Leather & Footwear • SIC 302 – Wood & Wood Products, Paper• SIC 303 – Petroleum, Chemical, Rubber & Plastics• SIC 304 – Glass & Non-Metallic Minerals
• SIC 305 – Iron, Steel & Metal Products• SIC 306 – Electrical Machinery• SIC 307 – Communication & Professional Equipment• SIC 308 – Motor Vehicles, Parts & Accessories• SIC 309 – Furniture & Other Manufacturing
Figure 1.1: Location of the subsectors chosen for the study (Adapted from Statistics South Africa (2010) and Competition Commission, (2009:39).
7
1.1.1.2 An historical context to the dominance of big business in the South African economy
The foundation for the dominance of big business in the South African
economy was laid in the 1880’s when De Beers and Anglo American
Despite being in existence for more than ten years, the Competition Act
(Republic of South Africa, 1998) has not been successful in diluting the
dominance of big business in the South African manufacturing sector
(Chabane, Goldstein & Roberts, 2003:46; Kampel, 2005:21), and in fact the
dominance of such entities has continued to grow (Competition Commission,
2009b:5). As a result, the Competition authorities have been criticised for
making little progress in increasing the participation of previously
disadvantaged individuals and companies in the economy (Chabane et al.,
2003:5; Mohamed & Roberts, 2008:42).
Ten years is, however, a short period to judge the efficacy of the Competition
authorities. Reflecting back on the performance of the Competition
28
Commission in its first decade, Deputy Commissioner, Tembinkosi Bonakele,
reports that the focus of the first five years was on setting up the institution,
crystallising its processes and building expertise and capacity among staff
(Competition Commission, 2009b:71). The focus in those years was also on
merger control, as opposed to detecting and enforcing the anti-competitive
practices that restrict SMEs. This is not unusual for new institutions, as the
performance of merger control is fairly straightforward and requires fewer
resources. This is because merging parties are required by law to notify the
authorities of their intention, and it is also in their interests to co-operate with
the authorities in providing information (Wise, 2003:59). In addition, merger
control provides an excellent training ground regarding the workings of
business and the economy for officials who may not have had much business
exposure (Wise, 2003:59). Thus, in its first seven years, the Competition
Commission focused on merger control rather than on the detection and
enforcement of anti-competitive behaviour (Competition Commission,
2009b:46).
In 2006, the Competition Commission took the strategic decision to switch its
focus to proactively tackling anti-competitive behaviour (Competition
Commission, 2009b:71). Underpinning the new focus was the identification of
priority sectors for investigation, namely the Food and Agro-Processing, the
Intermediate Industrial Products, the Infrastructure and Construction and the
Banking Services sectors (Competition Commission, 2010:5). These sectors
were chosen because anti-competitive behaviour in these sectors has a
disproportionate impact on poor consumers, because of the potential of these
sectors to contribute to economic growth and finally the likelihood of anti-
competitive behaviour occuring in those sectors (Competition Commission,
2009b:39; 2010:5). A consequence of the Competition Commission
prioritising these sectors is that the Competition Commission is proactive in
investigating anti-competitive behaviour.
29
The new strategic focus on enforcement was boosted by the enactment of
the Competition Amendment Act (Republic of South Africa, 2009), which
introduced new remedies designed to assist the Competition authorities in
dismantling the high levels of concentration in the economy. These are a
prohibition against participation in complex monopolies; a market inquiry
provision empowering the Competition Commission to proactively investigate
markets; the introduction of criminal sanctions against individuals directing or
managing firms engaged in cartel activities; and the incorporation of a
corporate leniency policy granting whistle-blowers immunity against criminal
and financial sanctions arising from anti-competitive behaviour (Competition
Commission, 2009a:13). Finally the media coverage of Competition
Commission hearings, which are open to the public, will also assist the
Commission in taking action against anti-competitive behaviour. Such
coverage serves to educate the public about the conduct that can be defined
as anti-competitive, and encourages cartel participants to apply for corporate
leniency as a precaution against being found guilty of such behaviour
(Competition Commission, 2009b:46). In light of the above, it is accordingly
premature to judge the impact of the Competition Commission in facilitating
the participation of SMEs in the South African economy.
The overarching environment in which the Competition authorities operate is
a legal one and, as a result, there is an emphasis on the following of due
process (Competition Commission, 2009:61; Wise, 2003:4). In reviewing the
performance of the South African Competition Commission for the
Organisation of Economic Cooperation and Development (OECD), Wise
(2003:61) warned that the Commission’s lax attitude to due legal process in
its early years was out of keeping with the “highly legalistic enforcement
culture”. This warning was justified when two cases were dismissed on
appeal because the Commission failed to follow due process. Both cases
concerned the practice of the Competition Commission widening the ambit of
an original complaint concerning anti-competitive conduct by a particular
entity to include additional parties and/or additional complaints.
30
In the first case the Competition Commission launched an investigation into
an alleged cartel in the dairy industry after receiving information from a
farmer that only Clover, Parmalat and Nestle were likely to be engaging in
such conduct. As a consequence of this investigation, two smaller milk
processors, Woodlands Dairy and Milkwood Dairy, were summoned to
submit themselves to interrogation and produce evidence (SCA, 2010:8). The
SCA ordered the Competition Commission to set aside the orders against the
two smaller processors, as there was no evidence that they were
participating in the cartel. The SCA (2010:12) held that “a suspicion against
some cannot be used as a springboard to investigate all and sundry”. The
ruling therefore curtails the power of the Commission to launch industry-wide
investigations, as unless it is able to obtain evidence against individual
entities, it is not empowered to include such entities when referring a
complaint to the Competition Tribunal for adjudication. The court therefore
adopted a strict legal approach, arguing that since the penalties levied by the
Competition Tribunal are akin to criminal penalties, the same strict legal
procedures should apply as in criminal cases
The SCA ruling was upheld by the CAC (2011:19) in a case concerning Yara
SA and Omnia Fertiliser, both blenders of fertilisers. That case concerned a
complaint by Nutri-Flo that Sasol was abusing its dominant position by
engaging in excessive, exclusionary and discriminatory pricing (CAC,
2011:3). The initial complaint against Sasol was then widened to include a
complaint that Sasol, Yara SA and Omnia Fertiliser were colluding on fixing
prices in the fertiliser industry (CAC, 2011:3). The latter complaint was then
dismissed on the grounds that the Competition Act (Republic of South Africa,
1998) did not permit the Commission to widen a complaint that addressed
only one party to include an additional two parties (CAC, 2011:23).
Cognisant of the two aforementioned appeal court rulings, the Competition
Tribunal then, in April 2011, dismissed the referral of a complaint against
South African Breweries (SAB) by the Competition Commission (Competition
31
Tribunal, 2011b:1). The court held that it lacked the jurisdiction to hear the
referral because the matter referred to it for adjudication was different to the
original complaint lodged.
Commenting in the media on the aforementioned appeal court rulings,
attorney Ms Lumala Mtanga, said the effect of the rulings is that the
Competition Commission’s powers of investigation would now be limited
strictly to the information presented at the time of the complaint (Marais,
2010b:para 2). Competition Commission staff and legal experts have
criticised the rulings in the media for opening a loophole that will allow
companies accused of anti-competitive conduct of dragging cases out
indefinitely on technicalities (Marais, 2010a:para 11; Bleby, 2011:para 8).
The Competition Commission has since announced that it would appeal the
CAC decision in the Constitutional Court to clarify its powers of investigation
and the circumstances under which it can refer complaints to the Competition
Tribunal (Competition Commission, 2011c:1).
There are several ways in which a Competition Commission investigation of
a complaint can be triggered (Competition Commission, 2009b:38). First, the
investigation may be initiated by the Competition Commission itself following
its own market analysis. Second the investigation may be initiated by the
Competition Commission after accessing evidence during a merger
investigation. Third the investigation may be triggered by evidence brought to
the Commission in a leniency application. Finally the investigation may be
triggered by a complaint lodged by a complainant, who may be SME or non-
SME entities (Visser, 2004:55). The benefit of investigations initiated by the
Competition Commission for SMEs is that allegations of anti-competitive
conduct that could affect SMEs would be investigated without the SME
having to expend time and resources in lodging and, if necessary, fighting a
complaint.
32
The Competition Commission’s Corporate Leniency Policy has emerged as
an important trigger for investigations. The policy, which was introduced in
2004, and grants immunity to prosecution to a cartel member who is the first
to make a full disclosure of an undetected cartel, or a cartel that the
Commission has not been able to prosecute for lack of evidence
(Competition Commission, 2008b:2). Leniency polices are used
internationally to assist Competition authorities in uncovering cartels that may
not be easy to detect without inside information (Jones & Sufrin, 2011:801;
Motta, 2009:193). The fact that immunity is granted to the first firm to blow
the whistle is a strong incentive for firms to destabilise a cartel (Jones &
Sufrin, 2011:801).
Without this policy it would be very difficult for the Commission to prosecute
cartels, as due to the secret nature of cartel activity, it is difficult to gather
sufficient evidence for a prosecution unless the Commission has inside
assistance (Competition Commission, 2009b:46). The prosecution of cartels
is a lengthy process that is draining on time and resources (Moodliyar,
2008:158).
Another tool the Competition authorities have, which assists them in meeting
their objective to facilitate the participation of SMEs in the economy, is the
ability to impose structural remedies. These remedies allow the authorities to
intervene in a market place with measures that control how a firm will do
business in the future, or even requiring a firm to divest itself of certain assets
or business units (Motta, 2009:69). Structural remedies are typically used to
dilute the monopoly power of dominant firms, and are premised on the
understanding that without such intervention, it would not be possible for new
firms to enter a market (Motta, 2009:69).
33
1.2.2 Types of anti-competitive conduct
Chapter 2 of the Competition Act (Republic of South Africa, 1998) provides
for two types of anti-competitive conduct, namely Restrictive Practices which
may be performed by a firm irrespective of size acting in concert with other
firms, and single-firm conduct in the form of Abuse of a Dominant Position,
for which it is necessary to prove that the accused holds a dominant position
in an industry. In terms of section 7 (Republic of South Africa, 1998), a firm is
dominant in a market if it has at least a 45% market share or, if it has a
smaller market share, it nevertheless has market power in that market. A
separate category of anti-competitive conduct is distinguished for dominant
firms, as these firms are said to have, by virtue of their size, a “special
responsibility” (Jones & Sufrin, 2011:366) not to distort competition in a
market.
Restrictive Practices are further divided into two categories. The first is
horizontal practices, which entails a concerted action among competitors in
an industry (for example, in terms of an agreement or as part of an industry
practice). Such actions are not anti-competitive if they promote economic
efficiency, stimulate innovation and the opening of new markets (Jones &
Sufrin, 2011:982). However, horizontal co-operation will be anti-competitive if
it creates a cartel that leads to “an easier environment for [the competitors]
and higher profits at the expense of consumers” (Competition Commission,
2009b:43). Price fixing is common in such cartels. Such behaviour is anti-
competitive as it goes against the principles that competitors should compete
freely in the market where they sell their goods and services (Lepaku,
2003:134).
Price fixing is often supported by market allocation and collusive tendering
(Competition Commission, 2009b:43). Where all of these practices occur, the
cartel is often deemed to be “hard core” (Jones & Sufrin, 2011:802). Market
allocation entails cartel participants agreeing to operate in certain market
34
segments only and staying out of segments allocated to other cartel
participants (Motta, 2009:141). This practice allows cartel participants to
achieve dominance in a particular market (Jones & Sufrin, 2011:810) and to
avoid the price wars that would benefit consumers (Motta, 2009:141).
Collusive tendering can be seen as a form of market allocation (Jones &
Sufrin, 2011:812) as firms co-ordinate their responses to a tender invitation
such that only one, or some of them, will win the tender. The effect is to deny
the entity making the tender the benefit of price competition.
The second category refers to vertical restricted practices between entities in
vertical relationship, such as a firm and its suppliers or customers
(Competition Commission, 2009b:54). Figure 1.4 is a diagrammatic
representation of the types of anti-competitive conduct prohibited in South
Africa.
35
Competition Act, No 89 of 1998
Chapter 2: Prohibited Practices
Part A: Restrictive Practices Part B: Abuse of Dominant Position
Section 4: Restrictive Horizontal Practices• A horizontal relationship that substantially prevents
or lessens competition• Price fixing• Market allocation• Collusive tendering
Section 5: Restrictive Vertical Practices• A vertical relationship that substantially prevents or
lessens competition• Resale price maintenance
Section 6: Abuse of DominanceA dominant firm may not:• Charge excessive prices• Refuse access to essential facility• Engage in exclusionary conduct that has effect of:
• Inducing a party not to deal with a competitor• Refusing to supply scarce goods to a competitor• Bundling• Selling goods or services below marginal cost• Buying up scarce supply of resources
Section 9: Price DiscriminationA dominant firm may not discriminate on price if:• This substantially prevents or lessens competition• This relates to the sale of equivalent goods/services• Discrimination may be in terms of:
databases are easy to search (Schafraad et al., 2006:460) and they allow for
the searching of multiple newspaper sources using a single keyword (Earl,
Martin, McCarthy and Soule, 2004:75). Searching newspaper sources, in
turn, allows for the research to extend over a broader range (Earl et al.,
2004:74). Electronic databases are suited for research that covers relatively
recent events, where only the verbal content of newspaper articles is being
analysed (Schafraad, 2005:462) and where alternative methods of data
collection would be time consuming and expensive, such as case studies
(Earl et al., 2004:66).
The database of articles sourced from Newsmonitor was supplemented with
media releases published by the Competition Commission on its website
during the period 1 January 2005 to 31 March 2011. To the extent that the
media reports were unclear or lacked sufficient detail on the anti-competitive
behaviour being reported on, these reports were cross checked (Zikmund,
2003:138) against the press releases. This tactic was used to overcome a
typical shortcoming of using secondary data, namely that such data may not
always be accurate (Zikmund, 2003:138). Clarke et al. (2005: 1034) also
highlighted the limitation of inaccuracy in their study by noting that journalists
often lacked sufficient knowledge of competition policy and law to accurately
report on anti-competitive allegations or instances.
In the present study, as was the case in the study conducted by Clarke et al.
(2005:1056), such inaccuracies related particularly to the identification of the
anti-competitive behaviour. Thus, where there was a difference in the
66
information provided by the two sources, preference was given to the press
release, being information derived from a primary source, namely the
Competition Commission. In this way, the current study was able to
overcome a limitation identified, but not resolved, in the study by Clarke et al.
(2005:1034).
It must be noted that it was not possible to rely entirely on Competition
Commission press releases, as these releases often did not cover all
allegations of anti-competitive behaviour. Furthermore, the extent of the
information provided in the releases was not consistent, as some releases
provided only brief descriptions of the matter under Competition Commission
scrutiny. The newspaper reports also had the advantage of recording factual
information relating to the anti-competitive behaviour that was obtained from
interviewing business owners, legal and economic experts and consumers,
as well as from recording evidence such individuals gave in Tribunal and
court hearings that were open to the media. In this way, newspaper reports
were able to provide “richer and more detailed information on the
characteristics of [the subject matter of the reports]” (Elliott, 2005:41), in this
case, allegations and instances of anti-competitive behaviour.
As newspaper reports and Competition Commission press releases do not
always indicate whether the entities being reported on are SMEs, the
secondary data was further supplemented by accessing the Who Owns
Whom electronic database. This database details the number of employees
and turnover levels of companies operating in the South African economy.
From this information it would be possible to determine if a particular entity is
an SME, as the National Small Business Act (Republic of South Africa, 1996)
categorises SMEs as entities employing no more than 200 people or who
have turnovers of less than R50 million.
67
3.4.2 Data collection
Secondary data has the advantage of being easily accessible, and at
relatively little expense (Zikmund, 2003:136). In this study, the intention was
to develop as broad a database as possible of instances and allegations of
anti-competitive behaviour against SMEs in the two value chains. Without
secondary data, this would have entailed a time-consuming and expensive
process of collecting primary data by way of interviewing people at individual
SMEs across South Africa. Secondary data also assists in fact finding by way
of “collecting descriptive information to support decision making” (Zikmund,
2003:138). Thus, in this study, newspaper reports and press releases were
analysed to obtain anecdotes of instances of anti-competitive behaviour
against SMEs in the South African economy.
In constructing their database, Clarke et al. (2005:1033) adopted the practice
of using a pre-determined list of anti-competitive practices, such as “tying,
price fixing, barriers to entry” etc. That practice was not adopted in this study
as attempts to use it yielded very few and scattered results on the
Newsmonitor database, possibly due to the fact that the South African media
currently reports on anti-competitive practices using general terminology. In
addition, all the results referred to instances of anti-competitive behaviour
being investigated by the Competition Commission. Accordingly the decision
was taken to construct a database for this study from articles found in a
subsidiary database created by Newsmonitor entitled “Competition
Commission”. The effect of this decision, however, is that the database for
this study, unlike that constructed by Clarke et al. (2005:1032), contains only
reported instances of anti-competitive behaviour that have come to the
attention of the Competition authorities.
