RIGHT OF REPLY | Competition Commission responds to ‘Watchdog boss under fire over 'irrational' rulings’

It is the Competition Commission’s practice not to debate in the media cases that are before the courts. This applies to the recent Vodacom-Maziv matter in which the Competition Tribunal has yet to issue reasons for its decision.

But “Watchdog boss under fire over ‘irrational’ rulings” (Business Times, December 1) goes well beyond fair public comment and provides an unbalanced and unfair view of the Competition Commission, this recommendation, and commissioner Doris Tshepe, relying on anonymous sources.

We seek to set the record straight.

Large complex mergers, especially ones that might transform an industry, will always generate differences of opinion. That is healthy. The South African competition regime is designed to ensure robust investigation and adjudication of complex matters to avoid “irrational” decisions. The commission is the investigative body, separate from the tribunal, which is the adjudicative body.

The commission’s recommendation to the tribunal to prohibit the Vodacom-Maziv transaction was based on two broad sets of competition concerns and the public interest. One broad set of competition concerns related to Dark Fibre Africa    and the concern that its independence, which has prompted so many industry players to build their networks on its shared dark fibre, would be compromised by the inclusion of a co-controlling shareholder that competed across many of the downstream businesses. If compromised, this would undermine competition in the downstream markets that represent an important aspect of the digital infrastructure, serving both businesses and consumers.

The other broad set of competition concerns related to the loss in competition between Vodacom and Maziv. On the fibre side, the commission identified that Vodacom has a strategy to enter fibre markets. Evidence obtained during the investigation showed that it had considered doing this through joint ventures and, absent the merger, may leverage its assets to partner with another fibre player and compete with Maziv. On BusinessLIVE, I have discussed this decision further.

In the same article, the commission is accused of not delivering on its mandate, with the suggestion of negligence and underperformance.

This is a surprising allegation, given a solid record of successes by the commission, including over the past two years. Three examples illustrate this.

In 2023, the commission initiated a complaint against Johnson & Johnson (J&J) in respect of its monopoly in the drug treating multidrug-resistant tuberculosis (TB) which is prevalent in South Africa. J&J extended its patent in South Africa and globally, and raised the price to the national department of health. Following this investigation, J&J announced that it would not enforce its secondary patent in South Africa and 133 other low- and middle-income countries, thus opening the market for entry of generic manufacturers. J&J has also agreed to a price drop of about 40% in South Africa, which has resulted in significant savings to the fiscus.

In July 2023, the commission completed its first market inquiry into digital platforms conducted in line with the amendments to the Competition Act. Small distributors in townships provided evidence of how they were excluded from markets. The inquiry put in place remedies aimed at promoting inclusion and participation in the digital economy by new players and historically disadvantaged persons.

Google agreed to alter its search page to promote South African platforms. Booking.com agreed to end both wide and narrow price parity for South African establishments. This has only been achieved in Germany and France. The value of these remedies to consumers and small businesses has been estimated at R1.1bn, opening a key lifeline to many businesses that were constrained by unfair market features.

Since September 2022, the commission finalised more than 560 mergers, a number of which were complex. The commission recommended prohibitions for three mergers, recommendations that the Competition Tribunal accepted. The merger conditions provided support of R2.2bn to firms owned by historically disadvantaged people. Assets worth R37bn were committed to the account of workers, through employee-shareholder commitments made by firms, in line with the law. An estimated 11,000 jobs were saved.

The commission has referred at least six cases of abuse of dominance to the tribunal in key sectors of the economy. The commission’s performance has been steady at above 80% of the performance target. It ended financial 2024 at 93% of targets reached and is at 87% for the first two quarters of this financial year.

These achievements are the result of a professional, highly motivated and skilled staff complement, who deal with some of the most challenging parts of our law; and litigants against commission decisions are often well-resourced. The characterisation of low staff morale is clearly at odds with the facts. The achievements are attained in tight fiscal conditions in which the commission constantly reviews areas in which to allocate resources and this too generates debates, as one can expect.

The article repeats allegations previously ventilated about 10 months ago relating to internal staffing matters and fully responded to by the commission at the time.

As in any large institution, there will be a diversity of views and the commissioner encourages debate and the ventilation of views, as this enhances the quality of the final decisions made by the institution. This is very different to the picture that has been painted and in fact, the commission is proud of the space it provides for deep reflection and discussion. 

In trying to make a case, the article states that it relies on a copy of a letter to the then minister of trade, industry & competition, Ebrahim Patel, from unnamed employees regarding the conduct of the commissioner. This includes questions relating to international travel.

These allegations were dealt with at the time to the satisfaction of Patel.

However, it is worth noting that the commission deals with an area of work that has significant international dimensions. First, many areas of the commission’s work relate to market conduct of global firms or transactions (such as mergers and cartel investigations) with cross-border implications. Competition regulators globally compare notes on ways to address such market conduct. Second, competition policy is shaped by global developments and thinking. An example is the focus on digital markets, where authorities as diverse as those in the US, Kenya, Nigeria, India, China and the EU are grappling with how to adjust the conduct of competition policy to new market dynamics.

The commission contributes to these discussions and benefits from new insights and learnings. This requires travel to other jurisdictions by senior commission members, including the commissioner.

The article repeats the Sunday World claims published 10 months ago regarding conflict of interest, and bases this on the fact that the commission had briefed advocate Ngwako Maenetje, the commissioner’s partner, as counsel in certain competition matters.

What do the facts indicate?

Maenetje is a senior counsel practising at the Johannesburg Bar since 2000. He has acted as counsel for the commission in a number of cases from as early as 2002, representing it before the Competition Tribunal, the Competition Appeal Court, the Supreme Court of Appeal and the Constitutional Court prior to the appointment of Doris Tshepe as a commissioner.

Since the appointment of Tshepe on September 1 2022, the commission has not briefed Maenetje in any new matters. Currently, there are two pending matters in which he has been acting for the commission before the tribunal. Maenetje was appointed by former commissioners to act in these two matters. These matters had not been finalised by September 1 2022. He remained on brief on these matters at the request of the commission’s chief legal counsel.

Shortly after Tshepe assumed office as commissioner, she informed Patel that Maenetje was on brief for the commission in pending matters in which he was briefed before her appointment.

The commissioner has recused herself from any decision-making and any other act related to the pending matters. She does not approve invoices or give instructions related to payments of Maenetje’s invoices or their processing.

The article criticises the commission for the apparent late submission of its annual report. The facts are as follows.

The commission submitted its draft annual financial statement (AFS) and performance information to the auditor-general and the National Treasury on May 31 in line with the Public Finance Management Act. The AG submitted its audit report in September, giving the commission a clean audit for financial 2024. This is the fifth consecutive clean audit. The annual report has since been submitted to the DTIC. 

The commission fully understands that it will always be a subject of public scrutiny. This is critical in ensuring high transparency and accountability levels are always preserved. The commission, however, encourages fair play and credibility in how matters are brought into the public discourse. Doing this would contribute to an important agenda of nation-building and social cohesion.

• Makunga is the spokesperson for the Competition Commission of South Africa.