South Africa: Competition Commission publishes its Draft Guidelines for the Determination of Administrative Penalties for Prohibited Practices  

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It in what AAT regards as a highly commendable step, the South African Competition Commission (“Commission“)  has recognised that there has been a need voiced by the Competition Tribunal (“Tribunal”), the Competition Appeal Court (“CAC”) and corporate South Africa for the Commission to develop guidelines for determining administrative penalties.

The Commission has published Guidelines for the Determination of Administrative Penalties for Prohibited Practices (“November Guidelines”), which set out  a proposed methodology which the Commission will (consistently) follow when concluding consent agreements, settlement agreements and when recommending an administrative penalty in a complaint referral before the Tribunal.  The Commission’s methodology is nothing new, it is based on the Tribunal’s six-step approach set out in Competition Commission v. Aveng (Africa) Limited t/a Steeledale, Reinforcing Mesh Solutions (Pty) Ltd, Vulcania Reinforcing (Pty) Ltd and BRC Mesh Reinforcing (Pty) Ltd  and confirmed by the CAC in Reinforcing Mesh Solutions (Pty) Ltd and Vulcania Reinforcing (Pty) Ltd v. Competition Commission.  However, the Commission has now listed factors, which are not explicitly included in the Competition Act, which should be taken into account, such as whether the firm has in any way delayed, obstructed, and/or assisted in expediting the investigation and litigation process and the Commission is also proposing an elaboration of the factors provided for in the Competition Act.  One such example is section 59(3)(c), which deals with the behaviour of the firm in the market during the period of the contravention.  In the November Guidelines, the Commission has provided a list of factors to be taken into account, such as the involvement of directors and/or senior management in the contravention and the firm’s encouragement of staff to participate in the contraventions for example. through personal incentives linked to the success of the contravention.  In addition, the Commission has proposed in its November Guidelines, that it “may impute liability for payment of the final administrative penalty on a holding company (parent company) where its subsidiary has been found to have contravened the Act.

 The November Guidelines have been made available to the public for comment by Friday, 30 January 2015.  Written comments on the guidelines can be e-mailed to: NellyS@compcom.co.za.

 

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