AAT, BRICS, COMESA, economics, Extra-judicial Factors, full article, Meet the Enforcers, South Africa

Meet the Enforcers: Companies Tribunal’s Prof. Kasturi Moodaliyar

meet the enforcers

Interview with Professor Moodaliyar marks second in AAT interview series highlighting African enforcers

In the second instalment of our Meet the Enforcers series, we speak with Prof. Kasturi Moodaliyar. An Associate Professor of Competition Law, she is part-time member at the Companies Tribunal; ICASA’s Complaints and Compliance Committee; and the Film and Publication Board Appeal Tribunal. She holds a B.Proc. LLB.LLM.(Natal), M.Phil (Cambridge), and Prog. Economics and Public Finance (UNISA)

As an academic in South Africa, focussing on competition law, how do you perceive the major differences and challenges that developing or younger antitrust-law jurisdictions are faced with, compared to more established ones? Specifically with regards to the Competition Commission, what is your assessment of its strengths and weaknesses?

The Commission has established a credible reputation in the area of anti-cartel enforcement and merger regulation. However, it has been less effective in addressing abuse of dominance. This is a risk as there is increasingly an expectation that the Commission address problems of single firm dominance in concentrated markets in the South African economy. If performance continues to lag in this area it will impact negatively on the perceived effectiveness of the Commission. While under-deterence of abuse of dominance reflects some limitations in the legislation it also highlights the challenge of resource constraints faced by the Commission. Such cases demand extensive legal and economic expertise – a shift of priorities to this area may impact performance of the Commission in areas in which it has traditionally had more success (cartel busting, mergers). The use of complementary tools like market inquiries and advocacy will be important and can asset the Commission – but also places a burden on resources.

Regarding staff turnover: Do you see the personnel turnover in recent history to be of sufficient magnitude to have an impact on the performance of the enforcement agency?

It is a worrying development although there are signs that it is starting to stabilise. Although key executives were lost there are still a number of highly experienced staff at the middle management level within the institution that must be nurtured and developed. Some have moved into executive level positions. This is a positive development but also points to a level go juniority in the executive which may impact on effectiveness. Will watch this space.

On Leadership: Do you consider it a benefit or a hindrance if leadership want to introduce their own philosophy of what competition law should seek to achieve on the agency’s activities during their tenure, or do you think that the law is sufficiently clear, such that leadership should focus on efficient and effective delivery of the service, and leave the interpretation to the Tribunal/courts.

It is natural that any leader will bring their own perspective to the role – this cannot be avoided. However, it will be important for the leadership to ensure that such perspectives do not undermine their objectives in giving effect to the mandate of the Commission – which is set down in the Competition Act. Fortunately there are checks and balances in the adjudicative process (Tribunal, rights of appeal) to ensure that these objectives are not contradicted.

Prioritisation: Every agency has budgetary constraints. What are the factors that you think should be most important in how cases are prioritised, should this be based on the developmental needs to society, particular sectors, or even particular areas of the law. What do you think of the prioritisation of recent Section 8 cases, SAB (10 years on an issue that has been extensively sanitised by foreign agencies), Gold Reef News (de minimis), and Sasol Polymers (niche, with limited potential for downstream beneficiation)?

The Commission’s stated prioritisation principles seem reasonable (as they appear in annual reports). However, there is somewhat of a disjuncture between the principles and the outcomes – particularly with respect to abuse of dominance cases. In fact, the outcomes in respect of anti-cartel enforcement have been largely consistent with the application of the Commission’s prioritisation principles – so credit is deserved here. However, new thinking around prioritisation is needed for abuse of dominance cases. In this regard there needs to be a better integration between the Commissions’s policy and research activity, the use of market inquiries and its advocacy with its planning and actions around enforcement against abuse of dominance.

Do you believe that the Competition Tribunal has a role in relation to broader competition advocacy initiatives in South Africa by way of the decisions made?

