WHAT SOUTH AFRICA’S NEW AMENDMENT ACT MEANS FOR BLACK-OWNED BUSINESSES
VENTURESAFRICA / 15 FEBRUARY 2019 - 15.22 / AJIFOWOKE MICHAEL GBENGA
To strengthen regulations against anti-competitive behaviour in industrial markets, President Cyril Ramaphosa has signed the Competition Amendment Bill into law.
The bill, which was approved by the National Assembly in October 2018 and endorsed by the National Council of Provinces in December 2018, is considered a step in the right direction for small businesses. Not only does this marks a significant moment for competition law and enforcement in South Africa, but it also champions economic inclusion by recognizing that the economy must be open to greater ownership by a greater number of South Africans. Thus, opening up the economy to fresh investment and innovation.
In a statement, the Presidency said that the amended legislation would address “concentration and economic exclusion as core challenges” to dynamic growth, employment and equality in the country.
The Presidency also explained that “the bill provides greater clarity to firms and investors on prohibited practices and what constitutes as the abuse of dominance. It also provides a clear mandate to the competition authorities to address economic concentration in a balanced manner and to promote economic transformation.”
While criticisms abound over the extent of power given to the country’s Competition Commission which might result to excessive political influence in business operations, the bill has its advantages, particularly for small and black-owned businesses in South Africa.
The Amendment Act seeks to address structural constraints in the economy and one of the key areas is the market structure. As far as the South African economic structure is concerned, the country is developing and highly unequal.
Even under a black government, the white minority continues to dominate the most productive parts of the economy, as most companies and shares on the Johannesburg Stock Exchange are owned by white South Africans. Black-owned, small businesses, on the other hand, have struggled to compete with their larger counterparts.
Local black entrepreneurs face a volatile economy and have to overcome an environment in which previous inequalities still hinder professional growth and access to key networks. It would not be out of context to say that the effects of apartheid are still being felt by a majority of the people.
How the Act helps
The Amendment Act will prove instrumental in effecting fair practices and levelling of the playground in South Africa’s industries. It has a provision to ensure big businesses engage with small, medium-sized or black-owned businesses on fair terms. When big firms buy from a small or black-owned business, they are required to show that they did so under fair terms and prices. Also, large organizations have to provide justification that prices given to small businesses are not going to prevent the latter from participating in the market.
Furthermore, by strengthening the Competition Commission’s powers in relation to market inquiries, the commission can investigate a particular market and make recommendations to address structural concerns, high levels of economic concentration and economic transformation within a specific market or industry.
Although the Commission has no explicit power to act on its recommendations, the Amendment Act empowers the Commission to act in order to remedy, mitigate or prevent the adverse effect on competition by making recommendations to the Competition Tribunal.
The Commission is further mandated to publish a report to the Minister with recommendations, which may include recommendations for new or amended policy, legislation or regulations, and recommendations to other regulatory authorities in respect of competition matters.
“The bill enables a more effective approach to concentration, with a focus on improving outcomes for small and black-owned business, and strengthen the institutions involved in managing competition policy and law,” the Presidency said.
The signing ceremony took place on Wednesday at the Tuynhuys Chambers in Parliament. Economic Development Minister Ebrahim Patel, who campaigned fiercely for the bill’s codification, joined the ceremony along with a group of stakeholders.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER