Competition amendments close loopholes and support small business - Ebrahim Patel

Minister of Economic Development Ebrahim Patel told Parliament’s portfolio committee on economic development that the Competition Amendment Bill closed numerous gaps in anti-competitive behaviour which previously existed at the expense of small and local business.

The amendment bill is a response to competition market anomalies, including an observation by the World Bank that the estimated mark-ups above normal profits for large businesses in SA is estimated to be as much as 10% of the country’s GDP.

Patel told the committee that because major business supplying various goods have poor and middle income South Africans as their main consumers, opening markets and stamping out anti-competitive behaviour are fundamental to addressing inequality and poverty.

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Patel said the department received 60 formal written responses to the Competition Amendment Bill. Among other things, the amendment bill removed definitions for prohibited acts and replaced them with comprehensive guidelines to allow court discretion.

He said the discussions the department held with National Economic Development and Labour Council (Nedlac) on the process helped the department better understand anti-competitive behaviour it sought to eradicate.

“They (business and Nedlac) found that the bill takes into account all of the market needs and government imperatives. I am advised by officials who attended the public hearings that there was overwhelming support for the core principles of the bill,” said Patel.

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Among other issues, the department was asked during its engagements why the current definition for excessive pricing was deleted from the amendment bill and why provisions for excessive pricing included guidelines.

“It would be nice for us to claim that there is a low rate of violations in excessive pricing because no excessive pricing exists, but that is not the case. The problem of excessive prices charged by dominant forms is clear and present in the market,” Patel said.

Patel said the bill, in its current form, was consistent with the constitution, allowed for the courts to exercise jurisprudence in the event of a dispute and closed loopholes which previously allowed larger firms to get away with multiple instances of anti-competitive behaviour.