The new South African government signaled its intention to review the South African competition law regime in the White Paper on Reconstruction and Development in 1994 (Notice 1954 Gazette 16085 of 23 November 1994). The need for a new competition policy in South Africa must be seen in the context of a historical legacy of excessive economic concentration and ownership, collusive practices by enterprises and the abuse of economic power by firms in dominant positions. It was also recognized, however, that the South African economy and society was in a state of transition, in terms of a broader restructuring of the economy, the effects of globalization and trade liberalization and the need to redress past inequality and non-participation in the national economy. A fundamental principle of competition policy and law in South Africa thus is the need to balance economic efficiency with socio-economic equity and development.
The Evolution of Competition Policy in South Africa
The origins of competition policy in South Africa lie with the Regulation of Monopolistic Conditions Act, 1955 (Act No. 24 of 1955). A review of the Act in the 1970s found that it had been unsuccessful in preventing a dramatic increase in oligopolies. As a result, the Maintenance and Promotion of Competition Act, 1979 (Act No.96 of 1979) was introduced and the Competition Board, tasked with administering the Act, was established.
The 1979 Act was amended in 1986 to give the Competition Board further powers, including the ability to act not only against new concentrations of economic power but also existing monopolies and oligopolies. Despite the amendments, however, it was widely recognized that technical flaws in the Act prevented the effective application of competition law on both substantive and logistical grounds.
The Department of Trade and Industry embarked on a three-year project, consulting with experts and stakeholders, to arrive at a new competition policy framework for South Africa in 1995. In November 1997, the Department of Trade and Industry released Proposed Guidelines for Competition Policy entitled ”A Framework for Competition, Competitiveness and Development”. These guidelines formed the basis for negotiations with the National Economic Development and Labour Council (NEDLAC). The objective of the NEDLAC process was to reach agreement between business, government and labour on the policy principles, which would shape and inform competition legislation. A NEDLAC agreement on competition policy was concluded on 20 May 1998. After a fourteen-week public consultation process, the Competition Act, 1998 (Act No, 89 of 1998) was passed by Parliament in September 1998. Certain provisions of the Act were brought into effect in October 1998 to allow for the establishment of a new institutional framework. The remaining provisions of the Act became effective on 1 September 1999.
The New Competition Act
The stated purpose of the Competition Act, 1998 (Act No. 89 of 1998) is to promote and maintain competition in South Africa in order to achieve the following objectives:
- To promote the efficiency, adaptability and development of the economy;
- To provide consumers with competitive prices and product choices;
- To promote employment and advance the social and economic welfare of South Africans;
- To expand opportunities for South African participation in world markets and recognize the role of foreign competition in the Republic;
- To ensure that small and medium-sized enterprises have an equitable opportunity to participate in the economy;
- To promote a greater spread of ownership, in particular to increase the ownership stakes of historically disadvantaged persons.
Three institutions are created in terms of the Act to achieve the above objectives:
- The Competition Commission
- The Competition Tribunal
- The Competition Appeal Court