2012/13 ANNUAL REPORT - The Competition …

1 2012/13 ANNUAL REPORT . competitioncommission south africa The Nautilus In its 14 years of existence, the south African Competition regime has been The Nautilus has been replicating itself for 500 million years. The spiral is a common recognised globally as a successful model for adopting and implementing new element of all natural development and tends to follow the Golden Ratio (Phi) in its Competition legislation. This includes favourable peer review by the Organisation rates of expansion. The key to Sacred Geometry is the relationship between the for Economic Co-operation and Development and positive reviews of the work progression of growth and proportion.

2 Beginning with a small single square, (one of the authorities in the international literature on Competition policy in emerging unit per side), continue adding larger and larger squares in a counterclockwise jurisdictions. direction using the following number sequence: 1, 1, 2, 3, 5, 8, as illustrated. The Golden Ratio (phi) is the unique mean such that the ratio of the whole to the The Competition Commission (the Commission ) continues to balance issues larger portion is the same as the ratio of the larger portion to the smaller portion. related to consumer welfare with the broader social and economic goals outlined The ratio links each chamber of the nautilus to the new growth and symbolically in the Competition Act, such as employment, international competitiveness, preserves the balance of structure and relationship of the Nautilus.

3 Efficiency and technology gains, as well as the ability of small and medium sized businesses and firms owned or controlled by historically disadvantaged persons to compete. The Commission won Agency of the Year in Asia-Pacific, Middle East & africa in the 2011 Global Competition Review Awards and the World Economic Forum's 2011 Global Competitiveness REPORT ranked south africa 7th out of 142 countries on the extent to which antimonopoly policy promotes Competition . The current GCR rating puts the Commission in the same league as the Ireland's Competition Authority, Russia's Federal Antimonopoly Service and Norway's Competition Authority.

4 The Commission has been the recipient of the Deloitte Best Company to Work For award in the public sector category in 2009 and 2011. For three consecutive years, the Ethisphere Institute recognized Commissioner Shan Ramburuth among the 100 most influential people that affect business ethics in the world. Mr Ramburuth was ranked 41st in 2010. The Ethisphere Institute is a research- based international think tank that advances best practice in business ethics. Our purpose and function Background information In 1998, a new framework for Competition regulation was established by the democratic government of south africa .

5 The Competition Act of 1998. established three independent bodies (the Competition Commission, The Competition Tribunal and the Competition Appeal Court) which replaced the previous Competition Board. The Commission is the investigation and enforcement agency while the Tribunal is the adjudicative body, very much like a court. Finally, the Appeal Court considers appeals against decisions of the Tribunal. The Competition Commission The Competition Commission is a statutory body constituted in terms of the Competition Act, No 89 of 1998 (the Act). It is empowered to investigate, control and evaluate restrictive business practices, abuse of dominant positions and mergers in order to achieve equity and efficiency in the south African economy.

6 Its purpose is to promote and maintain Competition in south africa in order to do the following: Promote the efficiency, adaptability and development of the economy;. Provide consumers with competitive prices and product choices;. Promote employment and advance the social and economic welfare of south Africans;. Expand opportunities for south African participation in world markets and recognise the role of foreign Competition in the Republic;. Ensure that small and medium-sized enterprises have an equitable opportunity to participate in the economy; and Promote a greater spread of ownership, in particular to increase the ownership stakes of historically disadvantaged persons.

7 To achieve its purpose, the Commission's core functions are to do the following: Implement measures to increase market transparency;. Implement measures to develop public awareness of the provisions of the Act;. Investigate and evaluate alleged anti-competitive conduct;. Conduct formal inquiry in respect of the general state of Competition in a market;. Grant or refuse applications for exemption from the application of the Act; 1. Authorise, with or without conditions, prohibit or refer mergers of which it receives notice;. Negotiate and conclude consent orders;. competitioncommission ANNUAL REPORT 2012/13 .

8 Refer matters to the Tribunal and appear before the Tribunal when required;. Negotiate agreements with any regulatory authority to coordinate and harmonise the exercise of jurisdiction over Competition matters within the relevant industry or sector, and ensure the consistent application of the principles of the Act;. Participate in the proceedings of any regulatory authority;. Advise and receive advice from any regulatory authority;. Over time, review legislation and public regulations, and REPORT to the Minister concerning any provision that permits uncompetitive behaviour; and Deal with any other matter referred to it by the Tribunal.

9 C NTENTS. LIST OF FIGURES 3. LIST OF TABLES 3. LIST OF BOXES 3. ACRONYMS AND ABBREVIATIONS 5. COMMISSIONER'S FOREWORD 8. Office of the Commissioner 10. Organisational Organogram 11. THE THREE STRATEGIC GOALS 12. Strategic Goal One 13. Food and Agro-processing 13. Intermediate Industrial Products 15. Construction and Infrastructure 19. Strategic Goal Two 20. Strategic Goal Three 23. Human Resources 23. Information Technology 23. Security and Facility Developments 23. DIVISIONAL REPORTS 24. Mergers and Acquisition 25. Cartels 32. Enforcement and Exemptions 34. Legal Services 40. Policy and Research 44.

10 Advocacy and Stakeholder Relations 48. Corporate Services 54. CORPORATE GOVERNANCE 58. 2. ANNUAL FINANCIAL STATEMENTS 64. PERFORMANCE AGAINST TARGETS 106. List of figures Figure1: Security awareness amongst staff 23. Figure 2: Merger decisions by sector 26. Figure 3(a): Total number of CLP applications received per year 33. Figure 3(b): Total number of CLP applications received per year (excluding construction and infrastructure) 33. Figure 4: Enforcement cases under consideration, by year 35. Figure 5: Enforcement cases 35. Figure 6: Cases initiated by the Commission in 2012/13 , classified by sector 36.