All articles in the subsidiary Newsmonitor database entitled “Competition
Commission” were scanned to select those articles for further analysis that
reported on instances of anti-competitive behaviour falling within the agri-
68
food and steel value chains. Reference was made to the value chains set out
in Figures 1.1 and 1.2 (Chapter 1) in determining whether reports of anti-
competitive behaviour fell into those chains. As was the practice with Wang
et al. (2009:596) and Archbold et al. (2006:631), repeated articles and
editorials were not included.
3.4.3 Data analysis
There are two main types of content analysis, namely analysis that focuses
on the explicit or manifest content of the text being studied to obtain
information on what happened and why, and analysis that addresses the
form, or latent content, of the narrative (Babbie, 2007:325; Elliott, 2005:38).
The former approach was adopted in this study because the intention was to
obtain a quantitative description (Zikmund, 2003:248) of reports of anti-
competitive behaviours and the entities engaged in and affected by such
behaviour. This approach also has the advantage that of being replicated as
the units of analysis of what is being investigated remain constant throughout
the research, unlike is the case when the underlying meaning of the text is
being studied (Babbie, 2007:325).
Content analysis is a popular tool for conducting research using mass media
as a database (Wimmer & Dominick, 1987:165). Content analysis is a way of
converting text into numerical units that can be analysed quantiatively
(Wilson, 2010:266) and accordingly lends itself to the tracking and recording
of social change (Archbold, Lytle, Weatherall, Romero & Baumann,
2006:632; Earl et al., 2004:76; Wimmer & Dominick, 1987:165). Thus, in this
study, content analysis was used to study social change in the form of the
effect of anti-competitive behaviour on SMEs. Content analysis commences
by identifying a unit of analysis (in this case it was either a newspaper article
or a press release), determining codes that will be applied to the text,
applying those codes and then tabulating the results in a format that is
conducive to quantitative analysis (Wilson, 2010:267).
69
Thus, the newspaper articles and press releases identified from the data
collection process were read and screened (Archbold et al., 2006:632; Danso
& MacDonald, 2001:119; Magzamen et al., 2001:155; Wang et al., 2009:595)
for the central theme of anti-competitive behaviour against SMEs in the agri-
food and steel value chains. The data was then systematically analysed by
means of coding (Archbold et al., 2006:633; Magzamen et al., 2001:155).
Codes are categories used to extract information from a data source
(Archbold et al., 2006:633; Franzosi, 1989; 265; Miles & Huberman, 1994:56;
Zikmund, 2003:735). The codes assisted in comparing the data in an
individual clipping or press release against the literature and other articles
and press releases to ascertain “themes, ideas, concepts, interpretations and
propositions” (Whitehead & Kotze, 2003:79) that are common as well as
contradictory.
The codes were developed to facilitate the analysis of the data as follows:
The types of anti-competitive acts being alleged and the lines of
business in which such allegations arise (Clarke et al., 2005:1035).
This analysis reflected which types of anti-competitive behaviour were
prevalent as well as if there was a pattern to the prevalence of certain
types of anti-competitive behaviour in certain lines of business.
The individuals or entities making allegations of anti-competitive acts
(Clarke et al., 2005:1037). This indicated whether allegations were
being made by SMEs, large enterprises, government departments,
academics or civil society.
Alleged sources of the anti-competitive behaviour in an industry. This
indicated the extent to which large businesses were being blamed for
anti-competitive behaviour.
There are three types of coding: open, axial and selective (Saunders et al.,
2003:399-400; Wilson, 2010:259). Open coding entails identifying concepts
within the data by means of labels (Maylor & Blackmon, 2005:354; Wilson,
70
2010:259), axial coding occurs when relationships are drawn between
different data categories (Saunders et al., 2003:400; Wilson, 2010:259) and
selective coding entails identifying a central category that reflects the main
intention of the research (Saunders et al., 2003:400; Wilson, 2010:259).
An open coding strategy was adopted in the analysis. This entailed breaking
up the newspaper article or press release text into distinct segments and
attaching labels to those segments such that similar segments could be
grouped together (Henning et al., 2007:130). As is a common practice with
open coding, the entire newspaper article and press release was read before
codes were applied to the text (Boeije, 2010:96; Henning et al., 2007:131).
The coding categories were based on the story grammar framework of
subject, verb, object developed by Franzosi (1989:276; 1994:106; 1998:82;
2010b:603; Wada, 2005:92) to analyse the content of narrative data such as
newspaper articles. Franzosi’s methodology was chosen, as this
methodology is primarily suited to analysing the content of newspaper
articles, as opposed to other forms of narrative text such as interviews, and
also allows for a large body of text, for example all newspaper articles on a
particular topic, to be analysed (Elliott, 2005:40).
In analysing each newspaper article or press release, each allegation or a
reported incident of anti-competitive behaviour, was categorised into the
story grammar structure of who (the subject, or the actor being accused of
anti-competitive behaviour), did what (the verb, or the anti-competitive
behaviour), to whom (the object complaining of being prejudiced by the anti-
competitive behaviour), when (the time), where (the place, or in this study,
the subsector of the economy) and why (being any motivation given for the
behaviour) (Franzosi, 2010a:43; Wada, 2005:92). The aforementioned
categories can be characterised as descriptive (Boeije, 2010:103), as they
served to label categories such as people, events and actions.
71
Once the information was extracted from the articles using the codes, the
information was quantified (Franzosi, 1989:265; Wada, 2006:92) i.e. the
types of anti-competitive conduct being alleged (or reported) by individual
actors against SMEs were quantified. In addition, the subsectors of the
economy most prone to anti-competitive behaviour, or allegations of such
conduct, as well as if any time pattern was quantified.
3.5 Ethical considerations
The data relied on for the study was publically available, either in the form of
newspaper articles, or press releases published on the Internet. There were,
accordingly, no ethical considerations pertaining to privacy, even where
individuals were quoted. There were ethical considerations in the structuring
of the study in order to ensure that the opinions drawn from the data were
accurate. These were met by meticulously recording the sources from which
the data was extracted, thereby allowing other researchers to double check
the research, and by relying on established methodologies, for example
those developed by Franzosi (1989; 1994; 1998; 2010a; 2010b) for analysing
newspaper articles.
72
CHAPTER FOUR: PRESENTATION OF FINDINGS 4.1 Introduction
This chapter presents the findings of the study, according to the two
primary research objectives and their supporting secondary objectives.
The first primary research objective was to determine the prevalence of
anti-competitive behaviour against SMEs in the South African agri-food
and steel value chains. The secondary objectives, which provide the detail
needed to answer the first primary research objective, are set out in
section 4.2 as follows: section 4.2.1 details the instances of anti-
competitive behaviour reported in the two value chains, section 4.2.2. details the entities being accused of anti-competitive behaviour and
section 4.2.3. notes the entities making the allegations of anti-competitive
behaviour, section 4.2.4. lists the types of anti-competitive behaviour
reported and section 4.2.5. outlines the duration of, and justifications for,
the anti-competitive behaviour.
The second primary research objective was to ascertain whether there
was a need for the Competition authorities to focus on protecting SMEs as
competitors. The findings required to answer this research objective are
set out by the secondary objectives in section 4.3. as follows: section 4.3.1. details the impact of anti-competitive behaviour on SMEs, section 4.3.2. outlines the effect of tools such as structural remedies and
corporate leniency policies that can assist the Competition authorities in
creating an economy more supportive of SMEs and section 4.3.3. highlights the attitudes of Competition authority officials and competition
policy experts on the role of competition policy towards SMEs.
73
Only two value chains in the South African manufacturing sector are
considered in this study. As explained in section 1.1.1.1, these value
chains were chosen because high levels of industry concentration are
restricting the growth of SMEs and because they fit into three of the four
priority sectors chosen by the Competition Commission for investigation.
The Food and Agro-processing priority sector covers the entire agri-food
value chain as set out in Figure 1.1. Thus, all cases of anti-competitive
behaviour identified in the secondary data as falling in the agri-food value
chain have been characterised under the Food and Agro-Processing
sector in this chapter. The steel value chain, as set out in Figure 1.2,
straddles two of the Commission’s priority sectors. This is because steel is
both an important manufacturing input and hence instances of anti-
competitive behaviour would fall within the Commission’s Intermediate
Industrial Products priority sector. In addition, manufacturers also produce
steel and steel products that are used in the construction industry.
Accordingly, instances of anti-competitive behaviour in that industry are
categorised under the Commission’s Infrastructure and Construction
priority sector.
4.2 The extent of anti-competitive behaviour against SMEs in the agri-food and steel value chains
4.2.1 Cases of anti-competitive behaviour
During the period 1 January 2005 to 31 March 2011, 29 instances of anti-
competitive conduct were reported in the agri-food and steel value chains.
Appendices 1a to 1c provide more detail on these cases, namely the
names of the actors (or entities accused of anti-competitive conduct) and
the complainants (or the entities alleging anti-competitive conduct).
The majority of cases considered (19), were in the Food and Agro-
Processing sectors, and of these, the majority were in the staple food
74
subsectors, namely, six cases in the grain subsector and three in the
poultry sector. In respect of the steel value chain, seven cases were
reported as falling within the Infrastructure and Construction sector with
the remaining three falling into the Intermediate Industrial Products sector.
Table 4.1 sets out the cases according to the Competition Commission’s
priority sectors.
Table 4.1: Identification of cases considered according to priority sector
4.2.2 Entities accused of anti-competitive behaviour
The secondary data did not always indicate whether the entities accused
of anti-competitive behaviour were SMEs. Reference was then made to
the electronic database, Who Owns Whom, which details the number of
employees and turnover levels of companies operating in the South
African economy. However, Who Owns Whom is not an exhaustive
reference guide, as it only provides detail in respect of companies where it
can source information.
The National Small Business Act (Republic of South Africa, 1996)
categorises SMEs as entities employing no more than 200 people or who
have turnovers of less than R50 million. The Who Owns Whom database
was consulted to ascertain the number of employees and turnovers of the
entities listed in Table 4.2. Where the database indicated either that the
company employed less than 200 people, or had a turnover of under R50
75
million, the entity was classified as an SME for the purpose of this study.
However, where the entity employed less than 200 employees but had a
turnover in excess of R50 million, it was not classified as an SME. The
Who Owns Whom search revealed a further three SMEs.
Table 4.2: Details of companies from Who Owns Whom database
Company Number of employees Turnover Classify as
SME? Abedare Cables 630 No information No Agriwire No information No information Uncertain Alvern Cables 346 No information No Ben Jacobs Iron & Steel 31 No information Yes Coetzee & Coetzee No information No information Uncertain Hi Pistorius No information No information Uncertain
Hendok Wireforce Steelbar No information No information Uncertain
Kalkor No information No information Uncertain
Koedoespoort Reinforcing Steel No information No information
Uncertain
Ladismith Cheese No information No information Uncertain
Lancewood 170 R424 million No Milkwood Dairies No information No information Uncertain
Plaaslike Boerdienste No information No information Uncertain
Power Metal Recyclers 200 No information Yes SA Metals Group 820 R2 billion No Tulisa Cables 119 No information Yes Videx Wire Products No information No information Uncertain Woodlands Dairy 309 R1.4 billion No
Source: Who Owns Whom (2011).
Table 4.3 presents the cases in terms of whether the entities being
accused of anti-competitive conduct were SMEs or large entities. Such
entities were further categorised in terms of where they fell in the value
chain, namely whether they were manufacturers, suppliers or competitors.
In the majority of cases, the entities being accused of anti-competitive
behaviour were manufacturers themselves 30, followed by four cases
where the entities were suppliers of either raw or finished materials and
three cases where the entities were buyers of goods produced by other
manufacturing entities. In four cases the entities being accused of anti-
76
competitive conduct were manufacturing companies that were owned by
companies in the construction sector.
Table 4.3: Type of entities accused of anti-competitive behaviour Value chain Subsector Entity
Manufacturers* Large manufacturers SME manufacturers Large manufacturer Large manufacturer Large manufacturer Large manufacturers Large suppliers Large suppliers Large suppliers Large manufacturers & SME manufacturers Large manufacturers Large manufacturers Large manufacturers & SME manufacturers Large producers Large manufacturers Large buyers Large buyer Large manufacturers & SME manufacturers
Large manufacturers & SME manufacturers Large manufacturer & construction companies Large manufacturers & construction companies Large manufacturers & SME manufacturers Large manufacturers & SME manufacturers Large manufacturers & manufacturers* Large manufacturer & Large competitor
Intermediate Industrial Products
Excessive pricing Scap metal Steel cartel
Large manufacturer & large supplier Large & SME manufacturers & construction companies Large manufacturers & construction companies
Summary Manufacturers 30 Large manufacturers 21 SME manufacturers 8 Suppliers 4 Large suppliers 4 SME suppliers 0 Buyers 3 Large buyers 3 SME buyers 0 Construction companies 4 *Indicates entities of which it was not possible to determine the size
In eight cases SMEs were accused of anti-competitive behaviour. Four of
these cases were in the Food and Agro-Processing sector and in three of
these cases the SMEs acted in concert with large manufacturers. These
77
were the maize milling, wheat milling and poultry: eggs, broilers and chicks
cases. There were four cases in the steel value chain where SMEs were
accused of anti-competitive behaviour, in each instance in concert with
large manufacturers. There were no SMEs accused of anti-competitive
behaviour in the supplier and buyer categories.
Details of the aforementioned cases are provided in Appendices 4a and
4c.
In four instances construction companies were accused of anti-competitive
behaviour in the manufacturing sector. These construction companies own
subsidiaries that manufacture key materials required in the construction
industry, namely: mesh reinforcing, mining roof bolts, scrap metal and
steel cartel cases. Table 4.4 summarises the involvement of construction
companies in cases of anti-competitive behaviour investigated by the
Competition Commission.
Table 4.4: The involvement of construction companies in anti-competitive behaviour in the manufacturing sector Cases investigated Construction Company Manufacturing subsidiary Mining roof bolts Aveng Africa Duraset
Murray & Roberts RSC Ekusasa Steel Murray & Roberts Cisco Mesh Reinforcing Aveng Steeldale Mesh
Murray & Roberts BRC Mesh Reinforcing Total cases per construction company
Aveng 2 Murray & Roberts 3
4.2.3 Complainants of anti-competitive behaviour
Table 4.5 distinguishes the complainants in terms of whether they were
SME or large entities. In each case the entities are further categorised in
terms of where they sit in the value chain, namely whether they are
manufacturers, buyers or suppliers. Where the investigation was initiated
by the Competition Commission itself, eg following an industry
investigation or a merger or leniency application, there would have been
78
no complainant instigating the investigation. Hence, the complainants in
these cases are recorded as “NA” for “not applicable”.
Table 4.5: Categorisation of complainants Value chain Subsector Entity
NA (Competition Commission initiated) SME manufacturer Large buyer (government entity) Large buyer NA (Competition Commission initiated) Large manufacturer (competitor) NA (Competition Commission initiated) Large buyers & SME buyers SME buyer SME buyer SME manufacturers & SME buyers NA (Competition Commission initiated) SME manufacturers & SME buyers NA (Leniency application) Large manufacturers (competitors) Large manufacturers (competitors) NA (Competition Commission initiated) SME supplier* NA (Competition Commission initiated)
NA (Competition Commission initiated) NA (Leniency application) Large buyers (mining houses) NA (Merger investigation) Large & SME buyers (retailers) Large buyers (mining houses) & Large manufacturer Large manufacturer & SME manufacturers
Intermediate Industrial Products
Excessive pricing Scap metal Steel cartel
Large buyers (mining houses) NA (Merger investigation) NA (Competition Commission initiated)
Summary
SME Entities SME Manufacturers SME Buyers SME Suppliers
9 4 6 1
Large entities Large manufacturers Large buyers Of which mining houses Large suppliers
11 5 6 3 0
Of the 9 instances where SME entities were recorded as complainants,
five instances entailed SME manufacturers. In the majority of cases (6),
the SME complainants were buyers. Of the 11 instances where large
entities were recorded as complainants, five of the complaints were
manufacturers. Of these five, three were competitors of the entities being
accused of anti-competitive behaviour, namely Japan Tobacco
79
International in the cigarette case and Supreme Poultry and Country Bird
in two of the poultry cases. Also noteworthy is of the six buyers who
lodged complaints of anti-competitive behaviour, three were major mining
houses, namely in the mining roof bolts, galavanised wire and excessive
pricing cases. Details of the aforementioned cases are provided in
Appendices 4a to 4c.
4.2.4 Types of anti-competitive behaviour
Table 4.6 sets out the types of anti-competitive conduct found in each
value chain. In keeping with Chapter 2 of the Competition Act (Republic of
South Africa, 1998), the categories of anti-competitive conduct are divided
into those that fall under Restrictive Practices, and those that fall under
Abuse of Dominance. Most of the allegations fall into the Restrictive
Practice category. Price fixing and market allocation are the most
commonly alleged categories of anti-competitive conduct in the Restrictive
Practices category, while exclusionary conduct is the most commonly
alleged anti-competitive practice under the Abuse of Dominance category.
