25 June 2013

SECTION27 congratulates Competition Commission on recent successes

SECTION27 congratulates the Competition Commission of South Africa on its recent groundbreaking and far-reaching successes in prosecuting anti-competitive behavior in the telecoms and construction sectors. Both these sectors are integral in improving the lives of South Africans through their role in information provision and communication (on the part of Telkom) and infrastructure development (by construction companies).

The Competition Commission reached a settlement with Telkom in relation to charges of abuse of dominance, which means that Telkom will pay an administrative penalty of R200 million and importantly will have to engage in various behavioural remedies such as a commitment to reduce the prices of certain wholesale services. This is likely to have follow-on effects for Internet service providers and consumers and will potentially lead to an improvement in innovation and access to communications.

In addition, the Commission has reached a settlement with 15 companies in the construction sector on charges of collusive tendering, including bid-rigging and price-fixing on R47 billion worth of public and private construction projects. The increased awareness of anti-competitive conduct and cleaning up of the industry is likely to benefit individuals and the economy as essential infrastructure projects can now be undertaken more cost-effectively, allowing for a greater rollout of infrastructure and the related benefits this provides.

These settlements highlight the impact that competition law can have on reigning in private misconduct and abuse of power that has repercussions on key services, and thereby has serious negative effects on ordinary people in the country, as well as economic growth.

Civil society needs to play a much more active role in both alerting the Competition Commission to areas of concern and supporting and publicizing their efforts in combating anti-competitive conduct. A strong and effective Competition Commission is key to reigning in abuse of private power. It is our hope that the market inquiry provisions of the Competition Act will be utilised to expand upon this work and take it to the next level by proactively assessing market distortions and recommending ways to improve the functioning of key markets, starting with the market for private healthcare, which arguably, to an even greater extent has massive externalities to both individuals, as well as the economy.

For further comment contact Sha’ista Goga on 011 3564100/0837690836

ENDS