Advocacy is primarily a function of the Competition Commission, not the Tribunal. The Tribunal must first and foremost safeguard the integrity of its adjudicative function by ensuring impartiality in its decision making processes. There is no harm done though if the Tribunal makes a contribution to the such initiatives as a bi-product of good decisions.

How important, in your view, is the political independence of competition enforcers?

It is very important if the integrity and effectiveness of the agency is to be upheld.

Comparing merger review in an African jurisdiction (any jurisdiction) with that of other competition enforcement agencies worldwide, where do you see the key differences?

A significant difference does appear to be the elevated status of public interest issues in merger proceedings.

What is your view about the elevation of non-competition assessments above those of pure competition tests in merger review? Is it good for the adjudication of competition matters generally?

It is not a problem in and of itself, and is to be expected given various developmental challenges. However, public interest considerations should not trump core competition concerns. In other words, agencies should strive to achieve consistency between the ‘pure’ competition policy objectives (competitive market structures, efficient outcomes etc) and public interest considerations. However, significant dangers arise when public interest objectives conflict with competition policy objectives. Where there are conflicts, alternative policy mechanisms should be considered so that agencies can focus on core non-conflicting objectives. Otherwise they may end up achieving nothing by trying to please everyone. This also means that the public interest considerations that do fall within the mandate of competition agencies should be carefully circumscribed.

What skills would you encourage regional African practitioners focus in on for purposes of developing antitrust advocacy in the region?

They should build a technocratic and professional staff with strong legal and economic skills. These core functions should also be supported by strong policy research and analysis skills – also of the technocratic professional (rather than political) variety. As an academic in this field I would also encourage ongoing training to strengthen those research, investigative and analytical skills.

Thank you, Professor Moodaliyar.

Standard
AAT, COMESA, full article, jurisdiction, Meet the Enforcers, merger documentation, mergers, notification, personnel

Meet the Enforcers: COMESA’s Rajeev Hasnah, 1st in exclusive AAT interview series

meet the enforcers

New AAT interview series highlights individual African competition enforcers

In the first instalment of our new Meet the Enforcers series, we speak with Rajeev Hasnah, CFA, who is a sitting Commissioner of the COMESA Competition Commission.  In our exclusive interview, we discuss the CCC’s merger review practice, its revised Guidelines, young history and achievements, and seek practitioner guidance.


