Towards a fair and efficient economy for all Annual Report 2009/2010 Presentation to Parliament’s Portfolio Committee on Economic Development Commissioner.

Towards a fair and efficient economy for all

The work of the Commission

• Prioritisation Impact on low income consumers Alignment with government’s economic policy Likelihood of anticompetitive conduct

• Mandate: Competition Act Prosecution of anti-competitive behaviour Prevent concentration through merger control Advocacy for pro-competitive conduct and regulations

• Operational support HR, Finance, IT, Security

• Governance: PFMA, Treasury regulations and other legislation

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Priority sector: Food and agro-processing

• Pioneer penalty of R195m for collusion in the bread cartel. Appeal heard in September 2010. Negotiating settlement in milling

• Keystone Milling penalty of R6,7m for participation in the milling cartel. Negotiations currently underway with other respondents

• Sasol Chemical Industries penalty of R250,7m for collusion in fertiliser products. Omnia and Yara are defending case. Interlocutory challenge of Commission’s pleadings in Competition Appeal Court

• Senwes’ appeal against finding of exclusionary conduct was dismissed by the Competition Appeal Court. Matter is pending before Supreme Court of Appeal

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Priority sector: Infrastructure and construction

• Collusive tendering by construction companies increases the costs

of government investment in new and improved infrastructure

• Investigations into cement, bricks and piling markets

• Raids in cement industry resulted in leniency application

• Referrals and settlements on cast concrete, plastic pipes, bitumen

and reinforcing steel

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Priority sector:Intermediate industrial products

• Pricing practices impacts on downstream, labour-absorbing

industries

• Focus on steel and polymers

• 4 cartel cases referred to the Tribunal involving: Manufacturing and supply of long steel products

Supply of wire and wire products

Supply of mining roof bolts

Supply of reinforcing wire mesh

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Financial Services (Banking)

• To increase competition in retail banking to the benefit of the consumer

• Continued focus on implementing 28 recommendations of Banking Enquiry Panel

• Steering Committee established – dti, Treasury and the Commission, in consultation with the South African Reserve Bank

• 6 discussion papers: ATM pricing; penalty fees relating to debit orders; improving consumer experience; competition in the national payment system, payment cards and electronic payments

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Enforcement cases under investigation

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Enforcement cases initiated in 2009/10 (classified by sector)

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8

Corporate leniency applications received

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9

Total cases 148

Mergers 41

Enforcement 107

Complaints referred to Tribunal 16 (9 cartel cases)

Before the Competition Appeal Court 5

Before the Supreme Court of Appeal 1

Consent and settlement agreements 5Towards a fair and efficient economy for all 10

Prosecutions

Referral of complaints to the Tribunal against corresponding sections of the Act

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0

5

10

15

20

25

30

1999/2000 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10

9(1) 8(d)

8(c) 8(b)

8(a) 5(2)

5(1) 4(1)(b)

4(1)(a) Number of cases

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Penalties in 2009/10

Respondent Market/sector Penalty amounts (R million)

Cobro Concrete (Pty) Ltd Construction R4,023

Marley Pipe Systems (Pty) Ltd Steel tubes and pipes R31,078

Sasol Chemical Industries Limited Gas R250,680

Concrete Units Construction R5,764

Pioneer Bread R195,718

TOTAL R 487,263

Mergers notified 2007/08 to 2009/10

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Outcome of merger reviews2007/08 to 2009/10

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• Fewer merger notifications

• Approximately 8% claimed financial distress

• Approximately 2000 job losses from 19 transactions: conditions imposed to minimize the impact of job losses

• Prohibition of Massmart and Finro merger was subsequently approved by the Tribunal after evidence provided at hearing

• Approval of Aspen/GlaxoSmithKline merger - Commission’s concerns resulted in GSK extending voluntary licences for Abacavir (an antiretroviral product) to generic manufacturers

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Mergers

• Bid-rigging brochure developed and various workshops held with

government and business

• National Treasury issued practice note in terms of PFMA on

Certificate of Independent Bid Determination

• Comments on procurement policy and legislation

• Training of procurement officials on prevention, detection and

reporting of bid-rigging

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Advocacy: Focus on bid-rigging

• Participation in international forums: Competition Committee of OECD (papers on bid-rigging in public procurement,

procedural fairness and standard setting) Annual Conference of International Competition Network UNCTAD’s Intergovernmental expert meeting on competition law

• Collaboration with African agencies Commissioner is vice –chair of the steering committee tasked with setting up

an African Competition Forum Chaired meeting of SADC’s competition committee Joint Food Project with Zambia and Egypt on edible oils, milling and fertiliser Opening address at the launch of Namibia’s competition authority Provided technical assistance to Mauritius’ competition authority Hosted delegates from Tanzania, the Gambia, and Botswana

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International relations

Communications

• Internal communications 22 discussion forums 13 staff meeting 12 issues of the internal newsletter

• External communications 19 media releases Total media coverage: 3425 print and 3878 broadcast media Website visits: 106,738 times by 45,619 visitors Media coverage advertising value equivalent: R145,787,617

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• Deloitte’s Best Company to work for in the public sector

• Total staff complement including graduate trainees: 138

• Graduate trainees 11

• Management development programmes attended by 20 senior staff members

• Implementation of results of salary benchmarking exercise to align the Commission’s salary bands with the public sector

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Human resources

Employment equity (race)

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Employment equity (gender)

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• Knowledge sharing and retention is a strategic priority

• Knowledge management system designed to integrate with case management system

• Improved collaboration, accessibility and reporting

• Will be completed in 2010/11

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IT and knowledge management

• 4 audit committee meetings• Internal audits conducted on Legal Services, Enforcement and

Office of the Commissioner• No material breakdown in the functioning of internal financial

controls and systems• Implementation of revised risk management strategy• Compliance with legislation: PFMA – quarterly reports, monthly expenditure reports, strategic and business

plans Annual training report and workplace skills plan Contribution to skills levy fund was R562,959• Unqualified audit report - 5th successive year• AG report - 23% of performance targets were not “SMART”

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Planning and reporting

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Financial performance review

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Expenditure for 2009/10

Thank you!

Tel: 0123943332Fax:0123944332

email: [email protected]

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