80
Table 4.6: Total number of allegations of anti-competitive behaviour per priority sector
Anti-Competitive behaviour
Food and Agro-Processing
Infrastructure & Construction
Intermediate Industrial Products
Total
Abuse of Dominant Position Abuse of dominance 1 1 Excessive pricing 2 1 3 Exclusionary conduct 11 1 12 Price discrimination 3 1 4
Non given Previously-regulated industry Previously-regulated industry Previously-regulated industry Previously-regulated industry Non given
Infrastructure & Construction
Wire products Galvanised wire Mining roof bolts
7 7 6
2001-2008 2001-2008 2002-2008
Increase buying power against Arcelor Mittal Cartel ensured no substandard products imported Non given
In one instance, SMEs justified their cartel on the grounds that this gave
them buying power against a dominant upstream supplier. Thus, in wire
products case, ten small wire manufacturers, each with Mr Rick Allen
(“Allen”) as the main shareholder, organised themselves into a cartel.
Allen justified the cartel, arguing it was a buyers’ group organised to gain
bargaining power against the vertically integrated steel mills, namely Cape
Gate, Scaw and Arcelor Mittal SA. Allen alleged, further, that wire
production was a profitable output market for the steel mills, who therefore
were supplying their own wire manufacturers with steel. Thus Allen argued
that one of the accused, Consolidated Wire Industries, which had
subsequently sought immunity from the Competition Commission, was co-
owed by two major steel mills, Arcelor Mittal SA and Scaw Metals. The
case also revealed the extent to which the market is dominated by the big
firms through the ownership of small subsidiaries.
4.3 The need for a specific focus on SMEs by the Competition authorities
4.3.1 Impact of anti-competitive behaviour on SMEs
Table 4.10 summarises how SMEs were affected by complaints of anti-
competitive behaviour investigated by the Competition Commission.
84
Table 4.10: Summary of the impact of anti-competitive behaviour on SMEs
Trigger Food and Agro-Processing
Infrastructure & Construction
Intermediate Industrial Products
Total
Details not reported 5 4 9 SME restricted 6 1 2 9 SME part of cartel 4 2 6 SME threatened 2 1 3 SME fought case 1 1 SME triggered alert 2 2 Unclear if SME part of cartel 1 1 2
Total 20 9 3 32
Seven categories were devised to describe how SMEs were impacted by
the behaviour:
Details not reported – there were nine cases where the impact
on SMEs was not reported.
SMEs restricted – there were nine instances where the
sustainability or the growth of SMEs was restricted by anti-
competitive behaviour, for example through the charging of
excessively high prices for manufacturing inputs.
SMEs threatened – this category refers to cases where there
were reported instances of SMEs actually being threatened by
companies engaged in anti-competive behaviour, but excludes
instances where SMEs also subsequently succumbed to
engaging in anti-competitive behaviour as a result of such
threats. Threats against SMEs included black listing or exclusion
from supply. Three instances were reported.
SMEs part of cartels – there were six instances where SMEs
were party to anti-competitive conduct, as they were part of
cartels in the industry.
SME fought case – in one instance an SME fought the case at
the Competition Tribunal after the Competition Commission
failed to find evidence of anti-competitive behaviour.
85
SME triggered an alert – in two instances the Competition
Commission case was initiated by an SME alerting the
Commission to the existence of anti-competitive behaviour in its
market.
Impact on SME unclear – in two instances it was not possible to
ascertain the size of the entities engaged in anti-competitive
conduct from the secondary data.
Details of the impact of anti-competitive behaviour on SMEs is set out in
Appendices 6a to 6c.
It must be noted that while there were 29 reported cases of anti-
competitive behaviour, Table 4.10 lists 32 instances impacts. This is due
to impacts being recorded twice in three cases. In the agri lime case, it
could not be determined if the participants were SMEs. Hence in that case
the impact on SMEs was recorded both as “Unclear if SME part of cartel”
and as “SME restricted” as agri lime is a key input for SMEs. Likewise
each of the dairy and the bread cases was triggered by an alert from an
SME, but SMEs were also threatened in those cases.
4.3.1.1 SMEs threatened by anti-competitive behaviour
Table 4.11 sets out the three instances where SMEs were threatened by
anti-competitive behaviour. In two of the cases, the affected SMEs were
manufacturers, while in the third case the affected SMEs were farmers.
86
Table 4.11: Instances where SMEs were threatened by anti-competitive behaviour
Case Conduct SME impact
Bread Exclusionary conduct
Price fixing
Pioneer engaged in price wars by forcing independent bakeries to charge the prices it set for bread.
Aim was to prevent competitors from entering into or expanding in markets
Dairy cartel Exclusive supply agreements
Information sharing
Price fixing Restricted
practices
Induced farmers not to supply competitors by threatening to cancel entire delivery contract
Farmers paid a surplus milk quota price, which is less than what they would get on open market
Steel cartel Fix trading conditions
Information sharing
Market allocation Price fixing
SMEs who imported steel were later victimised by steel mills by being refused supplies of urgent steel orders
4.3.1.2 SMEs co-opted into anti-competitive behaviour
Table 4.12 sets out the six instances where SMEs were found to be
participating in anti-competitive conduct. In two of the instances SMEs
were intimidated into participating in the anti-competitive behaviour but in
the other instances such participation was voluntary.
87
Table 4.12: Cases where SMEs participated in anti-competitive behaviour
Case Conduct SME participation
Animal feed Collusive tendering SMEs organised themselves into a cartel Maize milling Exclusionary
conduct Market allocation Price fixing
SMEs bullied to become part of cartel Could avoid joining while still small, but
pressure to join increased as SME grew SMEs were threatened not to heed the call from
the Commission to co-operate in investigation Poultry: eggs etc
Allocation of markets
Exclusive supply agreements
Information sharing Price fixing
Agreed not to compete in open market but divide by allocating territories and customers
Of which initiated by the Competition Commssion: 12
4.3.3 Instances where the Corporate Leniency Policy assisted the Competition Commission Table 4.16 sets out the cases where the Competition Commission was
assisted by its Corporate Leniency Policy. and the Commission obtained
successful prosecutions in four of the cases. No prosecution was obtained
in the dairy cartel case, as this case was dismissed when the SCA ruled
that the Competition Commission had not followed due process.
91
Table 4.16: Cases where the corporate leniency policy has assisted the Competition Commission Case Whistle blower Immunity granted Outcome of case
Market Investigations
Dairy Louise Malherbe, SME farmer in Eastern Cape
Clover Dismissed: on a legal technicality
Bread Imraan Mukhadam, SME retailer in Western Cape
Poultry: eggs Pioneer Foods Still under Competition Commission investigation
Mesh reinforcing BRC Mesh
Reinforcing Refered to Tribunal for adjudication
4.3.4 The role of structural remedies
Eight instances of structural remedies were provided by the secondary
data. Of these eight instances, one was of a mooted structural remedy,
namely in the Competition Commission probe into steel price hikes against
the major steel mills and steel wholesalers (Arcelor Mittal SA, Cape Gate,
Cisco, Macsteel and Trident among others), the newspaper reports
indicated that government would consider divesting Arcelor Mittal SA of its
Vanderbijlpark and Saldanha Bay steel mills if there was evidence of
excessive pricing.
The same structural remedy was imposed in the maize and wheat milling
cases. This was because the same company was found guilty of anti-
92
competitive conduct in those instances, namely Pioneer Foods. The
structural remedy against Pioneer Foods was far-reaching as the company
was not only obliged to cease the anti-competitive conduct but also to
change its operations by undertaking a R150 million capital expansion
project and reducing its margins on flour (a key input for SME
manufacturers) and bread (a staple food for consumers) so as to reduce
its gross profit margin by R160 million.
A similar far-reaching structural remedy was imposed in the ammonia-
based fertiliser and phosphoric acid cases. Among other things, Sasol was
ordered by the Competition Tribunal to divest itself of five fertiliser units to
parties approved of by the Tribunal and also to sell fertiliser on an ex
works basis within 100km of its Sasolburg and Secunda plants. The aim of
this remedy was to create more diversity in the production of fertilisers in
the South African markets by dismantling the vertical integration in the
fertiliser industry. It was also the first time that a company had been forced
to sell off business units by the Competition authorities.
A structural remedy was also imposed in the flat steel case. This was a
case brought by two of South Africa’s largest gold mining houses, DRD
Gold and Harmony Gold. In addition to imposing a fine for excessive
pricing, which was subsequently overturned on appeal, the Competition
Commission also ordered Arcelor Mittal SA not to impose any conditions
on the use or resale of steel sold from its steel mills. These remedies were
to counteract Arcelor Mittal SA’s practice of prohibiting the resale of steel
on the domestic South African market in order to reduce local steel
volumes. Arcelor Mittal SA was also ordered to make public its steel
prices, rebates and discounts for flat steel.
Appendix 7 provides more detail on cases where structural remedies
were imposed.
93
4.3.5 Attitudes towards SMEs
Table 4.17 summarises the opinions expressed by Competition
Commission staff and experts on whether there is a role for competition
policy in protecting competitors such as SMEs. The majority of
commentators were reported as being supportive of the narrow Chicago
School approach. According to this approach, the primary objective of
competition policy is to create competition in an economy so that
consumer prices remain low. This objective can be at the expense of
SMEs in situations where economies of scale can be achieved by large
companies.
Table 4.17: Summary of attitudes to the role of competition policy Commentator View taken Quotes Source
Menzi Simelane
Competition Commissioner
Protecting consumers not mean
cheap prices, but rather diversity
of choice brought on by a lack of
collusion
"What you really need in any economy is a
flea market approach across the board…
that approach is necessary to encourage
new players to enter the market"
Finweek,
2 March 2005
Shan Ramburuth
Competition Commissioner
Country needs "business-owner
martyrs" to step forward and take
a sense for personal responsibility
for fighting the cases
"Mukkadam is like a folk hero in the
community for blowing the whistle and
more should do it"
The Star,
14 February 2008
Mandla Maleka
Eskom chief economist
Investigations by Comp authorities
would lead to price corrections
over time and that would benefit
the economy
Sowetan,
2 March 2008
Rosalind Lake
attorney, Deneys Reitz
What is good for consumers is not
good for competitors, especially
small competitors
"Consumers will benefit from the
economies of scale that a few large
companies can offer, but not a large
number of small competitors"
Jac Marais
attorney Adams & Adams
Competing objectives in Act, thus
can have protection of consumers
at expense of supporting SMEs cos
bigger firms are often more
efficient and can lead to lower
prices for consumers
Engineering News,
4 February 2011
Table 4.18 summarise the opinions expressed by experts on the
accessibilty of the Competition Act to SMEs and solutions proposed to
assist SMEs. Cost and the time taken for the Competition authorities to
complete their investigations emerge as the main difficulties.
94
Table 4.18: Summary of opinions on the accessibility of the Competition Act for SMEs Problems identified Problem details Solutions proposed Cost of bringing a case to the authorities
Fees of lawyers, economists & expert witnesses
Cost of case at least R1 million SME can’t claim damages for loss
suffered due to anti-competitive conduct
Financial assistance for SMEs Legal Aid body for SMEs
Time take to resolve case
Commission took 2 years to investigate ammonia fertiliser case and refer to Tribunal
Tendency among lawyers to prolong cases on technicalities
Cartel accused drag out cases so can continue with conduct and delay payment of fine
By time hear case, complainant no longer in business
Propose charging interest from date fines are levied to reduce opportunistic appeals
Navigating technicalities
Investigations not adhering to due legal process have been over-ruled by recent SCA and CAC decisions
As a result, the Commission will not longer be able to initiate industry-wide investigations
The need to adhere to due legal process will encourage delays on legal technicalities
SMEs need to pay for experts to interpret the Competition Act and navigate its procedures for them
Competition Commission has improved its procedures, practices and administrative capabilities to ensure due legal process followed
Appendices 8a and 8b provide more detail on the aforementioned opinions.
4.4 Conclusion
The impact of anti-competitive behaviour on manufacturing SMEs in the
South African agri-food and steel value chains is complex. While there are
instances showing the detrimental impact of anti-competitive behaviour on
SMEs, SMEs themselves are also guilty of anti-competitive behaviour and,
in some instances, engaged in such behaviour voluntarily. Furthermore,
anti-competitive behaviour does not only affect SMEs but also big
businesses, notably the mining houses. The findings also revealed the role
of the Competition authorities in proactively tackling anti-competitive
behaviour, either through initiating investigations on their own accord or by
95
imposing structural remedies that have the effect of dismantling the
monopolies that give rise to anti-competitive behaviour.
96
CHAPTER FIVE: DISCUSSION OF FINDINGS 5.1 Introduction
This chapter discusses the findings of the study as divided into the two
primary research objectives. The first primary research objective was to
ascertain the extent of anti-competitive behaviour against SMEs in the
South African agri-food and steel value chains. The findings of this
research objective, together with its supporting secondary objectives, are
discussed separately for each of the value chains.
The second primary research objective was to determine whether there is
a need for the Competition authorities to protect SMEs as competitors.
Once again this research objective was supported by secondary
objectives designed to provide the detail needed to answer it. The agri-
food and the steel value chains are discussed together in answering the
second primary research objective.
5.2 The extent of anti-competitive behaviour against SMEs in the agri-food value chains 5.2.1 Cases of anti-competitive conduct
The cases in the agri-food value chain considered in the findings have
been placed on a simplified value-chain diagramme in Figure 5.1. The
diagramme shows the cases fell both at the pre-production and the post-
production levels of the value chain and also lists the entities accused of
anti-competitive behaviour. The fruit export case has been excluded from
the diagramme as it refers to an allegation yet to be investigated by the
Competition Commission.
97
Input suppliers
Silos
Farmers
Agro-processingWheat/Maize Milling
Retailers
Consumers
Fertiliser• Agri Lime - SME & Large manufacturers• Ammonia fertiliser – Sasol
• Phosphoric acid – Sasol Animal Feed• Animal feed – SME manufacturers• Poultry: feed – Astral, Pioneer, Country Bird,
Three cases were reported where SMEs were threatened by anti-
competitive behaviour. Such behaviour had the effect of excluding the
SMEs from the market. In the first case, the dairy cartel case, an SME
farmer alleged that two of South Africa’s main milk processors (Parmalat
and Nestle SA), as well as an SME milk processor (Ladismith Cheese),
threatened to cancel the delivery contracts of dairy farmers who sold
surplus milk to independent buyers after having met their milk quotas to
the aforementioned milk buyers. The actions of the milk buyers reflect the
buyer-driven nature of the agri-food chain, where power is vested at buyer
level. The case is also illustrative of the oligopolistic nature of the dairy
value chain (Cutts & Kirsten, 2006:328-9; Mkhabela & Mndeme, 2010:123)
where a small number of players control the market for a large number of
farmers.
In the other two cases, the threat to SMEs came from upstream in the
value chain, in that SMEs were threatened with cuts in the supply of key
raw materials needed for their manufacturing operations. In the bread
case, the SME, being an independent bakery in the Western Cape, was
threatened with flour supply cuts by Pioneer Foods if it did not charge the
bread prices that Pioneer Foods had set. Pioneer Foods was found by the
Competition Commission to be dominant in the Western Cape.
110
5.5.2 Facilitating the participation of SMEs
This section considers the tools available to the Competition authorities in
creating a more competitive environment in the agri-food and steel value
chains and whether, in so doing, they also created a more supportive
environment for SMEs. These tools include the power of the Competition
Commission to initiate investigations without a prior and formal complaint,
the use of the Corporate Leniency Policy to crack open cartels and the use
of structural remedies in diluting monopolisitic markets. The section ends
with an overview of the opinions expressed by experts in competition law
and policy on the role of the Competition authorities towards supporting
SMEs.
5.5.2.1 Investigations initiated by the Competition authorities
Of the 29 cases considered in the findings, 12 were initiated by the
Competition Commission. The majority of these, namely eight, were
initiated as a result of a market analysis conducted by Competition
Commission. The areas for investigation were chosen by virtue of their
falling within the priority sectors of the Competiton Commission. The
advantage of the Competition Commission initiating its own market
inquiries is that allegations of anti-competitive conduct that could affect
SMEs can be investigated without the SME having to expend time and
resources in lodging and, if necessary, fighting a complaint.
5.5.2.2 Impact of the Corporate Leniency Policy
The Competition Commission’s Corporate Leniency Policy is also an
important trigger for investigations. Leniency polices grant immunity to the
first firm to blow the whistle on a cartel (Jones & Sufrin, 2011:801) and
therefore assist Competition authorities in uncovering cartels that may not
be easy to detect (Motta, 2009:193; Moodliyar, 2008:158). It is a condition
111
of being granted immunity that the company must make a full disclosure of
the nature of anti-competitive behaviour, as well as of the players involved.
The policy supports the Competition Commission in securing a
prosecution arising from its investigations into anti-competitive behaviour.
Once again, SMEs benefit from not having to expend resources and time
to lodge complaints and fight those complaints at the Competition
Commission. The leniency policy was used in the mesh reinforcing and
the poultry: eggs, broilers and chicks cases. In each case immunity from
prosecution was granted to an entity accused, or likely to be accused, of
anti-competitive behaviour, namely BRC Mesh (a subsidiary of Murray &
Roberts) in the mesh reinforcing case, and Pioneer Foods in the poultry:
eggs, broilers and chicks case.