Rajeev Hasnah, CFA
You are an economist by training and currently a sitting COMESA Competition Commissioner.  As the young agency is about to celebrate its 2nd anniversary, what do you consider to be the CCC’s biggest achievement to date?
According to me, it is the fact that the CCC is effectively enforcing the COMESA Competition Regulations since it started operating in January 2013.  It is indeed a commendable achievement given that the current Board of Commissioners sworn-in in October 2011.  In 2012, the CCC worked on the drafting of the guidelines, in consultation with various stakeholders, and under the advice of other competition experts.
The institution also established a good working relationship with national authorities across COMESA and beyond, and proved its credibility and effectiveness as a regional competition authority within the business and legal communities globally.  The rather high number of merger notifications with a COMESA dimension already adjudicated to-date (around 50) is testimony to the success of the CCC being an effective competition law enforcer in its still early days.
Comparing the CCC merger review in practice with that of other competition enforcement agencies worldwide, where do you see the key differences?
Nowadays it is getting harder to talk about differences in any field of economic activity in this increasingly globalised world.  In my view, the key principles and the application of the Competition Law in the COMESA region do not differ significantly either from that of the national authorities or other major jurisdictions across the globe.  The assessment of “substantial lessening of competition” as the underlying fundamental test in merger reviews is at the core of the evaluation conducted by the CCC as well.
Does the multi-national nature of the CCC (akin to the European Commission) make the substantive work more difficult?
It is definitely not an easy feat to enforce the COMESA Competition Regulations across 19 different countries, each with its own economic, legal and cultural environments.  Yet, under the leadership of the current Chairman, Alex Kububa and Director/CEO of the CCC, George Lipimile, a good working relationship and collaboration has been established with the different national authorities across the COMESA region, which facilitates an effective enforcement of the Competition Regulations.   This also ensures that the CCC has a good perspective of the individual local realities, which is no doubt a key element to assess the impact on competition at the regional level.
What prompted the re-drafting of the CCC Merger Guidelines, and why was the indirect path of an administrative guidelines interpretation of the verb “to operate” chosen to elevate the review thresholds, as opposed to increasing the thresholds in the underlying Rules themselves?
It is not uncommon that an authority reviews its guidelines as it gains experience in enforcing the law.  Any changes or further clarifications are geared toward ensuring that the business and legal communities as well as competition economics experts have a good understanding of how the Regulations are enforced by the CCC.  This indeed shows that the CCC stands ready to ensure an improved clarity of its enforcement of the Competition Regulations among its key stakeholders.
The relevant paragraphs defining the verb “to operate” in the Merger Guidelines, should not be construed as a review of the merger notification thresholds per se.  The latter has its own procedures regarding any likely review.  The definition in the Merger Guidelines is rather to ascertain whether the said undertaking is construed to be effectively operating in a Member State or not.
Do you have advice for African practitioners counselling their clients on whether or not to notify a merger to the CCC?
Taking into consideration the rise in the enactment and enforcement of a competition policy regime across various jurisdictions and at the level of regional trading blocs as well, one can safely say that a competition authority is here to stay and to enforce the law as prescribed.
One of the key considerations in doing business is a proper assessment of the risks the undertaking faces or could potentially face and the implementation of a suitable actionplan to deal with these risks.  I believe that non-notification of a notifiable COMESA dimension merger to the CCC should not be construed as carrying a low probability of being detected by the CCC and certainly not a low impact one for the undertaking.
What is your view about the elevation of non-competition assessments above those of pure competition tests in merger review?  Is it good for the adjudication of competition matters generally?
Some jurisdictions consider public interests as important, while some don’t.  This is normally provided for or not in the respective laws, and whichever is the case, as adjudicators, we need to follow what is prescribed in the Regulations.
It is also important to note that in practice, the enforcement of competition law can be defined as being the conduct of economic analysis within a legal framework.  Both the economic analysis and legal framework evolve accordingly in line with the development of the jurisdiction’s economy.  We can take the examples of more mature competition policy regimes which started with the consideration of non-competition issues in merger review, to then afterwards moving to assessing only competition matters.  As such, each jurisdiction has its own specificities that it needs to take into consideration, though these are bound to evolve with time.
By way of background, how did you get into antitrust/competition law & economics?
I am an economist and a Chartered Financial Analyst (CFA) by training, and prior to joining the antitrust world I was an investment professional.  Four years ago I had the choice between acquiring experience in private equity or joining the nascent competition law enforcement team of the Competition Commission of Mauritius as its Chief Economist/Deputy Executive Director, working with the then Executive Director, John Davies.  I chose the latter for its excellent combination of applied microeconomics and law.
What was the path that took you to working for competition enforcement agencies?
I started as a macroeconomist working in London for an economic consultancy firm in the city, where I was advising traders and asset managers.  I then moved on to financial investing in an investment management firm and to corporate finance in one of the largest conglomerates in Mauritius.  So I came to the antitrust world as a business/investment practitioner with a strong background and experience in applied economic and financial analysis.
Having seen the world from the private sector side, I acquired an edge in the application of competition economics in my previous role as a Chief Economist/Deputy Executive Director and as a current Commissioner at the COMESA Competition Commission.
What skills would you encourage regional African practitioners focus on for purposes of developing antitrust advocacy in the COMESA region?
Having previously led the Competition Culture project for the International Competition Network (ICN) Advocacy Working Group (AWG), I am now one of the strong proponents of the importance of advocacy to develop and maintain a strong competition culture within society.
Ensuring that advocacy activities are properly designed and tailored to meet the requirements of the target group is crucial.  Equally important is to ability to communicate in a very simple and easy to understand language, adapted to meeting the target audience’s expectations.
Thank you, Mr. Hasnah.
Standard