The last time the Competition Commission carried out a dawn raid was in 2022, targeting insurance companies in the Western Cape and KwaZulu-Natal.
According to Norton Rose Fulbright: “Dawn raids are an effective tool used by regulators to get firms to consider applying for leniency (an incentive for a firm that participates in cartel activity to terminate its participation and inform the commission of the conduct).
“The first firm ‘through the door’ (and which fulfils certain requirements, including providing the authority with information that will lead to the successful prosecution of the other cartelists) may receive immunity from the commission for its participation in the conduct such that no administrative penalty will be imposed.”
As far as I can tell, no fines have been imposed on any of the insurers. Thin gruel. If you want something meatier, take a look at the taxi industry, though the idea of a dawn raid at the Bree Street taxi rank is a truly terrifying thought. Nerdy economists and lawyers fortifying themselves with polisiekoffie right before confronting the ugly face of real anticompetitive behaviour.
Researcher Mark Ingle noted in his 2009 paper: “Due to a welter of opportunities for corruption, however, [the taxi industry] has appropriated for itself many of the most negative aspects of the regulatory hand of the state and become a law unto itself. Whether the state can ever wrest control back from the industry is open to doubt.
“Notwithstanding the minibus taxi industry’s market being hobbled and distorted by the excess of anticompetitive practices which characterise its operations, and its apparent indifference to the convenience of its consumers, it nevertheless manages to thrive due to captive demand and the inability of the state and its organs to provide consumers with viable alternatives.”
In 2017 the commission held a market inquiry into the taxi industry and found, to name but a few:
- Illegal route monopolies: Associations prevent new entrants from operating on lucrative routes, charging exorbitant “joining fees” (R30,000-R120,000) to restrict market access.
- Regulatory capture: Provincial regulatory entities and municipalities frequently defer to associations’ demands when issuing operating licences, creating artificial scarcity of permits.
- Violence as a tool: Associations use intimidation to maintain territorial control.
According to journalist Sebe Buthelezi, “The act of competitors coming together and agreeing to lower or raise prices is defined as horizontal price fixing. Under SA’s Competition Act, this is illegal. Yet, it seems a meeting was held in Kokstad on March 15 2021 between bus operators, taxi associations and officials from the department of transport and the SA Police Service.
“In the meeting, which [the CEO of bus company Intercape] said he did not attend but was briefed on by other bus operators, an agreement on fares was apparently reached. One of [the CEOs] managers insisted at a subsequent meeting on April 8 2021 that it be placed on record that Intercape would not participate in price fixing as it was against the law.”
The taxi industry quite likes its price fixing, and has killed one of Intercape’s bus drivers and shot up its buses (with passengers inside), to show just how much they dislike competition. The police told Intercape to come to an agreement with the taxi bosses (it has refused).
It is truly difficult to imagine another industry that is so blatantly anticompetitive without any consequences. The Competition Commission even suggested subsidies rather than fines. Seriously. Perhaps what was really required in the bread price fixing scandal was subsidies to the companies that were fixing the prices?
In 2017 the SA National Taxi Council reported that “there were more than 200,000 minibus taxis operating in SA, generating an estimated R90bn in annual revenue”. If we want money for transformation, why not start the fund with a R9bn contribution from the taxi industry?
• MacKay is CEO of XA Global Trade Advisors.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.