5.5.2.3 Impact of structural remedies
Structural remedies allow the Competition authorities to intervene in a
market place with measures that control how a firm will do business in the
future and are typically used to dilute the monopoly power of dominant
firms (Motta, 2009:69). Such remedies are premised on the understanding
that without intervention by the Competition authorities, it would not be
possible for new firms to enter a market (Motta, 2009:69).
One example of the implementation of a far-reaching structural remedy
was the one imposed on Sasol in the ammonia fertiliser and phosphoric
acid cases. Among other things, that remedy compelled Sasol to divest
itself of its fertiliser blending units and to sell those units to entities
approved of by the Competition Commission, and also to sell fertiliser on
an ex works basis within 100km of its Sasolburg and Secunda plants. This
remedy, the aim of which was to dismantle vertical integration by Sasol in
the fertiliser industry, was the first time that a company had been forced to
sell off business units by the Competition authorities. SMEs stood to
benefit as there would be opportunities for new entrants to enter the
112
fertiliser blending industry, while farmers stood to benefit from the lower
prices arising from increased competition.
Using the Porters Five Forces Framework, the impact of the remedy on
the industry can be demonstrated diagrammatically as set out in Figure 5.4.
BEFORE AFTER
Barrier to entry
Fertiliser blending industry
New entrants
BuyersSupplier
Substitutes
Buyers are numerous, and many are SMEs, hence lack bargaining power
No substitutes available, save expensive imports
Supplier vertically integrated: produces raw material and blends fertiliser = bargaining power
Fertiliser blending industry
New entrants
BuyersSupplier
Substitutes
Bargaining power increased due to competition in the market
No substitutes available, save expensive imports
Number of suppliers increased from 1 to at least five = decrease in bargaining power
Barrier to entry shattered: the sale of of 5 Sasol blending plants allows for at least 5 new entrants unrelated to dominant players
Figure 5.4: Effect of the structural remedy in Sasol ammonia fertiliser case
The effect of the structural remedy can be seen as interventionist in
nature, as the Competition authorities sought to intervene in the structure
of the South African fertiliser industry. This interventionist role is more in
keeping with the Ordoliberalist approach to competition policy, which
compels the Competition authorities to consider not only consumer
welfare, but also the structure and dynamics of a particular industry (Fox,
2003:155) and in particular also the barriers preventing new entrants into
the market (Kampel, 2005:22). Structural remedies have been welcomed
by legal commentators who described them as “far more extensive and
113
effective [in dismantling anti-competitive practices] than the once-off
payment of a penalty” (Business Day, August 2010).
5.5.2.4 Attitudes towards SMEs
The Competition Act (Republic of South Africa, 1998) was drafted with a
developmental approach in mind, as among its objectives are the
facilitation of the participation of SMEs in the economy (section 2(e)) and
promoting a wider spread of ownership in the economy, particularly of
previously disadvantaged individuals (section 2(f)). Nevertheless, the data
reflects that the dominant thinking among the Competition authorities, and
competition experts, leans towards the Chicago School approach than the
developmental approach suggested by the objectives of the act.
The first Competition Commission, Advocate Menzi Semelane who held
office from 1999 to 2005, appeared to adopt an approach sympathetic to
SMEs. Advocate Simelane was quoted as saying that the role of
competition policy is to create a “flea market” (Fin Week, March 2005:para
4) type of economy in which there is a diversity of choice brought on a by
a lack of collusion and an openness to new entrants into an industry. He
further saw the objective of competition policy not as leading to low prices
for consumers, but rather as creating a diversity of choice brought on by a
lack of collusion. Advocate Simelane’s successor, the current Competition
Commission Comissioner, Mr Shan Ramburuth, appears to have adopted
an approach more in line with the Chicago School. Mr Ramburuth was
quoted as saying that South Africa needs “business-owner martyrs to step
forward and take a sense of personal responsibility” (The Star, February
2008: para 6) and bear the costs for fighting anti-competitive cases. He
was commenting on the role played by Mr Imraan Mukkadam, the SME
retailer in the Western Cape who alerted the commission to anti-competive
practices by the country’s major millers in the bread industry.
114
Mr Ramburuth’s sentiments are echoed by legal experts, with attorney Ms
Rosalind Lake stating that “what is good for consumers is not good for
competitors, especially small competitors” and attorney Mr Jac Marais
arguing that consumers can be protected at the expense of SMEs, as
bigger firms can often produce goods and services more efficiently than
SMEs (Engineering News, February 2011:para 5). None of comments
cited above were made in an academic context, and hence cannot be
seen as official statements of policy direction. However, because the
statements appeared in newspapers, they nevertheless send a signal to
the public of how SMEs will be viewed by the Competition authorities.
Further evidence a Competition law interpretation that is inimical to SMEs
was found in the recent curtailment of the Competition Commission’s
investigative powers by the SCA in the dairy cartel case and the CAC in
the phosphoric fertiliser case. These rulings were subsequently followed
by the Competition Tribunal in the beer case. In both of the
aforementioned instances, the appeal court ruled that the Competition
Commission may no longer launch industry-wide investigations when anti-
competitive behaviour is suspected in a particular subsector (SCA,
2010:12). Instead the Commission should, unless it obtains additional
evidence, restrict its investigations to the original complaint submitted to it
(CAC, 2011:23; SCA, 2010:12). This strict legal approach has been
criticised for opening a legal loophole (Bleby, 2011:para 8; Marais,
2010:para 11) that will lead to the delay in cases, which will further
prejudice SMEs.
The data also revealed the Competition Act is not accessible to SMEs,
mainly as a result of the cost and time needed to see a complaint to
finality. This is particularly the case as the SME is not matched in
resources as against a big corporate. An example is the SME fertiliser
blender, Nutriflo, an SME fertiliser blender, which spent R4.5 million over 9
years to battle Sasol (The Star, February 2008). While NutriFlo was not
115
liquidated as a result of taking on the battle, the company did have to
switch to a different line of business as a result of the battle.
5.6 Answering of the second primay research objective At the heart of this study is a perennial question to competition policy,
namely whether it is sufficient for competition policy to concern itself with
protecting competition as a process, or whether there is also a need to
protect individual categories of competitors such as SMEs (Fox, 2003:149;
Jones & Sufrin, 2011:17). This issue has been discussed in the literature,
where the dichotomy between two approaches to competition policy was
presented. These are the Chicago school, which places reliance on
market forces to select the firms that can most efficiently satisfy consumer
demand at the lowest cost, even if this can be achieved by monopoly
structures at the expense of SMEs. (Cook, 2002:547; Fox, 2003:152;
Jones & Sufrin, 2011:23). The Ordoliberalist European approach takes a
different view and recognises that an economy should be more than just
efficient, but also achieve developmental objectives that are relevant in a
particular jurisdiction (Fox, 2003:155). Accordingly, it may be necessary
for the Competition authorities to intervene in an economy to achieve
developmental objectives, such as protecting the economic freedom of
SMEs to enter into, and compete in, a market (Fox, 2003:156; Jones &
Sufrin, 2011:17).
The cases considered have shown that SMEs were not alone in being
affected by anti-competitive conduct. However, while the impact of anti-
competitive behaviour on SMEs was not unique, the experience of SMEs
in tackling anti-competitive behaviour was unique. The findings reported
that SMEs lacked the resources needed to tackle anti-competitive
behaviour, and to sustain an action once it has been initiated. As set out in
Table 4.18, the costs of paying for legal and economic experts are
onerous, SMEs may not be able to survive the time needed to fight a case
116
at the Competition authorities and they may not be skilled enough on
interpreting the technicalities of successfully concluding a case. Another
unique experience of SMEs is that they are often bullied to participate in
anti-competitive behaviour. A number of instances of this were reported in
the agri-food value chain.
In commenting on the applicability of Porter’s FFF to developing
economies, Narayanan and Fahey (2005:214) warned that in such
economies SMEs could not be seen in the same light as bigger
businesses, especially if such larger entities had achieved their dominance
through state support (Ramburuth & Roberts, 2009:7). Applying this
concept to the field of competition policy, one can argue that SMEs as
litigants should not be seen in the same light as bigger businesses. Thus,
because the demand on SMEs’ resources, skills and time is greater when
fighting cases before the Competition authorities, it is arguable that the
Competition authorities should adopt a more Ordoliberalist approach and
be more accommodating of SMEs as litigants than they are of bigger
businesses. However, the fact that SMEs were also reported as voluntarily
engaging in anti-competitive behaviour highlights a danger in making
specific concessions towards SMEs and the Competition authorities
should heed the warning of Fox (2003:162) that if they adopt this
approach, they could end up protecting SMEs from competition itself.
The findings also highlighted the tools at the disposal of the Competition
authorities in creating a more competitive environment. These tools
include the fact that the Competition authorities can initiate market
investigations on their own accord, that they are assisted in these
investigations by a Corporate Leniency Policy, and that they can order
structural remedies, which allow the authorities to intervene in an industry
to dilute the power of dominant companies. The findings show that by
using these tools, the Competition authorities in using these tools have
been able to facilitate the participation of SMEs in the economy, without
117
making this a specific focus. This is due to the fact that by focussing their
efforts on the priority sectors, the authorities have initiated investigations
into anti-competitive behaviour in industries where SMEs will likely be
affected by such behaviour. Notable here are the Competition Commission
initiated investigations into the steel cartel and into the maize and wheat
milling industries. The fact that the authorities have initiated such
investigations has saved SMEs the cost and time of lodging and fighting
complaints at the Competition Commission. In addition, certain of the
structural remedies imposed also had the effect of creating a more
conducive environment for SMEs. Notable here is the structural remedy
introduced in the fertiliser industry.
The Competition Commission’s power in respect of market investigations
was curtailed by recent Supreme Court of Appeal and Competiton Appeal
Court decisions. The effect of these decisions was to limit the Competition
Commission’s power to refer cases to the Competition Tribunal for
adjudication only in respect of entities for which it had evidence of anti-
competitive conduct (CAC, 2011:23; SCA, 2010:12). These decisions
further limit the ability of the Competition Commission to use the tools at
its disposal to support SMEs, as they will make it harder for the
Commission to tackle cartels and also allow cases to be dragged out on
technicalities (Bleby, 2011:para 8; Marais, 2010a:para 11). The
Competition Commission has since announced it will appeal the CAC
decision in order to obtain more clarity on its powers of investigation
(Competition Commission, 2011c:1).
The aforementioned tools have provided the Competition authorities with
the scope to create an economy that is more conducive to the participation
of SMEs, but without making specific concessions for SMEs as litigants in
competition matters. A number of these tools are new, notably the
Corporate Leniency Policy and the right of the Competition Commission to
investigate anti-competitive behaviour on its own account. The novelty of
118
these tools also means that their ambit has yet to be clarified, as is noted
by the Competition Commission’s intention to appeal the recent court
decisions curtailing its powers of market investigation. It had been noted in
the literature that it was premature to judge the performance of the
Competition authorities in coming to the assistance of SMEs. Following on
this it is, accordingly, premature to recommend whether the South African
Competition authorities should adopt a more interventionist approach in
achieving the objectives set out in the Competition Act (Republic of South
Africa, Section 2) of facilitating the participation of SMEs in the South
African economy.
5.7 Limitations of the study
The study is limited to the manufacturing sector of the South African
economy, in particular to only the agri-food and steel value chains within
that sector, whereas the Competition Tribunal and Commission are active
within all sectors of the economy. Accordingly, the study does not provide
a true reflection of anti-competitive activity in the South African
manufacturing sector, nor the economy as a whole. The study further
considers a very narrow set of cases in assessing the performance of the
Competition authorities in assisting SMEs, and accordingly cannot make a
more generalised assessment of the performance of the authorities.
A further limitation arises from the way in which the database was
constructed, in that only articles in the Newsmonitor subsidiary database
entitled “Competition Commission” were considered. As a result of this,
only those cases under Competition Commission inquiry, as reported on
by the press, were investigated. Thus instances of anti-competitive
behaviour, which have not yet come to the attention of the authorities,
were not included. The result of this is that there could be far more
extensive anti-competitive behaviour in the agri-food and steel value
chains than is reported on in this study. The newspaper reports, while
119
providing rich anecdotal data on the cases under consideration, were also
lacking in certain detail. For example, it was often not possible to ascertain
if an entity was an SME. Accordingly, the findings may not provide an
accurate indication of anti-competitive behaviour against manufacturing
SMEs. The findings also referred to cases where manufacturing entities
were owned by construction companies to the extent that this information
was reported in the newspapers. However, an exhaustive assessment of
the extent of vertical integration between manufacturing and construction
companies was beyond the scope of this study, and accordingly the study
may under-report the extent to which construction companies are
contributing to anti-competitive behaviour through the vehicle of their
manufacturing subsidiaries.
The limitations of the research methodology chosen were highlighted by
Clarke et al., (2005:1034), who wrote that newspaper databases may
contain allegations of anti-competitive practices, many of which may not
be proven or true. Furthermore, newspaper articles may not accurately
define the anti-competitive practice being complained of because the
parties complaining of an anti-competitive practice, or the journalists
recording this complaint, are not schooled in competition matters (Clarke
et al., 2005:1034). The implication of these limitations is that the findings
may not accurately portray the extent and types of anti-competitive
behaviour in the manufacturing sector. These limitations have also been
identified by other writers. For example Earl et al. (2004:72) report that
newspapers report selectively on events, and reporting often contains
errors of omission or the misrepresentation of information. Nevertheless
Earl et al. (2004:77) note that the limitations of newspaper data is no more
of a limitation than the nonresponse bias generally experienced with
surveys.
120
5.8 Summary and conclusion
The findings show that anti-competitive practices that became entrenched
in the agri-food and steel value chains under the Apartheid have endured
after the value chain was deregulated (in the case of the agri-food value
chain) and state support ceased (in the case of both value chains). This
has been to the detriment of SMEs, which have struggled to enter and
become profitable in those value chains, and has also been to the
detriment of consumers who have had to pay high prices for consumer
goods in those value chains. Such anti-competitive conduct has been to
the detriment of both SMEs and larger businesses as well as consumers.
It has also been a consequence of the pervasiveness of anti-competitive
conduct in the two value chains that SMEs have become both victims and
perpetrators of such conduct.
In the light of the pervasiveness of anti-competitive conduct the question
arises whether the Competition authorities should specifically focus on
protecting SMEs as competitor in fulfilling the objectives set out in the
Competition Act (Republic of South Africa, 1998:Section 2). The findings
have shown that SMEs cannot be seen as equal litigants to bigger
businesses in fighting cases before the Competition authorities. This is
because the drain on the resources, time and skills of SMEs is far greater
than on larger businesses. However, the Competition authorities, in using
tools such as market inquiries, the Corporate Leniency Policy and
structural remedies have assisted SMEs.
An example can be seen in the structural remedy imposed on Sasol which
will make it easier for SMEs to enter into the blending and marketing of
fertiliser. In addition, cases intiated arising from the Competiton
Commission’s inquiries into the economy, notably the milling and steel
cartel cases, have saved SMEs the cost and effort needed to bring cases
to the authorities. Thus the Competition Commission has prioritised key
121
sectors that will be instrumental to the growth of the South African
economy and in which there is significant potential for the expansion of
SMEs. By focussing on these sectors, the Commission has been able to
direct its scarce resources to where they will make the most impact.
The aforementioned tools are relatively new. Accordingly, it is still
premature to assess the performance of the Competition authorities in
coming to the assistance of SMEs and, following from this, to recommend
whether the authorities should adopt a more interventionist approach in
achieving its objectives of facilitating the participation of SMEs in the
South African economy.
122
CHAPTER SIX: CONCLUSION AND RECOM-MENDATIONS
6.1 Introduction
This chapter summarises the major findings of the study and proposes
recommendations for the field of competition policy and suggests topics
for future research.
6.2 Objectives of the study and major findings
The study had two primary objectives. The first was to ascertain the extent
of anti-competitive behaviour on SME manufacturers in the agri-food and
steel value chains. The agri-food value chain was characterised by a
prevalence of oligopolies and monopolies that could be attributed to a
legacy of state support in the industry and which had the effect of closing
the market to new entrants. Cartels in the agri-food chain were among the
longest in duration, indicative of the enduring legacy of previous state.
SMEs in this value chain were also bullied into participating in anti-
competitive behaviour. While there was evidence of SMEs voluntarily
engaging in such behaviour, the bullying of SMEs in the agri-food chain
was indicative of a hostile environment that was not conducive to the
growth of SMEs.
In the steel value chain anti-competitive conduct was noticeable upstream
at the level of primary steel production, as steel producers were able to
charge excessively high prices. This practice increased the input prices for
downstream players and so restricted their profitability. The practice also
stimulated downstream players, for example wire manufacturers, to
engage in cartel-like behaviour to increase their bargaining power against
123
the dominant primary steel producers. SMEs were less active in tackling
anti-competitive behaviour in the steel value chain than in the agri-food
value chain. Such participation by smaller players in anti-competitive
behaviour is common in value chains dominated by monopolies or
oligopolies. Also noteworthy among the findings was the role of major
mining houses in fighting anti-competitive behaviour, in particular in the
excessive pricing case.
