With some cases taking years for the Competition Commission to conclude, the implementation of SA’s competition law poses challenges to attracting foreign investment and negatively affects economic growth.
This is according to experts who debated the effect of the legislation at the Gordon Institute of Business Science (Gibs) last week.
Business Leadership SA CEO Busisiwe Mavuso said the commission took about three years to conclude one specific case. Such cases undermined the possibility of economic growth, she said.
“I recently spoke to a CEO of one of the large US banks trying to advise their clients in terms of how to engage with our markets. There is huge frustration,” she said.
“The fundamental problem of competition law in this country is inconsistency in its application. The Competition Commission is going to have to look at the length of time it takes to conclude some of these transactions. It takes a long time, which is totally unacceptable.”
Mavuso said speedy competition investigations were key to attracting investment.
“We are seeing investment being delayed, redirected and taken somewhere else because of the inefficiencies of our markets, one of which is competition law.
“We take three years to decide whether we want investment to come into the country or not. In a country of 46% unemployment in terms of the expanded definition it does not make sense.”
Competition Commission chief economist James Hodge said the perception that the commission took years before concluding probes was not a true reflection of the entity’s work.
“There is a concern around the processes that the competition authority is slow on mergers.
“Business is a broad church. You might have a small group that might feel like we are acting in a manner that is restrictive, and you have a large group who are saying thank you for opening the markets.
“On the process, we will be the first to admit [it is] not ideal.
“The problem is that the perception of one merger taking three years becomes the antidote for the whole system, and it is not correct.”
He said the commission completed its work in 20 days in some cases.
“Even the large mergers on average are done in six months. Severely complex ones do raise issues and we are looking at proposals to lighten the load.”
Hodge said the commission at times finalised its work on mergers after which the Competition Tribunal took over.
Understaffed, underresourced
“The commission can investigate in under six months and the tribunal takes over. To be frank, the tribunal has been understaffed, underresourced and that is what often causes some delays.
“At the tribunal stage, other businesses can intervene and slow the mergers down. Businesses sometimes use intervention to stifle rivals and hinder their dealings. That is a difficult problem to solve.”
International law firm Fasken partner Leana Engelbrecht, who specialises in competition law and foreign market deals, concurred that the implementation of competition law at times pushed business away from SA.
“The length of time to get things done around mergers and investigations seems to be a weakness,” Engelbrecht said.
“My experience is not only competition law compliance but regulatory compliance generally is very important to business, but there is this unpredictability element to it.
“It is very difficult to encourage clients internationally or locally to say we are still a business-friendly regulatory environment.
“Private equity investment might not be the most transformative investment activity, but it adds a lot to businesses, including small businesses.”
Gibs Prof Adrian Saville said SA needed foreign investment.
“Even if SA had a domestic investment bonanza, that would not be enough to get us into a high growth environment. For us to achieve the high growth inclusive and sustained growth, we need foreign capital desperately,” he said.
“SA is under an illusion about how we can make the rules for others, forgetting that there are about 215 investment destinations that capital can seek. There is nothing particularly unique or special about SA.
“We are missing action. We need to make it easy to do business.”
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