COMPETITION TRIBUNAL INTEGRATED...
Transcript of COMPETITION TRIBUNAL INTEGRATED...
Case review: highlights
• Mergers - New Approach to Public Interest
• Cartel – Furniture Industry
• Excessive Pricing- Sasol Polymer
4
Case review: mergers
0%10%20%30%40%50%60%70%80%90%
100%
2013/2014Approved
2014/2015Approved
0%10%20%30%40%50%60%70%80%90%
100%
2013/2014Approved
withconditions
2014/2015Approved
withconditions
84.54%
75.00%
15.46%
25.00%
2013/2014 Total number of Mergers decided
2014/2015 Total number of Mergers decided
97
102
Approved mergers decided Approved with conditions mergers decided
5
Case review: mergers
• In November Lewis Stores acquired 63 stores from Ellerine’s Beares division
• We expedited the take-over hearing because of the job losses anticipated
• It was the first case to come under business-rescue provisions of new Companies Act
• Imposed a condition preventing Lewis from retrenching any employees from viable stores and ordering Lewis to invite affected employees to apply for new positions
• Merger saved 339 jobs and created 126 new jobs
6
Case review: mergers
• BB Investment Company / Adcock Ingram merger
• Why changes in employment policy may be merger specific
• What is proper consultation with labour?
7
Case review: mergers
• Tribunal found that: • the distinction between merger specific
retrenchments and operational retrenchments was blurred in this case
• there had been no proper consultation with employees on whether retrenchments were merger related or not
• Tribunal approved the BB Investment Company / Adcock Ingram merger with a one year ban on all retrenchments
8
Case review: prohibited practices
4
1
2
1
43
42
2014/2015
2013/2014
3
1
2
1
0
0
2014/2015
2013/2014
Orders Issued
Consent Orders Complaints from the Commission Complaint from the complainant
Reasons Issued
Consent Orders Complaints from the Commission Complaint from the complainant
9
Case review: consent orders
• The furniture removal cartel is the largest cartel uncovered in terms of number of respondents and geographical scope
• Commission alleges more than 40 furniture removal companies involved in rigging 3 500 relocation tenders between 2007 and 2012
• Customers of colluding furniture removal companies included Eskom, SANDF, SAPS and PPC
• Tribunal confirmed 13 furniture removal settlements this year with penalties ranging from R39 260.00 to
R4 273 060.00
10
Case review: complaints
Sasol Polymers
• In June the Tribunal imposed a R534 million penalty on Sasol Chemical Industries (SCI), a Sasol subsidiary, for charging excessive prices for purified propylene and polypropylene
• Both products are used in the manufacture of plastic
• The Competition Appeal Court has since overturned the Tribunal’s decision but this is being appealed to the Constitutional Court
11
Case review: complaints
Sasol Polymers
• Competition Commission approach
• Competition Tribunal approach
• Competition Appeal Court approach
12
Highlights
• We heard 180 cases this year and decided 175
• Large mergers and consent orders made up 80.6% of cases decided
• We prevented 3 803 job losses in past 15 years
• We approved 8 large mergers with employment conditions this year
14
Highlights
• Tribunal confirmed 43 settlement agreements this year, up from 42 last year
• Approved 84 mergers up from 82 last year
• Total administrative penalties levied was R725 million
• Fourth full-time Tribunal member appointed
• We achieved or exceeded 12 of our 18 performance targets
• We spent 91.38% of our budget
15
Performance information
16
1
6
11 Number ofperformance
indicators
Strategic Focus Area
Tribunal hearings and decisions Stakeholder Awareness Operational Effectiveness
Total
18
0
3
3 Number of targetspartially achieved
Strategic Focus Area
Tribunal hearings and decisions Stakeholder Awareness Operational Effectiveness
Total
6
1
3
8 Number of targetsachieved orexceeded
Strategic Focus Area
Tribunal hearings and decisions Stakeholder Awareness Operational Effectiveness
Total
12
Tribunal hearings and decisions
18
56%
Intermediate Mergers
0%
Intermediate Mergers
The percentage of reasons for
decisions issued within 20 days.
