Prof. Kasturi Moodaliyar
- By Wits University
There is a large knowledge gap in the market in terms of the understanding of the South African competition law field, notably the Competition Act of 1998, which came into effect in South Africa in 1999, and which has significantly changed the way in which business is done in this country.
The Development of Competition Law and Economics in South Africa is the title of a book that Professor Kasturi Moodaliyar co-edited in 2013, published by the HSRC, and available as a free download on the HSRC’s website, which is aimed at bridging this knowledge gap.
“It’s a compilation of papers stemming from two conferences hosted by the Mandela Institute at the Wits School of Law together with the Competition Authorities,” says Moodaliyar. It was attended by national and international academics, students and practitioners from law and economic firms.
“Business in South Africa in the pre-1994 apartheid era was the era of concentrated markets, with monopolies controlling different industries and cartels operating with protectionist relations with government. It was effectively an old boys club where a handful of firms controlled a large part of the economy, and prevented other firms from entering the market,” she explains.
From 1999 this completely changed and all firms, by law, must compete with one another and are not allowed to communicate with each other on certain levels that would prejudice competitiveness or the public interest, such as around price-fixing.
“Also in terms of mergers and acquisitions, companies now have to take the public interest into consideration, such as a merger’s impact on employment, which would not have been a consideration before,” Moodaliyar continues.
“For example, the Competition Tribunal might look at a merger where workers need to be retrenched, may impose conditions that the retrenchment takes place in stages over a set period of time, or that the workers are retained, and ultimately suitable employment is found for them.”
In the last couple of years the Competition Commission has been looking into cartels that have existed in South Africa for quite some time and that have been fixing prices, bid rigging or dividing markets, as well as the conduct of dominant companies that have been abusing their dominance.
“In so doing, they are stifling competition and, instead of offering better prices and product offerings, they are offering higher prices, reducing output and possibly not innovating and providing choices and quality to consumers,” explains Moodaliyar.
Addressing the issue of concurrent jurisdiction, such as that concerning ICASA and the Competition Commission, Moodaliyar co-presented a paper with economist Keith Weeks at the Competition Law Conference, on the way in which the Electronic Communications Act overlaps with the Competition Act in terms of competition law.
When cases are filed there are jurisdictional issues as to who should handle what issues, which causes confusion as to whether it should be ICASA or the Competition Authorities, as evidenced by the anti-competitive behaviour case brought against Telkom by the SA Value Added Network Service (which included the Internet Service Provider Association). This case was tied up in litigation for nearly 10 years over the question of jurisdiction. Ultimately the courts found that the Competition Tribunal did have jurisdiction. The Tribunal ultimately found that Telkom had abused its dominant position.
The construction industry in South Africa has also been under fire in the last couple of years in a major price-fixing case.
“The Competition Commission finalised a fast-track settlement process in the construction industry in 2013 after several construction companies were found to have engaged in cartel behavior, especially around the Soccer World Cup period,” Moodaliyar explains.
The Commission recognised it was an endemic problem, and instead of dealing with one case at a time, which would take years and consume considerable resources, it decided on a fast-track settlement process and mitigation of fines if the offending companies came forward during this process.
“Just about every big construction company operating in South Africa revealed their role in anticompetitive tendering, and the collective fines amounted to about R1.4 billion, to be paid to the National Revenue Fund, which goes to Treasury and becomes part of the national budget,” she continues.
Following on this, Moodaliyar held a well-attended seminar at the Mandela Institute in 2014 on what happens once cases have been settled by the competition authorities, including the question of making damages claims accessible to the victims of cartels. The victims range from municipalities and government departments to companies and citizens.
“If we look at the bread industry price-fixing case, the victim is everyone who buys bread in South Africa. The competition case took place around 2008 and now the damages claims are in process by claimants from two class action groups: one is a group of small bakeries in the Western Cape and the other is an NGO by the name of ‘The Children’s Trust’ that came together as a class action,” she explains.
It’s a difficult, expensive claim process but it is extremely important as it will set the precedent for future cases and streamline the process for future victims of cartels to get some compensation for the harm they have suffered from anti-competitive behaviour.
About Prof. Moodaliyar
Moodaliyar holds the position of the Eskom Senior Lecturer in Competition Law. Prior to her joining the Law School in February 2005 she worked as an enforcement and exemptions investigator and there after a merger analyst at the Competition Commission in Pretoria. She is also a member of ICASA's adjudicative body the Complaints and Compliance Committee, and a part -time member of the Film and Publications Board and the Companies Tribunal. She graduated from the University of Natal with a B.Proc.LLB and her LLM degree. She was admitted as an Attorney of the High Court of South Africa in 2000. Moodaliyar was awarded the Nelson Mandela Magdalene scholarship to read for her M.Phil degree in criminological research at Cambridge University in 2001. In 2004 she completed the Programme in Economics and Public Finance at Unisa. She is currently reading for her PhD in Competition Law. She is also the coordinating editor for the Butterworths Competition Law Reports and has been a guest editor on the South African Journal of Economics and Management Sciences. In 2008 Moodaliyar was awarded the Carnegie Sandwich Fellowship to conduct research on her PhD and she spent six months at Fordham University School of Law in New York as a visiting research fellow.