The competition commission has endorsed the Competition Amendment Bill, a view that puts it at odds with President Kgalema Motlanthe, who tried to have the bill changed but failed.

Nandi Mokoena, strategy manager at the competition commission, says the commission ? unlike Motlanthe ? is satisfied with the bill's personal criminal liability and complex monopoly provisions.

The criminal liability provisions allow competition authorities to use findings by the competition tribunal against a company to pursue criminal liability against individual directors. If found guilty, directors can be fined up to R500 000, be jailed for 10 years, or both.

The provision has directors ? who decry it as being hostile to investors ? up in arms. As for the complex monopoly provisions, these make it possible for the commission to break up highly concentrated markets where a handful of dominant suppliers can manipulate the market, without necessarily colluding.

The Competition Amendment Bill was passed by parliament last year. Motlanthe sent it back to parliament early this year over concerns about its constitutionality, only to have it sent back unchanged. Motlanthe argued, through advocate Ishmael Semenya, that the personal criminal liability provision introduced 'reverse onus'.

Prove his or her innocence

The provision states that a finding against a company by the competition tribunal can be used as prima facie evidence in the pursuit of criminal charges against individual directors.

Semenya says this means a director enters the court with an assumption of guilt, or at least some degree of guilt, and is left having to prove his or her innocence, violating the constitutional principle of presumption of innocence.

Mokoena points out that the current status of using the findings as prima facie, or face-value, evidence in a criminal case is already a climb-down from using the findings as conclusive proof.

She also notes that beyond a prima facie status, there is no lower weight that the evidence could carry. This means that even if a firm is found guilty by the tribunal, should the authorities wish to pursue charges against an individual director, they would have to build their case from scratch ? almost independent of the commission and tribunal's findings.

A few dominant players

Nor will the act be applied retrospectively. This means that a director like Nick Dennis, the former Tiger Brands CEO whose subsidiary was found to have fixed prices, will not be pursued in terms of the new act when it is passed.

On the complex monopoly conduct provisions, Semenya told parliament that it had the potential to outlaw industries that have a few dominant players, such as the credit card industry, where Visa and MasterCard are dominant. The amendment bill defines a complex monopoly as an industry where 75 percent of the goods are supplied by five or fewer firms. The bill allows the commission to treat industries as complex monopolies because, in such industries, collusion does not happen through meetings behind closed doors, but rather through behaviour, where one company raises prices and others simply follow suit.

Mokoena says this is merely evolution of policy in an attempt to deal with market concentration. She says four previous incarnations of the Competition Act, dating back to 1955, have tried to deal with market concentration without much success.

Mokoena says she expects the president to refer the bill to the constitutional court so that once it's signed into law, the commission will not face legal challenges by disgruntled directors at a later stage.

Financial Mail