The Competition authorities were not as successful in bringing dominant
players to book in the steel value chain as they were in the agri-food value
chain. In the agri-food value chain, structural remedies imposed on Sasol
and Pioneer Foods had the effect of creating a market structure that was
more conducive to the participation of SMEs. However, in the steel value
chain, an attempt, after a multi-year battle, to hold AMSA to account for
excessive pricing has been delayed by a lengthy appeal process. This is
indicative of the difficulties faced by industry players and the Competition
authorities in tackling anti-competitive conduct.
Accordingly, in addressing this research objective was addressed by
identifying and quantifying the individual cases of anti-competitive
behaviour, as well as the types of entities accused and complaining of
such behaviour. From this the conclusion was drawn that anti-competitive
behaviour that was engendered under Apartheid, as a result of state
support and regulation, continues to be prevalent in the modern South
African economy. This has created an economy that is hostile to SME
participation, such that SMEs themselves often need to engage in
prevailing anti-competitive practices to survive.
The second primary research objective was to ascertain whether the
South African Competition authorities should focus on protecting SMEs as
competitors to fulfil an objective of the Competition Act (Republic of South
Africa, 1998) that they facilitate the participation of SMEs in the South
124
African economy. The study found that anti-competitive conduct in the two
value chains was as detrimental to bigger businesses as it was to SMEs.
However, SMEs faced unique difficulties in bringing cases of anti-
competitive behaviour to the attention of, and fighting the cases before,
the Competition authorities. The difficulties faced by SMEs support the
argument that the Competition authorities should single out SMEs as a
category of litigants for targetted support. The danger of this approach,
however, is that the authorities could end up protecting SMEs from
competition itself, in particular because SMEs are already voluntarily
engaged in anti-competitive in a number of instances.
There is considerable scope for the Competition authorities to facilitate the
participation of SMEs in the economy using tools such as market inquiries,
relying on the Corporate Leniency Policy and imposing structural remedies
on dominant players without necessarily having a specific focus on
protecting SMEs. The aforementioned tools are relatively new, and their
ambit is still being delineated, as is indicated by the Competition
Commission’s recent announcement to appeal the rulings that constrain its
ability to conduct market investigations. Until such time as the Competition
authorities’ use of the aforementioned tools has matured, it will be
premature to recommend whether the South African Competition
authorities should adopt a more interventionist approach in facilitating the
participation of SMEs in the South African economy.
Thus the second research objective was addressed by identifying and
quantifying the various ways in which SMEs were impacted by anti-
competitive behaviour, by identifying and quantifying the manner in which
the Competition Commission tackled anti-competitive behaviour, and
finally by identifying the attitudes of experts on the role of competition
policy in supporting SMEs. From this the conclusion was drawn that while
SMEs were not uniquely impacted by anti-competitive behaviour, they did
face unique hurdles as litigants. Nevertheless, the Competition authorities
125
should be cautious in creating a specific focus on SMEs, as SMEs
themselves are often participants in anti-competitive behaviour. Rather
more time is required to assess the impact of the Competition authorities
in creating an economy that is conducive to the participation of SMEs
through the use of tools such as market inquiries, the Corporate Leniency
Policy and structural remedies.
6.3 Recommendations for the field of competition policy
It is one of the objectives of the Competition Act (Republic of South Africa,
1998) that the Competition authorities assist in facilitating the participation
of SMEs in the South African economy. However, there is little policy
direction on how the authorities may achieve this objective, nor has this
topic been extensively researched.
The findings also indicate that SMEs face unique difficulties in fighting
cases before the Competition authorities. Thus, a further recommendation
would be to explore the solutions proposed by legal and economic experts
on competition policy to make the Competiton authorities more accessible
to SMEs. These solutions include setting up a Legal Aid body for SMEs
and streamlining the authorities’ procedures, practices and administrative
capabilities such that they will be more accessible to SMEs. Other
proposals include charging interest from the date that fines are levied to
reduce the opportunistic appeals that delay the resolution of cases beyond
the capacity of SMEs to continue fighting them.
6.4 Suggestions for future research
The current study had a narrow focus, in that it was restricted to cases in
the South African agri-food and steel value chains that were being
126
considered by the Competition Commision. Future research could include
all cases currently under Competition Commission consideration. This
would give a truer reflection of anti-competitive practices in the South
African economy, and their impact on SMEs, in particular because many
sectors in the economy are interlinked. For example, the current
Competition Commission inquiry into the banking industry is also of
relevance to SMEs, as a lack of funding is a key constraint for SMEs.
Furthermore, the manufacturing sector is linked to other sectors in the
economy, notably the construction sector, as was indicated in the findings,
and to the retail sector. Research that includes these sectors can then
also place anti-competitive practices in the manufacturing sector in
context, namely whether the manufacturing sector is more prone to anti-
competitive conduct than other sectors in the economy.
There has been very little literature published on the competitive structure
of the agri-food and steel value chains. The literature that has been
published, has been produced by a small number of academics.
Deepening the academic study on the competitive structure of important
value chains will assist in a better understanding of the structure of the
South African economy, and in particular assist businesses in
understanding what conduct can be viewed as anti-competitive. It will also
assist the Competition Commission in its market investigations, notably in
deciding on areas for future investigations.
There is also a need for more research on the role of competition policy in
facilitating the participation of SMEs in the South African economy, in
particular because this is one of the objectives of the Competition Act
(Republic of South Africa, 1998). Very little literature has been found on
this topic, despite its relevance for the transformation of the South African
economy.
127
6.5 Conclusion
The South African Competition Act (Republic of South Africa,
1998:Section 2) has as one of its objectives to facilitate of the participation
of SMEs in the economy. Despite being in existence for just over ten
years, the Act has not been successful in diluting the dominance of big
business in the agri-food and steel value chains of the South African
manufacturing sector. It is in this context that the study sought first to
create a descriptive picture of the extent of anti-competitive behaviour in
the two value chains chosen, and its impact on SMEs and, following from
this, to determine whether it was necessary for the Competition authorities
to focus specifically on supporting SMEs as competitors to achieve the
objectives of the Act.
The study revealed that SMEs were not unique in being constrained by
anti-competitive behaviour, as bigger businesses were similarly affected.
In addition there were also instances where SMEs were voluntary
participants in anti-competitive conduct. These findings motivate against
the Competition authorities focussing specifically on SMEs, in particular
because there is the danger that they could protect SMEs from
competition itself. However, it was also found that SMEs face unique
difficulties in bringing cases to the Competition authorities. In addition, the
instances of SMEs being bullied to participate in anti-competitive conduct
reflect the hostile environment in which SMEs operate.
In ascertaining whether the Competition authorities should focus
specifically on assisting SMEs, it is necessary to consider the tools the
Competition authorities can use to create a more competitive environment
without having a specific focus on SMEs. These tools include market
inquiries, the Corporate Leniency Policy and structural remedies to dilute
the market power of dominant entities. The aforementioned tools are still
relatively new and their ambit is still being delineated. Accordingly, until
128
such time as the Competition authorities’ use of the aforementioned tools
has matured, it will be premature to recommend whether the South African
Competition authorities should adopt a more interventionist approach in
facilitating the participation of SMEs in the South African economy.
129
REFERENCES
Abor, J. & Quartey, P. (2010). Issues in SME development in Ghana and South Africa. International Research Journal of Finance and Economics, 39(2009):218-228.
Abu, O. & Kirsten, J.F. (2009). Profit efficiency of small- and medium-scale maize milling enterprises in South Africa. Development Southern Africa, 26(3):353-368.
Aghion, P., Braun, M. & Fedderke, J. (2008). Competition and productivity growth in South Africa. Economics of Transition, 16(4):741-768.
Albors-Llorens, A. (2002-2003). Collective dominance in EC competition law: Trojan horse or useful too? Cambridge Yearbook of European Legal Studies, 5(2002-2003):151-172.
Alemu, Z.G. & Ogundeji, A.A. (2010). Price transmission in the South African food market. Agricultural Economics Research, Policy and Practice in Southern Africa, 49(4):433-445.
Aliber, M., Kirsten, M., Maharajh, R., Nhlapo-Hlope, J., & Nkoane, O. (2006). Overcoming underdevelopment in South Africa’s second economy. Development Southern Africa, 23(1):45-61.
Altenburg, T. (2006a). Donor approaches to supporting pro-poor value chains. Report prepared for the Donor Committee on Enterprise Development available from the German Development Institute database: http://www2.gtz.de/ wbf/BE_Accra_2007/downloads/Implementation/SECTORAL_APPROACHES/DONOR_APPROACHES_TALTENBURG.pdf. (Accessed on 31 July 2011).
Altenburg, T. (2006b). Governance patterns in value chains and their development impact. European Journal of Development Research, 18(4):498-521.
ANC. (1992). Ready to Govern: ANC policy guidelines for a democratic South Africa. Available from the African National Congress database: http://www.anc.org.za/show.php?id=227. (Accessed on 8 August 2011).
Archbold, C.A., Lytle, D., Weatherall, C., Romero, A. & Baumann, C. (2006). Lawsuits involving the police: a content analysis of newspaper accounts. Policing: An International Journal of Police Strategies and Management, 29(4):625-642.
Babbie, E. (2007). The practice of social research. Thomson Wadsworth. California, United States of America. 11th edition.
Barnes, J. & Morris, M. (2004). The German connection: shifting hegemony in the political economy of the South African automotive industry. Industrial and Corporate Change, 13(5):789-814.
Beall, J., Gelb, S. & Hassim, S. (2005). Fragile stability: State and society in democratic South Africa. Journal of Southern African Studies, 31(4):681-699.
Berry, A. (2002). The role of the small and medium enterprise sector in Latin America and similar developing economies. Seton Hall Journal of Diplomacy and International Relations, 3(1):104-119.
Berry, A., von Blottnitz, M., Cassim, R., Kesper, A., Rajaratnam, B., & van Seventer, D.E. (2002). The economics of SMMEs in South Africa. Trade and Industrial Policy Strategies, pp1-110. Available from the Edge Growth database: http://www.edgegrowth.com/Portals/0/Documents/Seminal%20Docs/THE%20ECONOMICS%20OF%20SMMES%20IN%20SOUTH%20AFRICA.pdf. (Accessed on 25 September 2011).
Bezuidenhout, A. & Cock, J. (2009). Corporate power, society and the environment: A case study of Arcelor Mittal South Africa. Transformation: Critical Perspectives on Southern Africa, 69(1):81-105.
Bleby, M. (8 April 2011a). Tables turn as commission faces guillotine. Business Day. Available from the Business Day database: http://www.businessday.co.za/articles/Content.aspx?id=139654. (Accessed on 7 September 2011).
Boeije, H. (2010). Analysis in Qualitative Research. Sage Publications. London, United Kingdom. Third edition.
Boselie, D., Henson, S. & Weatherspoon, D. (2003). Supermarket procurement practices in developing countries: redefining the roles of the public and private sectors. American Journal of Agricultural Economics, 85(5):1155-1161.
Boyd, L., Spicer, M. & Keeton, G. (2001). Economic scenarios for South Africa: A business perspective. Daedalus, 130(1):71-99.
Bradford, W.D. (2007). Distinguishing economically from legally formal firms: targeting business support to entrepreneurs in South Africa’s townships. Journal of Small Business Management, 45(1):94-115.
Brusick, P. & Evenett, S.J. (2008). Should developing countries worry about abuse of dominant power? Wisconsin Law Review, 2(2008):269-294.
Business Day. (8 October 2008). Economist doubts competition policy is effective. Available from the Newsmonitor database: www.newsmonitor .co.za. (Accessed on 27 June 2011, subscription needed).
Carmody, P. (2002). Between globalisation and (post) Apartheid: The political economy of restructuring in South Africa. Journal of Southern African Studies, 28(2):255-275.
Chabane, N. (2003). An evaluation of the influence of BEE on the application of competition policy in South Africa. School of Economic and Business Sciences, University of Witwatersrand. Available from the International Development Research Centre database: http://idl-bnc.idrc.ca/dspace/bitstream/10625/31967 /1/123938.pdf: (Accessed 30 July 2011).
Chabane, N., Goldstein, A. & Roberts, S. (2006). The changing face and strategies of big business in South Africa: more than a decade of political democracy. Industrial and Corporate Change, 15(3):549-577.
Chabane, N., Machaka, J., Molaba, N., Roberts, S. & Taka, M. (2003). A ten year review: Industrial structure and competition policy. Corporate Strategy and Industrial Development Research Project, School of Economic and Business Sciences, University of Witwatersrand. Available from the Southern African Regional Poverty Network database: http://www.sarpn.org.za/documents/ d0000875/docs/10yerReviewIndustrialStructure&CompetitionPolicy.pdf. (Accessed 13 September 2009).
Clarke, J.L., Evenett, S.J. & Lucenti, K. (2005) Anti-competitive practices and liberalising markets in Latin America and the Caribbean. World Economy, 28(7):1029-1056.
Competition Appeal Court. (2001). York Timbers Limited and South African Forestry Limited. Case No: 09/CAC/May 01. Available from the Competition Tribunal database: http://www.comptrib.co.za/comptrib/comptribdocs/516/York% 20Timbers%2009CACMay%2001.pdf. (Accessed 30 October 2009).
Competition Appeal Court. (2011). Yara South Africa (Pty) Ltd and The Competiton Commission, Sasol Chemical Industries Limited, Yara South Africa (Pty) Ltd, Omnia Fertiliser Limited. Case No: 93/CAC/Mar10. Available from the Competition Tribunal database: http://www.comptrib.co.za/assets/Uploads/9394 CACMar10.pdf. (Accessed 7 September 2011).
Competition Commission. (1 November 2001). The Competition Act: an introduction. Pamphlet available from the Competition Commission database: http://www.compcom.co.za/assets/Uploads/AttachedFiles/MyDocuments/Nov-01-The-Competition-Act-An-Introduction-Book1.pdf. (Accessed on 8 August 2011).
Competition Commission. (2002). The Competition Act: a small and black business guide. Pamphlet available from the Competition Commission database: http://www.compcom.co.za/assets/Uploads/AttachedFiles/MyDocuments/Nov-02-The-Competition-Act-A-Small-and-Black-Business-Guide.pdf. (Accessed on 3 January 2010).
Competition Commission. (8 February 2008a). Competition Commission prohibits mergers in the steel sector to prevent the strengthening of cartels. Media release available from the Competition Commission database: http://www.compcom.co.za/assets/Uploads/AttachedFiles/MyDocuments/PR162008.pdf. (Accessed on 8 August 2011).
Competition Commission. (2008b). Competition Commission: Corporate leniency policy. Pamphlet available from the Competition Commission database: http://www.compcom.co.za/assets/Uploads/CLP-public-version-12052008.pdf. (Accessed on 6 September 2011).
Competition Commission. (2009a). Competition News. Edition 33:1-16. Available from the Competition Commission database: http://www.compcom.co.za /assets/Uploads/AttachedFiles/MyDocuments/december-2009-newsletter.pdf. (Accessed on 10 September 2011).
Competition Commission. (2009b). Unleashing Rivalry: Ten years of enforcement by the South African competition authorities. Available from the Competition Commission database: http://www.compcom.co.za/assets/Uploads/AttachedFiles /MyDocuments/10year.pdf. (Accessed 13 August 2011).
Competition Commission. (2010). Annual Report 2009/2010. Available from the Competition Commission database: http://www.compcom.co.za/assets /Publications/Annual-Reports/Annual-Report-2009-10-Final.pdf. (Accessed on 13 August 2011).
Competition Commission. (27 January 2011a). Competition Commission of the findings of the supermarket industry probe. Media release available from the Competition Commission database: http://www.compcom.co.za/assets/Uploads /AttachedFiles/MyDocuments/Supermarket-Investigation-Release.pdf. (Accessed on 9 April 2011).
Competition Commission. (20 April 2011b). Competition Commission withdraws case against Clover, Ladismith, Nestle and Parmalat. Media release available from the Competition Commission database: http://www.compcom.co.za/assets/ Uploads/AttachedFiles/MyDocuments/final-media-release-on-the-milk-case.pdf. (Accessed on 6 September 2011).
Competition Commission. (29 August 2011c). Competition Commission seeks direct access to the Constitutional Court. Media release available from the Competition Commission database: http://www.compcom.co.za/assets/Uploads/ AttachedFiles/MyDocuments/Competition-Commission-seeks-direct-access-to-the-Constitutional-Court.pdf. (Accessed on 6 September 2011).
Competition Tribunal. (2003). Nationwide Poles and Sasol Oil (Pty) Limited. Case No: 72/CR/Dec03. Available from the Competition Tribunal database: http://www.comptrib.co.za/comptrib/comptribdocs/109/72CRDec03.pdf. (Accessed 30 October 2009).
Competition Tribunal. (2004). Harmony Gold Mining Company Limited, Durban Roodepoort Deep Limited and Mittal Steel SA Limited, Macsteel International BV. Case No: 13/CR/Feb04. Available from the Competition Tribunal database: http://www.comptrib.co.za/assets/Uploads/Case-Documents/13CRFeb04remed ies.pdf. (Accessed 4 September 2011).