The percentage achieved- reasons only
issued in one matter (Oceana Group and FoodCorp) and they were issued 16 days out of time due to panel workload.
Target Performance
19
90%
Opposed prohibited practices-90% of
pre-hearing invitations to be
sent to parties with 20 business days.
The percentage achieved- 5
invitations and 1 issued 3 days out of
time due to administration error.
Target Performance
80%
*Target removed in 2015/2016
Intermediate Mergers Intermediate Mergers
Tribunal hearings and decisions
20
80%
Opposed prohibited practices-80% of decisions to be
issued within 100 business days of
hearing date.
The percentage achieved- 6 were out of time (Sasol out by 57 days and Buchanan out by 13). Delays arise
because of the complexity of issues to be decided,
length of record and panel workload
Target Performance
67%
*Target amended in 2015/2016 To vary with complexity of the matter
Intermediate Mergers
Intermediate Mergers
Tribunal hearings and decisions
Stakeholder Awareness
22
97%
Opposed prohibited
practices-97% to be posted on
Tribunal website within 24 hours.
The percentage achieved- 14 of 120
decisions posted out of time. Delay was due to
website being upgraded and
confidentiality claims by parties.
Target Performance
88%
*Target amended in 2015/2016 to refer to non confidential version of reasons.
Intermediate Mergers
Intermediate Mergers
Stakeholder Awareness
23
100%
Government gazette-percentage of merger decisions
issued within 20 days of final
decision.
The percentage achieved- 7 of 111 decisions sent late
due to admin error.
Target Performance
94%
*Target excluded in 2015/2016.
Intermediate Mergers
Intermediate Mergers
Financial overview
• Tribunal received an unqualified audit
• No material findings on the annual performance report concerning the usefulness and reliability of the performance information
• Fruitless, wasteful and irregular expenditure
26
Financial overview
• Fruitless and wasteful expenditure - penalties of R10 138.42 paid to SARS pertaining to a voluntary disclosure process in the 2011/2012 year. Disclosure related to incorrect application of perks tax.
• Irregular expenditure for project management of CMS development over 3 years (R476 805.00)
• Irregular expenditure for procurement of furniture in the 2014/2015 (R208 630.74)
• Condonation from National Treasury sought for both
27
Financial overview
88.10% Percentage of Budget spent
2012/2013
Total Budget: R31.11 million Total expenditure: R27.47 million
100.77% Percentage of Budget spent
2013/2014
Total Budget: R33.08 million Total expenditure: R33.54 million
91.38% Percentage of Budget spent
2014/2015
Total Budget: R36.64 million Total expenditure: R33.10 million
Exceeded Not spent Spent
28
Financial overview
Expenditure category
2014/2015 2013/2014
R’m % R’m %
Personnel 19 095 57.69 16 170 49.76
Compliance costs 1 739 5.26 1 797 5.53
Administrative expenses
3 007 9.08 3 436 10.56
Travel and subsistence
412 1.24 638 1.96
Unitary payments to dti
1 759 5.31 1 652 5.08
Professional services
2 411 7.28 3 859 11.87
Staff training 1 337 4.04 1 427 4.39
Fees to part-time members
3 342 10.10 3 526 10.85
Total 33 102 100 32 495 100
29
Tribunal member vacancy
•Two PT vacancies since August 2014
•No Deputy Chairperson since February 2012
31
Funding requirement
• No extra funding required for 2016/2017
• EDD/NT in recent allocated awarded us with additional R8.92 m for 2017/2018 AND
• Additional R12.74 m required for 2018/2019
• R37.84 m for 2019/2020 – no budget allocation communicated as yet
33
Top Corporate Publication
• Received first prize for our 2013/2014 Annual Report in the SA Publication Forum’s Corporate Publication Competition in October 2015
34