I see Sipho Ngwema, spokesperson for the Competition Commission, took umbrage with the way I was engaging with the commission’s work, most recently its misguided provisional report on the fresh produce sector (“Columnist misses the point of fresh produce market inquiry”, July 8). But he managed to skirt all my actual concerns over the course of 800 words, which is quite an achievement.
There was also an article by advocate Ruan Maré, the technical director of the fresh produce market inquiry, in the Sunday Times the day before, which focused on the “legitimacy” of the market inquiry process. Seems as if the troops were instructed to get out there and defend it. I wonder why.
I note that Ngwema focused on the fact that the commission’s provisional findings are justified by the evidence it has gathered so far. This ignores the bigger-picture point I raised: whether conducting these inquiries in the way it does supports or hampers government’s efforts to grow local businesses and attract more foreign investment. And, by extension, grow the economy and start making inroads into the world’s most shameful youth unemployment numbers. This is certainly the lens the government of national unity (GNU) cabinet must be assessing its policies through.
The commission’s spokesperson doesn’t engage with the concern I voiced that the commission has no means to compel municipalities or government departments to implement its recommendations (though I note that in the Sunday Times the suggestion was made that the market inquiry report has to be tabled in parliament, which is of course true, but that hardly compels anyone to do anything).
There is also no challenge to my conclusion that the commission recommends remedies; or that the market inquiries have a myopic focus on the impact of private sector firms on competition in markets but almost totally ignore the (arguably far greater) effect on “historically disadvantaged persons (HDPs)” and small, medium and micro enterprises (SMMEs) of the failure by the state to supply basic services (power, water, rail services, efficient ports) and that as a consequence the private sector ends up funding the lion’s share of supporting “participation” by these firms.
There is an opportunity for the new minister, Parks Tau, to set a far more business-friendly course
His main point is that “the commission operates independently of political influences”. While this may have been true in the past, it is clear that over the past couple of years the commission has increasingly taken an approach to enforcement of the Competition Act that aligns closely with the department of trade, industry & competition’s polices, and in particular seeks to force broad-based BEE by merging firms, and to extract benefits from large companies (ostensibly because this is required to support HDPs’ or SMMEs’ ability to “participate” in their markets).
The clearest example of this alignment was former trade, industry & competition minister Ebrahim Patel’s “Inaugural Worker Share Ownership Conference Awards”, in which the commission’s efforts to impose public interest conditions in mergers were applied by Patel to bolster the ANC’s belated (and it turns out, distinctly ineffective) election campaign.
The commission’s zeal for public interest conditions followed a clear policy statement from the minister in May 2021 that “policymakers will seek to have a greater number of black South Africans drawn into ownership of firms. After the amendment of the act in 2018, a greater focus is now placed on promotion of employee/worker ownership arrangements in merged firms.”
It is deeply disingenuous to now suggest the commission’s work is solely driven by “evidence” gathered in the market inquiry process. Where the commission chooses to investigate, and what it focuses on when it does, has been patently driven by the policies set to date by the department, as led by Patel.
The question for the GNU is whether those policies have actually been effective in supporting economic growth and job creation; and, if not, what needs to change. While the commission is an economic regulator that has an important — independent — job to do in terms of the Competition Act, it does and indeed should take its lead from the minister in setting its priorities, and in how it exercises its statutory powers. These choices have a significant impact on whether “The Market” regards SA as a safe place to invest.
There is an opportunity for the new minister, Parks Tau, to set a far more business-friendly course. This could include, for example, the minister raising the monetary thresholds for merger notifications, so that smaller deals don’t face the costs and delays associated with merger reviews by the commission. The minister could revise the rules of the commission and Competition Tribunal to require that mergers that don’t raise major competition or public interest issues are automatically fast-tracked and approved more quickly.
He could engage with the commission to revise its public interest guidelines, in particular to bring them into line with tribunal case law, which recognises that the assessment of public interest factors is a holistic exercise, not one that demands an increase in shareholding by HDPs in each and every merger.
Most importantly though, Tau could encourage the commission to revert to more evidence-based decision-making that prioritises predictability rather than treating companies that dare to merge as stagecoaches ripe for hijacking at the pass.
• Avery, a financial journalist and broadcaster, produces BDTV’s ‘Business Watch’. Contact him at badger@businesslive.co.za.
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