Competition Tribunal. (7 April 2011). The Competition Commission and SAB. Media release. Available from the Competition Tribunal database: http://www.comptrib.co.za/publications/press-releases/the-competition-commiss ion-and-sab-07-april-2011/. (Accessed on 7 September 2011).
Cook, P. (2002). Competition and its regulation: key issues. Annals of Public and Cooperative Economics, 73(4):541-558.
Cutts, M. & Kirsten, J.F. (2006). Asymmetric price transmission and market concentration: an investigation into four South African agro-food industries. South African Journal of Economics, 74(2):323-333.
Dabbah, M.M. (2010). International and Comparative Competition Law. Cambridge University Press. Cambridge, United Kingdom. First Edition.
Danso, R. & McDonald, D. A. (2001). Immigration and the print media in post-Apartheid South Africa. Africa Today, 48(3):115-137.
De Klerk, M., Drimie, S., Aliber, M., Mini, S., Mokeona, R., Randela, R., Modiselle, S., Roberts, B., Vogel, C., De Swardt, C. & Kirsten, J. (2004). Food security in South Africa: key policy issues for the medium term. Position paper prepared for the Human Sciences Research Council. Available from the South African Regional Poverty Network database: http://www.sarpn.org/documents /d0000685/Food_security_SA_January2004.pdf (Accessed on 10 October 2010).
Dutz, M.A., Ordover, J.A. & Willig, R.D. (2000). Entrepreneurship, access policy and economic development: lessons from industrial organisation. European Economic Review, 44(4-6):739-747.
Earl, J., Martin, A., McCarthy, J.D., & Soule, S.A. (2004). The use of newspaper data in the study of collective action. Annual Review of Sociology, 30(1):65-80.
Elliott, J. (2005). Using narrative in social research, Sage Publications, London, United Kingdom, First edition.
Engineering News. (4 February 2011). SMEs underusing Competition Act’s powers. Available from Newsmonitor.
Etter, B. (2000). The assessment of mergers in the EC under the concept of collective dominance: An analysis of recent decisions and judgements – by an economic approach. World Competition, 23(3):103-139.
Fedderke, J. & Kularatne, C. & Mariotti, M. (2007). Mark-up pricing in South African manufacturing industry. Journal of African Economies, 16(1):28-69.
Fedderke, J. & Szaltonai, G. (2009). Industry concentration in the South African manufacturing industry: Trends and consequences, 1972-1996. Economic Modelling, 26(1):241-250.
Financial Mail. (29 April 2005). Victory for small firms. Available from the Newsmonitor database: www.newsmonitor.co.za. (Accessed 27 June 2011, subscription needed).
Financial Mail. (7 September 2007a). Davis v Lewis. Available from the Newsmonitor database: www.newsmonitor.co.za. (Accessed 27 June 2011, subscription needed).
Financial Mail. (7 September 2007b). Stomped. Available from the Newsmonitor database: www.newsmonitor.co.za. (Accessed 27 June 2011, subscription needed).
Fin Week. (2 March 2005). Adopt a flea market approach. Available from the Newsmonitor database: www.newsmonitor.co.za. (Accessed 27 June 2011, subscription needed).
Fin Week. (17 July 2007). Complex monopolies – proposals seem out of kilter with competition law regimes in the US and Europe, Pp 62-63. Available from the Newsmonitor database: www.newsmonitor.co.za. (Accessed 27 June 2011, subscription needed).
Fin Week. (10 September 2009). Futile baying for blood, pp28-29. Available from the Newsmonitor database: www.newsmonitor.co.za. (Accessed 27 June 2011, subscription needed).
Fourie, F C v N. (2007). How to think and reason in macroeconomics, Juta. Cape Town, South Africa. Second edition.
Fox, E. (2000). Equality, discrimination and competition law: Lessons from and for South Africa and Indonesia. Harvard International Law Journal, 41(2):579-594.
Fox, E. (2003). “We protect competition, you protect competitors. World Economy, 26(2):149-165.
Fox, E. (2007). Economic development, poverty and antitrust: The other path. Southwestern Journal of Law and Trade in the Americas, 13(2):211-236.
Franzosi, R.P. (1989). From words to numbers: A generalised and linguistics-based coding procedure for collecting textual data. Sociological Methodology, 19(1989):263-298.
Franzosi, R.P. (1994). From words to numbers: A set theory framework for the collection, organisation, and analysis of narrative data. Sociological Methodology, 24(1994):105-136.
Franzosi, R.P. (1998). Narrative as data: linguistic and statistical tools for the quantitative study of historical events. International Review of Social History, 43(1998):81-104.
Franzosi, R.P. (2010a). Sociology, narrative, and the quality versus quantity debate (Goethe versus Newton): Can computer-assisted story grammars help us understand the rise of Italian fascism (1919-1922). Theory and Society, 39(6):593-629.
Franzosi, R.P. (2010b). Quantitative Narrative Analysis. (Series: Quantitative Applications in the Social Sciences). Sage Publications, California, United States of America.
Funke, T.B. (2006). From farm to retail: costs and margins of selected food industries in South Africa. Unpublished MSc thesis. University of Pretoria. Available from the UpeTD database: http://upetd.up.ac.za/thesis/available/etd-09162008-172432/. (Accessed on 1 September 2011).
Gamble, J.E. & Thompson, A.A. (2009). Essentials of Strategic Management: The quest for competitive advantage. New York, Mc Graw Hill Irwin.
Gereffi, G. Humphrey, J. & Sturgeon, T. (2006). The governance of global value chains. Review of International Political Economy, 12(1):78-104.
Gibbon, P. (2003). Value chain governance, public regulation and entry barriers in the global fresh fruit and vegetable chain into the EU. Development Policy Review, 21(5-6):615-625.
Griffith, G. (2000). Competition in the food marketing chain. Australian Journal of Agricultural and Resource Economics. 44(3):333-367.
Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces model. Strategic Change, 15(5):213-229.
Hartzenberg, T. (2006). Competition policy and practice in South Africa: Promoting competition for development. Northwestern Journal of International Law & Business, 26(3):667-684.
Hawthorne, R. (2008). Has the conduct-based approach to competition law in South Africa led to consistent interpretations of harm to competition? South African Journal of EMS, 11(3):292-305.
Hyde, K.F. (2000). Recognising deductive processes in qualitative research. Qualitative Market Research: An International Journal, 3(2):82-89.
Iheduru, O.C. (2004). Black economic power and nation-building in post-Apartheid South Africa. The Journal of Modern African Studies, 42(1):1-30.
Irvine, H. (2004). Does the South African Competition Act accommodate the concept of collective dominance? South African Mercantile Law Journal, 16:448-457.
Jenny, F. (2006). Cartels and collusion in developing countries: Lessons from empirical evidence. World Competition, 29(1):109-137.
Jones, A. & Sufrin, B. (2011). EU Competition Law – Text, Cases and Materials. Oxford University Press. Oxford, United Kingdom. Fourth edition.
Kampel, K. (2005). Competition law and SMEs: Exploring the competitor/competition debate in a developing democracy. Trade & Industry Monitor, 35(2005):20-24. Available from the Trade and Industrial Policy Strategies database: http://www.tips.org.za/files/Trade_and_Industry_Monitor_ 35.pdf. (Accessed on 25 September 2011).
Kampel, K. (2007). The role of South African competition law in supporting SMEs. In Competitive Advantage and Competition in Developing Countries. Edited by Cook, P.; Fabella, R. & Lee, C. Cheltenham, UK: Edward Elgar Publishing Limited
Kaplinsky, R. (2000). Globalisation and Unequalisation: what can be learnt from value-chain analysis. Journal of Development Studies, 37(2):117-146.
Kaplinsky, R. & Manning, C. (1998). Concentration, competition policy and the role of small and medium-sized enterprises in South Africa’s industrial development. The Journal of Development Studies, 35(1):139-161.
Kesper, A. (2000). Failing or not aiming to grow? Manufacturing SMMEs and their contribution to employment growth in South Africa. Trade and Industrial Policy Strategies. 1-35. Available from the Trade and Industrial Policy Strategies database: http://www.tips.org.za/files/412.pdf. (Accessed 30 July 2011).
Kotha, S. & Orne, D. (1989). Generic manufacturing strategies: a conceptual synthesis. Strategic Management Journal, 10:211-231.
Lake, R. (2009). Complex monopolies and market inquiries. Paper presented at the Deneys Reitz M&A and competition law seminar. Conducted by Deneys Reitz Attorneys. Available from the Deneys Reitz Attorneys database: http://www.deneysreitz.co.za/images/news/Complex%20Monopolies%20and%20Market%20Inquiries_Rosalind%20Lake.pdf. (Accessed on 12 July 2010).
Lepaku, M. (2003). Is price fixing in competitors’ agreements analogous to theft?. Juta Business Law, 11(2):133-137.
Ligthelm, A.A. (2008). A targeted approach to informal business development: The entrepreneurial route. Development Southern Africa, 25(4):367-382.
Louw, A., Vermeulen, H., Kirsten, J.F., & Madevu, H. (2007). Securing small farmer participation in supermarket supply chains in South Africa. Development Southern Africa, 24(4):539-551.
Louw, A., Jordaan, D., Ndanga, L., & Kirsten, J.F. (2008). Alternative marketing options for small-scale farmers in the wake of changing agri-food supply chains in South Africa. Agrekon, 47(3):287-308.
Louw, A., Geyser, M., Troskie, G., van der Merwe, M., Scheltema, N., & Nicholson, R. (2010a). Determining the factors that limit the agro-processing development in the maize milling industry in rural areas in South Africa. Report prepared for the National Agricultural Marketing Council. Available from the National Agricultural Marketing Council database: http://www.namc.co.za/dnn/PublishedReports/CommodityProductStudies/PerCategory/tabid/119/ItemId/733/Default.aspx. (Accessed on 25 september 2011).
Louw, A., Geyser, M., & Schoeman, J. (2010b). Determining the factors that limit the agro-processing development in the wheat milling and baking industries in rural areas in South Africa. Report prepared for the National Agricultural Marketing Council. Available from the National Agricultural Marketing Council database: http://www.namc.co.za/dnn/PublishedReports/CommodityProductStudies/PerCategory/tabid/119/ItemId/733/Default.aspx. (Accessed on 25 September 2011).
Luiz, J. (2002). Small business development, entrepreneurship and expanding the business sector in a developing economy: the case of South Africa. Journal of Applied Business Research, 18(2):53-69.
Machaka, J. & Roberts, S. (2003). The DTI’s new “Integrated Manufacturing Strategy”? Comparative industrial performance, linkages and technology. South African Journal of Economics, 71(4):679-703.
Mackenzie, N. (2009). Unravelling complex monopoly conduct. Without Prejudice, 9(9):19-21.
Magzamen, S. Charlesworth, A. & Glantz, S.A. (2001). Print media coverage of California’s smoke-free bar law. Tobacco Control, 10(2):154-160.
Mail & Guardian. (2 October 2010). Allegations fly in the wire sector. Available from the Newsmonitor database: www.newsmonitor.co.za. (Accessed on 27 June 2011, subscription needed).
Marais, J. (17 October 2010). Competition body set to appeal for relief. Business Times. Available from the Business Times database:
http://www.timeslive.co.za/business/2010/10/17/competition-body-set-to-appeal-for-relief. (Accessed on 7 September 2011).
Marais, J. (14 November 2010b). Court clips Commission’s wings. Business Times. Available from the Business Times database: http://www.timeslive .co.za/search.do;jsessionid=CF3C43E9E0AC2173FE08C8019B6E8D7D.present2.escenic.avusa.co.za. (Accessed 7 September 2011).
Maylor, H. & Blackmon, K. (2005). Researching business and management. Palgrave Macmillan. Hampshire, United Kingdom. First edition.
Mkhabela, T. & Mndeme, S.H. (2010). The cost of producing milk in the KwaZulu Natal Midlands region of South Africa: a cost-curve approach. Agrekon, 49(1):122-142.
Mather, C. (2005). The growth challenges of small and medium enterprises (SMEs) in South Africa’s food processing complex. Development Southern Africa, 22(5):607-622.
Miles, M.B. & Huberman, A.M. (1994). Early steps in analysis. In Qualitative data analysis. Thousand Oaks: Sage, pp 50-89.
Millin, M. & Tennassie, N. (2005). Explaining economic growth in South Africa, a Kaldorian approach. International Journal of Technology Management and Sustainable Development, 4(1):47-62.
Moodaliyar, K. (2008). Are cartels skating on thin ice? An insight into the South African corporate leniency policy. South African Law Journal, 125(1):157-177.
Mohamed, G. & Roberts, S. (2008). Weak links in the BEE chain? Procurement, skills and employment equity in the metals and engineering industries. Journal of Contemporary African Studies, 26(1):27-50.
Motta, M. (2009). Competition Policy: Theory and Practice, Cambridge Universtity Press. New York, United States of America. 12th edition.
Narayanan, V.K. & Fahey, L. (2005). The relevance of the institutional underpinnings of Porter’s Five Forces Framework to emerging economies: an epistemological analysis. Journal of Management Studies, 42(1):207-223.
National Agricultural Marketing Council (2008). The impact of market power and dominance of supermarkets on agricultural producers in South Africa: A case study of the South African dairy industry. A report commissioned by the National Agricultural Marketing Council. Available from the National Agricultural Marketing Council database: http://www.namc.co.za/ASSETS/NEWpdf_18_05_09/THE %20IMPACT%20OF%20MARKET%20POWER%20AND%20DOMINANCE%20OF%20SUPERMARKET%20finalZ_09_05_15.pdf. (Accessed on 1 September 2011).
Nattrass, N., Wakeford, J. & Muradzikwa, S. (2003). Macroeconomics: theory and practice in South Africa. David Philip. Cape Town, South Africa. Third edition.
Ndabeni, L.L. (2008). The contribution of business incubators and technology stations to small enterprise development in South Africa. Development Southern Africa, 25(3):259-268.
Norton, A. (2008). South Africa overview. International Financial Law Review, 27:80-81.
Parr, G. (2005). Import parity pricing: A competitive constraint or a source of market power? Paper prepared for the Trade and Industrial Policy Strategies’ Annual Forum. Available from the Trade and Industrial Policy Strategies database: http://198.62.158.214/uploads/user-S/11798702981Import_Parity_ Pricing.pdf. (Accessed 6 September 2011).
Phele, T., Roberts, S., & Steuart, I. (2004). Industrial strategy and local economic development: manufacturing policy and technology capabilities in Ekurhuleni. School of Economic and Business Sciences, University of Witwatersrand. 1-24. Available from the University of the Witwatersrand database: http://www.wits.ac.za/sebs/csid. (Accessed on 23 December 2009).
Ponte, S. & Gibbon, P. (2005). Quality standards, conventions and the governance of global value chains. Economy and Society, 34(1):1-31.
Ponte, S., Roberts, S. & van Sittert, L. (2007). “Black Economic Empowerment”, Business and the State in South Africa. Development and Change, 38(5):933-955.
Ponte, S. & van Sittert, L. (2007). The chimera of redistribution in post-Apartheid South Africa: “Black Economic Empowerment” (BEE) in industrial fisheries. African Affairs, 106(424):437-462.
Porter, M.E. (1979). The structure within industries and companies’ performance. The Review of Economics and Statistics, 61(2):214-227.
Porter, M.E. (1980). Industry structure and competitive strategy: keys to profitability. Financial Analysts Journal, 36(4):30-41.
Porter, M.E. & Kramer, M.R. (2006). Strategy and society: The link between competitive advantage and corporate responsibility. Harvard Business Review, 84(12):78-92.
Porter, M.E. & Kramer, M.R. (2011). Creating shared value: How to reinvent capitalism – and unleash a wave of innovation and growth. Harvard Business Review, 89(1/2):62-77.
Ramburuth, S. & Roberts, S. (2009). The key priorities and objectives of the Competition Commission of South Africa. Paper delivered at a conference organised by the British Institute of International Comparative Law on 17 June 2009. Available from the RBB Economics database: www.rbbecon.com/sa-conference/downloads/Simon Roberts2.pdf. (Accessed on 31 July 2011).
Reekie, D. (1999). The Competition Act, 1998: An economic perspective. South African Journal of Economics, 67(2):258-289.
Republic of South Africa (1996a). National Small Business Act, No 102 of 1996. Government Gazette. (No. 1901). Available from the South African Government Online database: http://www.info.gov.za/acts /1996/a102-96.pdf. (Accessed on 31 July 2011).
Republic of South Africa (1996b). Marketing of Agricultural Products Act, No 47 of 1996. Government Gazette. (No. 17473). Available from the South African Government Online database: http://www.info.gov.za/view/DownloadFileAction ?id=70886. (Accessed on 5 August 2011).
Republic of South Africa. (1998). Competition Act, No 89 of 1998. Government Gazette. (No. 19412). Available from the South African Government Online database: http://www.info.gov.za/view/DownloadFileAction?id=70747. (Accessed on 31 July 2011).
Republic of South Africa. (2009). The Competition Amendment Act, No 1 of 2009. Government Gazette. (No. 32533). Available from the South African Government Online database: http://www.info.gov.za/view/DownloadFileAction?id=106306. (Accessed on 31 July 2011).
