Competition Commission Meeting Our Objectives

1
Competition CommissionMeeting Our Objectives
Presentation to Portfolio Committees Cape Town 13
June 2001 ADV. MENZI SIMELANE
2
Objectives
To provide

• An overview of our achievements to date
• Economic information

3
Background

• Commission became operational on 1 September 1999
  20 months old
• The Competition Act has been amended twice
• Most recent amendment became effective 1 February
  2001
• Thresholds increased dramatically, reducing
  merger workload by 60
• Jurisdiction became concurrent with other
  regulators has increased merger investigation
  activity

4
Meeting Our ObjectivesObjectives of the Act

• To promote efficiency, adaptability and
  development of the economy
• To provide consumers with competitive prices and
  product choices
• To promote employment and advance social and
  economic welfare of South Africa
• To expand opportunities for South African
  participation in world markets and recognise the
  role of foreign competition in the Republic
• To ensure that SMEs 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

5
Meeting Our ObjectivesOur Activities

• Merger evaluations
• Investigations into prohibited practices
• Exemption evaluations
• Advisory opinions
• Education Information
• Policy research (non-case)
• Legislative reviews

6
Meeting Our Objectives Mergers
1999/2000 2000/2001 Total
No of cases notified Intermediate Small Large Transitional 331 20 175 136 407 19 337 21 738 39 51 21 136
No of cases finalised Large Intermediate Small Transitional 236 12 91 133 414 24 387 3 650 36 478 3 133
No of cases prohibited Large Intermediate Small Transitional 5 (2.1) 1 1 3 6 (1.4) 3 3 11 (1.7) 4 4 3
7
Meeting Our Objectives Mergers
Type of merger No of mergers Percent
Purely Horizontal 178 62
Purely Vertical 25 9
Conglomerate 63 22
Management Buy-out 6 2
Horizontal/vertical mix 13 5
Total 285 100
Acquisition by a foreign firm 55 19
Failing firm argument 13 5
Anticipated job losses 19 6
Sample of mergers between April - December 2000
8
Meeting Our Objectives Mergers
Sector of Total (9/99-3/00) of Total (4/00 2/01)
Mining and Construction 6 4
Financial Services 13 6
ICT1 14 11
Transport 10 4
Manufacturing 22 33
Services 13 11
Real Estate 4 8
Wholesale - 12
Retail - 6
Other 3 18 5
TOTAL 100 100
9
Meeting Our ObjectivesInvestigations
Type of Complaint No of Complaints Received No of Complaints Resolved
Horizontal (Collusion) 13 10
Vertical 8 5
Abuse of Dominance 67 46
Multiple Provisions 64 36
No jurisdiction 26 26
TOTAL 176 123
10
Meeting Our ObjectivesInvestigations
Sectoral Distribution (cases under investigations Sectoral Distribution (cases under investigations
Agriculture 6
Services 10
Manufacturing 25
Wholesale 15
Retail 17
Sale, repair maintenance of motor vehicles 2
Transport 15
Medical Schemes 10
11
Meeting Our ObjectivesInvestigations
Sectoral distribution (resolved cases)
Forestry 1
Manufacturing 24
Wholesale 6
Retail 19
Transport 1
Services 16
Medical aid Schemes 1
Agriculture 1
Telecommunications 2
Real Estate 2
Insurance 3
Mining 3
IT 9
12
Meeting Our ObjectivesExemptions

• 9 applications (4/2000 3/2001)
• 3 pharmaceutical manufacturing
• 2 healthcare services
• 4 manufacture of transport equipment, cement
  products, liquid fuels and shipping lines
• All relating to restrictive horizontal practices

13
EfficiencyCost per Output
Merger Evaluations Investigations Exemptions Evaluations Advisory Opinions
Total Cost R11 172 560 R8 299 335 R1 297 254 R1 412 605
Outputs 419 mergers 27complaints 7 exemptions 132 advisory opinions
Cost per output R26 664 R65 342 R185 321 R10 701
14
EfficiencyTurnaround Time
Case Type Av Turnaround Time
Mergers 31 days
Complaints 91 days
Exemptions 145 days
Advisory Opinions 25 days
15
Interesting InformationOwnership Concentration
Company Number of ownership interest out of 59 sample sectors Percentage ownership control
Anglo -American 21 35
Sanlam 13 22
Old Mutual 12 20
Rembrandt 11 18
Sasol 5 8
Unilever 4 6
Tiger Brands 3 5
Parmalat 3 5
Ellerine Holding 2 3
16
Interesting InformationProblem Sectors
17
Interesting InformationMergers Employment

• In 125 cases evaluated a net loss employment of
  197 jobs occurred
• Industries with combined market share of 60-100
  resulted to 77 of the above job losses
• Competitive industry with low levels of
  concentration resulted to only 18 of the above
  job losses
• Concentrated industries at Cr4 above 60
  competitive industries at Cr4 below 40 resulted
  to 4 times more job losses
• 100 employment gains were within Cr4 in the
  ranges of 20 to 60

18
Questions Clarification
19
How to contact us
Website www.compcom.co.za E-mail CCSA_at_compcom.
co.za Tel [phone] Fax [phone]