Competition Amendment Bill receives the thumbs-up from Parliament
22 October 2008
The National Assembly has on Tuesday, 21 October 2008, passed the Competition Amendment Bill aimed at promoting a competitive environment and fighting 'hardcore' cartels which undermine efforts directed at promoting the country's economic growth. The passing of the Bill follows its adoption by the National Council of Provinces (NCOPs) on 25 September 2008, with proposed amendments mainly in the contentious areas of personal liability of directors and officers of firms found to have been engaging in cartel behaviour, and complex monopoly provisions.
The Department of Trade and Industry's (the dti's) Director of Consumer and Competition Law and Policy, Nomfundo Maseti, says the Bill was amended to remove the sub-clause that seeks to hold directors and/or officers of firms criminally liable for negligence even though they may not have had actual knowledge of the firm's involvement in cartel activities. Directors or officers of firms will now be held criminally liable for their knowledge of the firm's involvement in a cartel. In addition, the personal liability clause was amended to remove the phrase which seeks to shift the onus of proof from the State to the director.
Maseti says "The Bill introduces a new offence section in the Competition Act, making it an offence for a director or officer of a company to cause, or knowingly acquiesce in, the firm engaging in cartel behaviour. This element of personal liability to price fixing offences increases the cost of being 'caught' and thus will disincentivise officers of firms from engaging in cartel activity." Directors of companies who consciously become involved in such activities will have to face the music, she added.
On complex monopoly provisions, the Bill was amended to insert the definition of 'conscious parallel' conduct in order to provide certainty to business on its meaning. "Conscious parallel conduct occurs when two or more firms, in a concentrated market, being aware of each other's actions conduct their business affairs in a co-operative manner without discussion or agreement." It is an act of price fixing between competitors but without actual discussion or agreement, and could have the same outcome as hardcore cartels.
Maseti states that the purpose of the complex monopoly provisions is to deal with multi-firm behaviour or co-ordinated conduct that may evade the current horizontal and vertical restrictive practices, as well as abuse dominance provisions of the Competition Act.
The Bill will now be submitted to the President for assent. The implementation of the Amendment Act will take place after the date of signing by the President.