Roberts, S. (2004). The role for competition policy in economic development: the South African experience. Development Bank of Southern Africa. 1-17. Available from the Trade and Industrial Policy Strategies database: http://www.tips.org.za/files/747.pdf. (Accessed 30 October 2009).
Roberts, S. & Rustomjee, Z. (2010). Industrial policy under democracy: Apartheid’s grown-up infant industries. Iscor and Sasol. Transformation: Critical Perspectives on Southern Africa, 71(1):50-75.
Sakakibara, M. & Porter, M.E. (2001). Competing at home to win abroad: Evidence from Japanese industry. The Review of Economics and Statistics, 83(2):310-322.
Saunders, M., Lewis, P., & Thornhill, A. (2003). Research methods for business students, Prentice Hall, Essex, United Kingdom, Third edition.
Schafraad, P., Wester, F., & Scheepers, P. (2006). Using “new” data sources for “old” newspaper research: Developing guidelines for data collection.
Communications: The European Journal of Communications Research, 31(4):455-467.
Schneider, G.E. (2000). The development of the manufacturing sector in South Africa. Journal of Economic Issues, 34(2):413-424.
Schurink, W.J. (2003). Qualitative research in management and organisational studies with reference to recent South African research. SA Journal of Human Resource Management, 1(3):2-14.
Seekings, J. (2007). “Not a single white person should be allowed to go under”: Swartgevaar and the origins of South Africa’s welfare state, 1924-1929. Journal of African History, 48(3):375-394.
Smith-Hillman, A.V. (2007). Market power, competition policy and developing economies: Divergent conditions within African and Caribbean economies. Journal of Economic Studies, 34(2):120-135.
South African Iron and Steel Institute. (2009). Sales to industrial groups. Available from the South African Iron and Steel Institute database: http://www.saisi.co.za/industrialgroup.php. (Accessed on 6 September 2011).
Statistics South Africa. (8 December 2010). Manufacturing industry: Financial 2008. Available from the Statistics South Africa database: http://www.statssa. gov.za/Publications/Report-30-02-03/Report-30-02-032008.pdf. Accessed on 20 March 2011.
Statistics South Africa. (22 February 2011). Statistical release P0441: Gross domestic product, fourth quarter 2010. Available from the Statistics South Africa database: http://www.statssa.gov.za/Publications/P0441/P04414thQuarter 2010.pdf. (Accessed on 20 March 2011).
Sturgeon, T.J. (2000). How do we define value chains and production networks? Background paper prepared for the Bellagio value chains workshop, Massuchusetts Institute of Technology. Available from the University of Leipzig database: http://www.uni-leipzig.de/~afrika/documents/Carlos/Sturgeon.pdf. (Accessd on 19 December 2010).
Supreme Court of Appeal. (2010). Woodlands Dairy and Ano v Competition Commission. Case No: 105/2010. Available from the Supreme Court of Appeal database: http://www.justice.gov.za/sca/judgments/sca_2010/sca10-104.pdf. (Accessed on 7 September 2011).
The Star. (14 February 2008). Competition clampdown is little relief to small companies. Available from the Newsmonitor database: www.newsmonitor.co.za. (Accessed on 27 June 2011, subscription needed).
Theron, N. (2001). The economics of competition policy: merger analysis in South Africa. The South African Journal of Economics, 69(4):614-658.
Timm, S. (20 July 2010). Voices of small business still mute: Associations fail to lobby on their behalf. Business Day. Available from the Business Day database: http://www.businessday.co.za/Articles/Content.aspx?id=115249. (Accessed on 20 July 2010).
Traub, L.N. & Jayne, T.S. (2008). The effects of price deregulation on maize marketing margins in South Africa. Food Policy, 33(3):224-236.
Vickers, J. (2007). Competition law and economics. European Competition Journal, 3(1):1-15.
Visser, C. (2004). An overview of the Competition Act (Part 1). Juta Business Law, 12(1):54-56.
Vorley, B. (2001). The chains of agriculture: sustainability and restructuring of agri-food markets. Pamphlet published by the International Institute for Environment and Development. Available from the International Institute for Environment and Development database: http://www.ring-alliance.org/ring_pdf/bp_foodag_ftxt.pdf. (Accessed on 25 September 2011).
Wada, T. (2005). Civil society in Mexico: popular protest amid economic and political liberalisation. International Journal of Sociology and Social Policy, 25(1/2):87-117.
Wang, A.L., Duke, W. & Schmid, G.P. (2009). Print media reporting of male circumcision for preventing HIV infection in sub-Saharan Africa. Bull World Health Organ, 87:595-603.
Watkinson, E. & Makgetla, N. (2002). South Africa’s food security crisis. Paper prepared for the National Labour and Economic Development Institute, July 2002. Available from the South African Regional Poverty Network database: http://www.sarpn.org.za/documents/d0000077/P93_safscrisis.pdf (Accessed 10 October 2010).
Weatherspoon, D. & Reardon, T. (2003). The rise of supermarkets in Africa: Implications for agrifood systems and the rural poor. Development Policy Review, 21(3):333-355.
Whitehead, T. & Kotze, M. (2003). Career and life balance of professional women: a South African study. SA Journal of Human Resource Management, 1(3):77-84.
Who Owns Whom. (2011). Electronic database. Available from the University of Johannesburg library database: http://0-www.whoownswhom. co.za.ujlink.uj.ac.za/. (Accessed 14 September 2011, subscription needed).
Wilson, J. (2010). Essentials of business research: A guide to doing your research project. Sage Publications. London, United Kingdom. First Edition.
Wise, M. (2003). Competition law and policy in South Africa. OECD Journal of Competition Law and Policy, 5(4):7-69.
World Steel Association. (October 2008). World Steel Fact Sheet: Energy. Available from the World Steel Association database: http://worldsteel.org/pictures/programfiles/Fact%20sheet_Energy.pdf. (Accessed on 6 September 2011).
Zikmund, W.G. (2003). Business Research Methods. Thomson South Western.
Mason, Ohio, United States of America. First Edition.
and technology. South African Journal of Economics, 71(4):679-703.
4. Roberts, S. & Rustomjee, Z. (2010). Industrial policy under democracy:
Apartheid’s grown-up infant industries. Iscor and Sasol. Transformation:
Critical Perspectives on Southern Africa, 71(1):50-75.
5. Roberts, S. (2004). The role for competition policy in economic
development: The South African experience. Development Southern
Africa, 21(1):227-243.
149
Database: JStor Search category: steel AND South Africa
Result: The search was limited to articles published between 2000 to 2011 and
yielded 2 472 articles ranked according to relevance. The first 300 articles were
scanned and the following were relevant to the study:
1. Boyd, L., Spicer, M. & Keeton, G. (2001). Economic scenarios for South
Africa: A business perspective, Daedalus, 130(1):71-99.
2. Carmody, P. (2002). Between globalisation and (post) Apartheid: The
political economy of restructuring in South Africa. Journal of Southern
African Studies, 28(2):255-275.
3. Firoz, A.S. (2011). Steel industry in turmoil: structural crisis of the 1990’s.
Economic and Political Weekly, 38(15):1493-1504.
4. Freund, B. (2007). South Africa: The end of Apartheid and the emergence
of the “BEE elite”. Review of African Political Economy, 34(114):661-678.
5. Iheduru, O.C. (2004). Black economic power and nation-building in post-
Apartheid South Africa. The Journal of Modern African Studies, 42(1):1-
30.
6. Nel, E., Hill, T.R., & Goodenough, C. (2004). Global coal demand, South
Africa’s coal industry and the Richards Bay coal terminal. Geography,
89(3):292-297.
7. Seekings, J. (2007). “Not a single white person should be allowed to go
under”: Swartgevaar and the origins of South Africa’s welfare state, 1924-
1929. Journal of African History, 48(3):375-394.
8. Tybout, J.R. (2000). Manufacturing firms in developing countries: How well
do they do and why? Journal of Economic Literature, 38(1):11-44.
9. Wilson, F. (2001). Minerals and migrants: how the mining industry has
shaped South Africa. Daedalus, 130(1):99-121.
150
Database: JStor Search category: steel AND South Africa AND SME
Result: The search was limited to articles published between 2000 to 2011
and yielded 13 articles ranked according to relevance. All the articles were
scanned and the following were relevant to the study:
1. Jeppesen, S. (2005). Enhancing competitiveness and securing equitable
development: Can small, micro and medium-sized enterprises (SME) do
the trick? Development in Practice. 15(3/4):463-474.
151
Appendix 3: Literature search of articles on South African competition policy and SMEs Database: Business Source Premier Search category: competition AND South Africa AND SME
Result: The search was limited to articles published between 2000 to 2011 and
yielded 6 articles ranked according to relevance. All the articles were scanned
and the following were relevant to the study:
1. Jeppesen, S. (2005). Enhancing competitiveness and securing
equitable development: Can small, micro and medium-sized
enterprises (SME) do the trick? Development in Practice. 15(3/4):463-
474.
Database: Business Source Premier
Search category: competition policy AND South Africa
Result: The search was limited to articles published between 2000 to 2011 and
yielded 20 articles ranked according to relevance. All the articles were scanned
and the following were relevant to the study:
1. Bezuidenhout, A. & Cock, J. (2009). Corporate power, society and the
environment: A case study of Arcelor Mittal South Africa.
Transformation: Critical Perspectives on Southern Africa, 69(1):81-105.
2. Boyd, L., Spicer, M. & Keeton, G. (2001). Economic scenarios for
South Africa: A business perspective, Daedalus, 130(1):71-99.
3. Chabane, Goldstein & Roberts (2006). Changing face
152
4. Ezrachi, A. & Gilo, D. (2010). Excessive pricing, entry, assessment and
investment: Lessons from the Mittal litigation. Antritrust Law Journal,
76(3):873-897.
5. Hartzenberg, T. (2006). Competition policy and practice in South
Africa: Promoting competition for development. Northwestern Journal
of International Law & Business, 26(3):667:684.
6. Theron, N. (2001). The economics of competition policy: merger
analysis in South Africa. The South African Journal of Economics,
69(4):614-658.
7. Roberts, S. (2004). The role for competition policy in economic
development: The South African experience. Development Southern
Africa, 21(1):227-243.
8. Rangasamy, L. (2005). The extent of anti-export bias in the South
African economy in the 1990’s. Development Southern Africa,
22(4):569-588.
9. Wise, M. (2003). Competition law and policy in South Africa. OECD
Journal of Competition Law and Policy, 5(4):7-69.
Database: JStor
Search category: competition AND South Africa AND SME
Result: The search was limited to articles published between 2000 to 2011 and
yielded 62 articles ranked according to relevance. All the articles were scanned
and the following were relevant to the study:
1. Gumede, V. (2004). Export propensities and intensities of small and
medium manufacturing enterprises in South Africa. Small Business
Economics, 22(5):379-389.
2. Jeppesen, S. (2005). Enhancing competitiveness and securing
equitable development: Can small, micro and medium-sized
153
enterprises (SME) do the trick? Development in Practice. 15(3/4):463-
474.
3. Ponte, S. & van Sittert, L. (2007). The chimera of redistribution in post-
Apartheid South Africa: “Black Economic Empowerment” (BEE) in
Search category: competition policy AND South Africa
Result: The search was limited to articles published between 2000 to 2011 and
yielded 3 397 articles ranked according to relevance. The first 300 articles were
scanned and the following were relevant to the study:
1. Boyd, L., Spicer, M. & Keeton, G. (2001). Economic scenarios for
South Africa: A business perspective, Daedalus, 130(1):71-99.
2. Carmody, P. (2002). Between globalisation and (post) Apartheid: The
political economy of restructuring in South Africa. Journal of Southern
African Studies, 28(2):255-275.
3. Iheduru, O.C. (2004). Black economic power and nation-building in
post-Apartheid South Africa. The Journal of Modern African Studies,
42(1):1-30.
4. Schneider, G.E. (2000). The development of the manufacturing sector
in South Africa. Journal of Economic Issues, 34(2):413-424.
5. Seekings, J. (2007). “Not a single white person should be allowed to go
under”: Swartgevaar and the origins of South Africa’s welfare state,
1924-1929. Journal of African History, 48(3):375-394.
154
Database: HeinOnline
Search category: competition AND South Africa
Result: The search was limited to articles published between 2000 to 2011 and
yielded 50 992 articles ranked according to relevance. The first 300 articles were
scanned and the following were relevant to the study. Articles marked with an
asterix were not available from the library of the University of Johannesburg at
the time of conduction the study.
1. Brusick, P. & Evenett, S.J. (2008). Should developing countries worry
about abuse of dominant power? Wisconsin Law Review, 2(2008):269-
294.
2. *Calgagno, C. & Walker, M. (2010). Excessive pricing: towards clarity
and economic coherence. Journal of Competition Law and Economics,
6(4):891-910.
3. Coetser, P. (2008). A practitioner’s riposte on defining dominance.
Competition Law International, 4(28):28-29.
4. *Dabbah, M.M. (2010). Competition law and policy in developing
countries: A critical assessment of the challenges to establishing and
effective competition law regime. World Competition, 33(3):457-476.
5. *Davis, D.M. (2009). Competition law and globalisation: Uniformity or
convergence, networking or state sovereignity. Acta Juridica,
2009(1):185-203.
6. Fox, E. (2000). Equality, discrimination and competition law: Lessons
from and for South Africa and Indonesia. Harvard International Law
Journal, 41(2):579-594.
7. Hartzenberg (2006). Competition policy and practice
8. *Kelly, L. (2010). Introduction of a cartel offence into South African law.
Stellenbosch Law Review, 21(2):321-333.
155
9. Kronthaler, F. & Stephan, J. (2007). Factors accounting for the
enactment of a competition law – an empirical analysis. Antitrust
Bulletin, 52(2):137-168.
10. *Lavoie, C. (2010). South Africa’s corporate leniency policy: A five-year
review. World Competition, 33(1):141-162.
11. Lepaku, M. (2003). Is price fixing in competitor’s agreements
analogous to theft? Juta’s Business Law, 11(2):133-137.
12. Mariotti, D. (2010). South African merger remedies: What have we
learnt in the past ten years? Competiton Law International, 6(55):55-
61.
13. *Moodaliyar, K., Reardon, J.F. & Theurerkauf, S. (2010). Relationship
between public and private enforcement in competition law: A
comparative analysis of South African, European Union and Swiss
Law. South African Law Journal, 127(1):141-162.
14. *Roberts, S. (2008). Assessing excessive pricing: the case of flat steel
in South Africa. Journal of Competition Law and Economics, 4(3):871-
892.
15. Serebrisky, T. What do we know about Competition agencies in
transition and emerging countries: Evidence on workload, personnnel,
priority sectors and training needs. World Competition, 27(4):651-674.
16. Trebilcock, M.J. & Iacobucci, E.M. (2010). Designing competition law
institutions: Values, structure an mandate. Layola University Chicago
Law Journal, 41(3):455-472.
17. Visser, C. (2004). Overview of the Competition Act (Part 1). Juta’s
Business Law, 12(1):54-57.
