The National Assembly on Tuesday adopted the controversial Competition Amendment Bill, despite objections by the opposition parties.
The opposition objected to various proposals contained in the bill, particularly on the minister’s regulatory role, which they said would give too much power to the economic development minister.
Among other things, the bill is intended to provide for an extension of the mandate of the competition authorities and the executive to tackle high levels of economic concentration. It is also meant to tackle the limited transformation in the economy and the abuse of market power by dominant firms.
Various analysts have raised concern about the clause on “intervention in merger proceedings involving a foreign acquiring firm”, saying this would give the government the right to block foreign investment.
During the debate on the bill in parliament on Tuesday, DA MP and economic development spokesperson Michael Cardo said the bill is “flawed … emanating from a flawed process that will empower a flawed institution — the Competition Commission — to ride roughshod over the economy”.
“The Competition Amendment Bill puts too great a burden on the competition authorities to solve SA’s economic problems. It gives them too much power. And the bill codifies a trend of ministerial interventionism that will undermine the regulators’ independence… Section 18A enables the president to appoint a committee with the power to decide whether an acquisition by a ‘foreign acquiring firm’ is in the interests of national security. This should have been the subject of standalone legislation on foreign investment, not grafted onto the Competition Act as a stopgap measure,” said Cardo.
“As it is, ‘national security’ is badly and broadly defined. There is a new, onerous, murky process for mergers involving foreign firms that is likely to have a chilling effect on large transactions. It will create uncertainty and disincentivise foreign investment at the very time that President [Cyril] Ramaphosa has embarked on a $100bn investment drive,” he said.
EFF deputy leader Floyd Shivambu said while there are high levels of economic concentration in SA, competition laws are not a “durable” solution to the problem of economic concentration. He suggested that nationalisation was the best way to tackle the problem.
“Perhaps the ruling party should look into the Freedom Charter, which says the mineral wealth beneath the soil, the mines and monopoly industries shall be transferred to the ownership of the people as whole,” Shivambu said.
Economic development minister Ebrahim Patel defended the bill, saying it offered an appropriate and effective balance of the interests of all the social partners and the government.
“Firstly, small-medium businesses are given a special status, consumers and customers will have better protection against excessive pricing by dominant firms… Large businesses will know that penalties are much tougher for breaking the law... New investors will know that the market is open,” said Patel.
He said the contentious “intervention in merger proceedings involving a foreign acquiring firm” clause was necessary to protect the national security interests of the country. There are similar provisions in other countries such as the US, said Patel.
After being put to the vote, the ANC used its majority in the house to push through the bill. It will now be forwarded to the National Council of Provinces for concurrence.
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