156
Appendix 4a: Cases considered in the study categorised according to the Competition Commission’s priority sectors
Priority Sector Sub-sector Case Actor Actor type Actor - detail Complainant Complainant type Complainant detail
Food & Agro-
ProcessingAnimal feed Animal feed Zedek Trading, Anix Trading SME manufacturers small feed manufacturers National Treasury Government buyer Government department
Food & Agro-
ProcessingBeverages Beer SAB Miller Large manufacturer
SAB controls 87% of SA beer
marketBig Daddy's Group Large buyer Independent distributor
Food & Agro-
ProcessingBeverages Rooibos Rooibos Ltd Large manufacturer
Rooibos Ltd controls 95% of
local marketCoetzee & Coetzee
Supplier - size
unknown
One of 8 players in upstream tea
market
Food & Agro-
ProcessingDairy Dairy products
Clover, Clover Industries, Parmalat, Nestle,
Ladismith Cheese, Woodlands, Lancewood,
Milkwood
Large manufacturers First four process 65% - 80%
milk in SACompCom initiated NA Small supplier
Food & Agro-
ProcessingFertiliser Agri lime
Hi Pistorius & Co, Kalkor, Plaaslike
Boeredienste, Fertiliser Association of SA,
Grasland Ondernemings
Manufacturers - size
unknown
Manufacture and supply agri
lime to farmersCompCom initiated NA CompCom
Food & Agro-
ProcessingFertiliser Ammonia-based Sasol Nitro, Omnia, Kynoch/Yara Larg manufacturers
Sasol sole local producer of
ammonia and operates at
every level in fertiliser supply
chain
Nutri-Flo, Profert SME manufacturersSmall blenders and distributors of
fertiliser
Food & Agro-
ProcessingFertiliser Phosphoric acid Foskor, Sasol Large manufacturers
Industrial ProductsSteel Excessive pricing Arcelor Mittal and Macsteel
Harmony Gold and DRD
GoldExcessive pricing
Intermediate
Industrial ProductsSteel Steel cartel
Arcelor Mittal, Cape Gate, Cisco (M&R),
Scaw Metals, Barloworld Robor, Pro Roof
Steel, Kulungile Metals, Trident, Macsteel,
Highveld Steel & Vanadium,
CompCom initiated Cartel
Fix trading conditions, Information
sharing, Market allocation, Price
fixing
small manufacture argues cant
branch into new product cos of
cost of steel / afraid to give
names for fear of victimisation /
tried to import but impractical cos
need different types of steel and
Intermediate
Industrial ProductsSteel Scrap metal
SA Metal & Machinery, National Scrap
Metal, Ben Jacobs Metals, Power Metals
Recyclers, Universal Recycling, Ton Scrap,
Scaw SA, Scaw Metals Group, Amalgamated
Scrap Metals Recycling, Abbedac Metals,
Ben Jacobs Iron & Steel, Cape Town Iron &
Steel Works, The New Reclamation Group
Merger investigation
Collusive tendering,Fix trading
conditions, Market allocation,
Price fixing
Bid rigging in sale of wagons,
tanks and coaches by Spoornet,
Reclam had wanted to buy then
direct from spoornet but they were
put out to auction, colluded to
ensure spoornet would not auction
in future: made inflated offer and
colluded with other players that
only very low bids were given at
Industry vital to primary and
secondary metal conversion
industries / facilitated allocation
of customers, suppliers and
territories
162
Appendix 6a: Impact of anti-competitive behaviour on SMEs
Priority sector Subsector Actor Complainant Reported SME impact Stage
Food & Agro-
ProcessingAgri lime
Hi Pistorius & Co, Kalkor, Plaaslike
Boeredienste, Fertiliser Association
of SA, Grasland Ondernemings
CompCom initiated - part
of food value chain
investigation
SME restricted: high input prices threaten
viability Cartel
may include SMEs
Under Comp Com investigation
Food & Agro-
Processing
Ammonia-based
fertiliserSasol Nitro, Omnia, Kynoch/Yara Nutri-Flo, Profert SME fought case
Fine: Sasol = R250m Dismissed:
Omnia / Kynoch
Structural Remedies: detail
provided
Food & Agro-
ProcessingAnimal feed Zedek Trading, Anix Trading National Treasury SME part of cartel: colluded on tenders
Fine: Zedek = R40 000 / Anix =
R20 000
Food & Agro-
ProcessingBeer SAB Miller Big Daddy's Group Details not reported Dismissed: technicality
Food & Agro-
ProcessingBread Pioneer Foods
Bakery in Mossel Bay and
Imraan Ismail Mukkadam
SME alerted Comp Com
SME threatened - Pioneer threatened to
stop supplying independent bakeries if
they did not charge the Pioneer prices
Fines: Pioneer = R195m / Foodcorp =
R45.5m / Tiger Brands = R98.8m.
Immunity: Premier
Food & Agro-
ProcessingCigarettes British American Tobacco SA
Japan Tobacco
InternationalDetails not reported
Complaint dismissed: insufficient
evidence
Food & Agro-
ProcessingDairy products
Clover, Clover Industries, Parmalat,
Ladismith Cheese, Woodlands,
Lancewood, Nestle SA, Milkwood
Louise Malherbe
SME alerted CompCom SME
threatened: Suppliers threatened with
cancellation of entire delivery contract if
did not supply Clover or Parmalat
Dismissed: technicality
Food & Agro-
ProcessingFruit exports
Mediterranean Shipping Company,
Safmarine, Maersk, Pacific
International, CSAV SA, DAL
Deutsche SA, MISC Berhad, Mitsui
Osk Lines
Fruit SA Details not reported Under Comp Com investigation
Food & Agro-
ProcessingGrain storage
Senwes, Afgri, Suidwes, NWK, OVK,
VKBCTH Trading
SME restricted: CTH foreclosed out of the
marketUnder Comp Com investigation
Food & Agro-
ProcessingGrain storage Senwes CTH Trading
SME restricted: Senwes charges farmers
who don’t deal with it higher storage fee /
Senwes forecloses grain supplies, creating
barriers to entry for other traders
Remedy: on appeal
163
Appendix 6b: Impact of anti-competitive behaviour on SMEs
Priority sector Subsector Actor Complainant Reported SME impact Stage
Food & Agro-
ProcessingMaize milling
Pioneer Foods, Tiger Brands,
Foodcorp (Ruto Mills), Premier
Food, Goodrich Milling, Progress
Milling, Pride Milling, Westra
Milling, Brenner Mills, Blinkwater
Mills, TWK Milling, NWK Milling,
Carolina Mills, Kalel Foods,
Bothaville Milling, Paramount Mills,
Keystone Milling
Small bakers and retailers
SME part of cartel: Threatened not to
approach commission, while small could
avoid joining, but as grew pressure to join
increased
Fines: Pioneer = R500m / Keystone =
R6.7m. Immunity: Tiger
Brands, Premier Foods.
Structural remedies Settlement
discussions: smaller mills
Food & Agro-
ProcessingMaize products
Pioneer Foods, Foodcorp, Tiger
Brands, PremierCompCom initiated Details not reported Settlement discussions
Food & Agro-
ProcessingPhosphoric acid Foskor, Sasol
Animal feed
manufacturers, farmers
SME restricted: raised input costs,
restricted choice of raw material suppliers
Fine: as per ammonia fertiliser
case
Structural remedies as per
ammonia fertiliser
Food & Agro-
Processing
Poultry feed and
products
Nulaid (Pioneer), Rainbow
Chickens, Astral Foods, Country
Bird, Afgri, SAPA, AFMA
Country Bird and Supreme
Poultry
SME restricted: raised key input prices by
25%
Referred to Tribunal
Immunity: Pioneer
Food & Agro-
Processing
Production and sale of
eggs, broilers & chicks
Rainbow Farms, Astral Foods,
Supreme Poultry, Pioneer Foods,
Afgri, Soveriegn Foods, Pioneer,
Hyline SA, Avichick, Eggbert, Top
Lay, Fair Acres, Heidel Eggs, Lund
Eggs, Waterglen Pluimvee,
Paardebert Flinkwink, Outeniqua
Eggs, Golden Yolk, Rosendal,
Nantes Eggs, Eikenhof, Elkana,
Windmeul Eggs, Morningside,
Sunrise Eggs, Eden Rock, Cocorico,
Daybreak Farms (Afgri)
Lenience application SME part of cartelUnder Comp Com investigation
Immunity: Pioneer
Food & Agro-
Processing
Production of breeding
stock
Astral Operations (Ross Poultry,
National Chicks, Meadow Feeds)
and its subsidiary Elite Breeding
Farms (which is a partnership
between Astral & Country Bird)
Country Bird and Supreme
PoultryDetails not reported
Referred to Tribunal
Immunity: Pioneer
Food & Agro-
ProcessingRooibos Rooibos Ltd Coetzee & Coetzee
SME restricted: New entrants struggle to
enter market cos Rooibos has exclusive
supply agmt with the four main packers.
SMEs then forced to supply export market
which leaves vulnerable to currencly
fluctuations
Fine: Rooibos = R15m
Food & Agro-
ProcessingStaple foods
Pick n Pay, Spar, Woolworths,
Shoprite Checkers, Massmart,
Metcash
CompCom initiated -
inquiry into food value
chain
SME restricted: alleged retailers'
practices made it difficult for SMEs to
supply retailers
Dismissed: insufficient evidence /
Exclusive lease agmts under
investigation
Food & Agro-
ProcessingWheat milling
Pioneer Foods, Tiger Brands,
Foodcorp (Ruto Mills), Premier
Food, Goodrich Milling
Small bakers and retailers
SME part of cartel: Keystone presented
evidence that smaller mills intimidated to
play along with cartels
Fines, Immunity and Remedies:
as per maize milling case
164
Appendix 6c: Impact of anti-competitive behaviour on SMEs
Priority sector Subsector Actor Complainant Reported SME impact Stage
Infrastructure &
ConstructionElectrical cables
Abedare Cables (Altron), Southern
Ocean Electric Wire Company
(Ocean Holdings), Alvern Cables,
Tulisa Cables
CompCom initiated
inquiry Details not reported Under Comp Com investigation
Infrastructure &
Construction
Galvanised wire
products
Allens Meshco, Wireforce Steelbar,
Hendok, Galvwire, Independent
Galvanising and Meshrite
Harmony Gold, African
Cable, Malasela
Technologies
Cartel may include SMEsMerged with CWI & Cape Gate
case
Infrastructure &
ConstructionMesh reinforcing
Steeldale Mesh (Aveng), Capital
Africa Steel, Vulcania Reinforcing,
BRC Mesh Reinforcing (M&R)
Lenience application Details not reported
Referred to Tribunal
Leniency: BRC Mesh (Murray &
Roberts)
Infrastructure &
ConstructionMining roof bolts
RSC Ekusasa Mining (Murry &
Roberts), Africa Duraset (Aveng),
Dywidag Systems International,
Videx Wire Products
De Beers, Goldfields,
Harmony, Anglo, Lonmin,
Sasol Mining
Details not reportedFine: Duraset (Aveng) = R21.9m
Leniency: RSC (Murray & Roberts)
Infrastructure &
ConstructionSteel reinforcing
Aveng (Africa), Koedoespoort
Reinforcing Steel, Witbank
Reinforcing and Wire Products,
Nelspruit Reinforcing Supplies,
Silverton Reinforcing and Wire
Products
Merger investigation
SMEs part of cartel: alleged that merger
application motivated by desire to formalise
cartel
Under Comp Com investigation
Infrastructure &
ConstructionWire products
Cape Gate, Allens Meshco, Hendok,
Wireforce Steelbar, Agriwire,
Agriwire North, Agriwire Upington,
Cape Wire, Forest Wire,
Independent Galvanising,
Associated Wire Industries,
Consolidated Wire Industries
(Scaw)
CKW Wire Products /
Overberg Agri Co-op
SME part of cartel: Comp Com alleges
smaller players organised themselves into
a cartel
Referred to Tribunal
Infrastructure &
ConstructionWire Rod Arcelor Mittal, Allens Meshco Barnes Fencing Details not reported Under Comp Com investigation
Intermediate
Industrial Products
Excessive pricing: flat
steelArcelor Mittal and Macsteel
Harmony Gold and DRD
Gold
SME restricted: high input prices threaten
viability
Ruling overturned by
CAC:Tribunal to rework excessive
pricing methodology
Intermediate
Industrial ProductsScrap metal
SA Metal & Machinery, National
Scrap Metal, Ben Jacobs Metals,
Power Metas Recyclers, Universal
Recycling, Ton Scrap, Scaw SA,
Scaw Metals Group, Amalgamated
Scrap Metals Recycling, Abbedac
Metals, Ben Jacobs Iron & Steel,
Cape Town Iron & Steel Works, The
New Reclamation Group
Merger investigation
SME restricted - raised input prices for
upstream users, prices uncompetitive for
downstream suppliers
Fines: Universal = R18m / Abbedac =
R4.9m / Amalgamated Scrap Metals
= R3.2m / Power = R12.8m / Reclam
= R145m Immunity: Scaw
Metals, Scaw SA, Cisco (Murray &
Roberts)
Intermediate
Industrial ProductsSteel cartel
Arcelor Mittal (AMSA), Cape Gate,
Cisco (M&R), Scaw Metals,
Barloworld Robor, Pro Roof Steel,
Kulungile Metals, Trident,
Macsteel, Highveld Steel &
Vanadium,
CompCom initiated -
probe steel price hikes
SME threatened: SMEs who imported
steel were later victimised by steel mills
by being refused supplies of urgent steel
orders
Under Comp Com investigation
165
Appendix 7: Cases where structural remedies were imposed
Case Actor Stage Structural remedies
Intermediate Industrial Products
Flat steel Arcelor Mittal and Macsteel Ruling overturned by CAC:Tribunal to rework excessive pricing methodology
Tribunal orders: 1] AMSA may not impose conditions on use/resale of flat steel products 2] AMSA may not make agreements iro use/resale of products 3] Mittal to waive any such conditions 4] Mittal to make public its list prices, rebates, discounts for flat steel 5] AMSA to pay the costs of the complainants
Sasol to: 1] Sell 5 fertiliser blending units 2] Sell fertilisers at ex-works basis from Sasolburg & Secunda & wi 100km radius 3] Not differentiate in pricing of fertiliser other than on standard commercial terms such as volume & off-take commitments that are transparent to all customers, 4] Separate ammonia plants & businesses from Sasol Nitro 5] Cease importation of ammonia except where neccessitated by plant disruptions 6] Report on compliance annually
Phosphoric acid Foskor, Sasol Fine: as per ammonia fertiliser case Structural remedies as per ammonia fertiliser
Structural remedy as per ammonia fertiliser case, Foskor agree to stop excessive pricing
Grain storage Senwes Remedy: on appeal Senwes to: 1] declare differentiated silo tariffs prohibitied 2] offer servies to all buyers on same t&cs irrespective if they sell grain to senwes 3] interdict senwes from committing prohib practices 4] order senwes pay admin penalty of 10% turnover
Pioneer to: 1] reduce bread and flour margins to reduce gross margin by R160m 2] increase capital expenditure by R150m 3] implement compliance programme 4] ongoing co-operation with Comp Com / CompCom invited small millers to come forward and negotiate settlement agreements
Fines, Immunity and Remedies: as per maize milling case
Structural remedy as per maize milling case
166
Appendix 8a: Summary of opinions on the accessibility of the Competition Act for SMEs Problem Actor SME support required Details on the support Commentary on the support Newspaper
Cost
Jean Meijer
attorney, Bowman Gilfillan
director
Financial assistance for SMEs
Cost of lawyers, economists and
expert witnesses: atleast R1m to take
case to Comp Tribunal, a case with
potentially high fines, could cost 5
times more and last years
"When a corporate is facing anti-
competitive charges, there are serious
risks involved, including potential
reputational damage, civil claims and
large fines. Thus companies are prepared
to throw significant resources at a case."
Financial Mail
7 Sept 2007
CostDavid Lyle
director of NutriflowFinancial assistance for SMEs
Nutriflo spent R4.5m and 9yrs
battling Sasol
The Star
14 Feb 2008
CostTrudi Hartzenberg,
Economist, Trade Law CenterFinancial assistance for SMEs
Excessive pricing case against Mittal
only possible cos Harmony and DRD
Gold had deep pockets.
Case was initiated in 2001Business Day
30 Oct 2008
Cost
Imraahn Mukkadam
retailer supplying informal
markets
Financial assistance for SMEs
Act does not allow SME to claim
damages for loss suffered aro of anti-
competitive behaviour
CompCom should set up a legal aid body
to cover legal fees incurred by SME in
bringing case to authorities
The Star 14 Feb
2008
Customer indifferenceClients of construction firms,
Murray & Roberts and Aveng
Clients of cartel participants to
take legal action
No legal action by clients - even gvt
dept - against construction firms
acting in a cartel / Hardly any legal
public opprobrium, unlike as in bread
industry
Comp Auth can only go so far in stamping
out collusion.
Business Report
26 March 2009
Facilitation of investigationsHeather Irvine
attorney Deneys Reitz
SCA ruling limiting CompCom
investigative powers
CompCom may not go on a "fishing
expedition" to widen the net of
potential transgressors
"A suspicion against some cannot be used
as a springboard to investigate all and
sundry" - SCA
Business Times
17 Oct 2010
Facilitation of investigationsShan Ramburuth,
Competition Commissioner
SCA ruling limiting CompCom
investigative powers
CompCom can only issue summons to
produce docs etc after fully
investigating complaint, summons
may not be wider than complaint to
which it relates
Ruling will encourage companies to delay
the findings of the CompCom by pursuing
technical points.
Business Times
17 Oct 2010
Facilitation of investigationsLulama Mtanga
attorney Bowman Gilfillan
SCA ruling limiting CompCom
investigative powers
CompCom will no longer be able to
launch industry wide investigations
when anti-comp behaviour
suspected in particular sector
But Mtanga also said CompCom had
improved its procedures, practices and
admin capabilities, so more recent
investigations will not be affected by
issues raised in SCA ruling
Business Times
14 Nov 2010
Lack of knowledge
David Lewis
Tribunal chair
Denis Davis
Judge President of CAC
Need for experts to interpret Act
Small businesses suffer who cant
afford to pay for the experts to
navigate the technicalities
Lewis, economist, adopts an economics
interpretation, Davis looks to the
technicalities of the law
Financial Mail
7 Sept 2007
167
Appendix 8b: Summary of opinions on the accessibility of the Competition Act for SMEs Problem Actor SME support required Details on the support Commentary on the support Newspaper
Lack of knowledgeJac Marais
attorney Adams & Adams
s10(3)(b)(ii) allows for preferential
agreements with large companies
that promote SMEs
Lack of awareness means provision is not
being used.
Engineering News
4 Feb 2011
New remedyShan Ramburuth,
Competition CommissionerCorporate leniency policy
Aimed at eradicating and preventing
cartel and collusive activities,
companies come forward voluntary
to declare involvement in anti-comp
activities
As at Sept 2010, investigating 98 CLP cases Business Day
10 Sept 2010
New remedyShan Ramburuth,
Competition Commissioner
Independent Bid Determination
Certificate for public procurementIntroduced by Treasury