competition commission south africa ANNUAL REPORT 2019-20 competition regulation for a growing and inclusive economy TABLE F CONTENTS: PART A: GENERAL OVERVIEW 6 1. About The Annual Report ................................................................... 7 2. The Executive ..................................................................................... 8 3. Minister’s Foreword ............................................................................ 10 4. Commissioner’s Foreword ................................................................. 13 5. Establishment And Mandate Of The Competition Commission ........ 16 6. Strategic Overview ............................................................................. 18 PART B: ECONOMIC IMPACT 22 7. 2019/20 Highlights ............................................................................. 23 8. Commission’s Interventions In Priority Sectors ................................. 28 PART C: PERFORMANCE INFORMATION 38 9. Programs & Functions ........................................................................ 39 10. Market Conduct Division .................................................................... 41 11. Cartels Division .................................................................................. 48 Competition Commission of South Africa 12. Mergers And Acquisitions Division ..................................................... 51 Physical Address: the dti campus, Block C, Mulayo, 77 13. Legal Services Division ...................................................................... 77 Meintjies Street, Sunnyside, Pretoria, 0002 14. Economic Research Bureau Division ................................................. 86 Postal Address: Private Bag X23, Lynnwood Ridge, 0040 15. Market Inquiries .................................................................................. 88 Telephone: +27 12 394 3200 16. The Advocacy Division ....................................................................... 94 Fax: +27 12 394 0166 17. Office Of The Commissioner .............................................................. 107 Email: [email protected] 18. The Corporate Services Division ........................................................ 112 Website: www.compcom.co.za External Auditors: The Auditor-General of South Africa PART D: CORPORATE GOVERNANCE 120 Banker’s Information: ABSA Business Bank, 3rd Floor, Absa Towers West, 15 Troye Street, Johannesburg 2001, 19. Corporate Governance ....................................................................... 121 PO Box 7735 Johannesburg 2000 Company Secretary: Mr Mduduzi Msibi competition commission RP284/2020 PART E: ANNUAL FINANCIAL STATEMENTS 126 south africa ISBN: 978-0-621-48678-0 LIST F ABBREVIATIONS GLOSSARY F TERMS AVE Advertising Value Equivalent HMI Private Healthcare Market Inquiry For the purposes of this report, the meaning of the following terminology is explained below: ACF African Competition Forum HR Human resources “Abuse of dominance” means engaging in prohibited practices as “Market Inquiry” refers to a formal inquiry in respect of the general AG Auditor General IRC Information Resource Centre provided in sections 8 and 9 of the Act. state of competition, the levels of concentration in and structure of a CD Cartels Division IT Information Technology market for particular goods or services, without necessarily referring CRESSE The Competition and Regulation Summer ICN International Competition Network “Advisory Opinion” refers to a non-binding written opinion provided to the conduct or activities of any particular named firm. School and Conference LSD Legal Services Division by the Commission to a requester, who may be an individual or a firm, The Act Competition Act No. 89 of 1998, as amended MCD Market Conduct Division setting out the Commission’s likely view on the subject matter of the “Non-referral” means that, after conducting an investigation, Competition Bill Competition Amendment Bill 2017 opinion. the Commission has decided not to refer a particular case to the M&A Mergers and Acquisitions Division CAC Competition Appeal Court Competition Tribunal for prosecution. NDP National Development Plan Commission Competition Commission of South Africa “Advocacy” refers to activities aimed at the promotion of voluntary NEDLAC National Economic Development and Labour compliance to the Act, through non-enforcement mechanisms. “Public interest” refers to the consideration of socio-political and Tribunal Competition Tribunal Council economic issues, as prescribed in Section 12A of the Act, in the Concourt Constitutional Court of South Africa NHI National Health Insurance “Consent Agreement” refers to an agreement concluded between evaluation of mergers and acquisition applications. CLP Corporate Leniency Policy OTC Office of The Commissioner the Commission and a respondent, and which is confirmed as an CSD Corporate Services Division PFMA Public Finance Management Act No. 1 Of 1999, order of the Competition Tribunal in terms of section 49D of the Act, “Referral” refers to the submission by the Commission of a as amended Data Inquiry Data Services Market Inquiry setting out: (i) the alleged contravention, (ii) where appropriate, an complaint to the Tribunal for prosecution, upon completion of its PPTMI Public Passenger Transport Market Inquiry admission by the respondent, (iii) a penalty where applicable and (iv) investigation. DAFF Department of Agriculture Forestry and Fisheries SME’s Small and Medium Sized Enterprises where applicable, a remedy addressing the harm occasioned by the DMR Department of Mineral Resources alleged contravention of the Act. SARS South African Revenue Service DTIC Department of Trade, Industry and Competition SADC Southern African Development Community ERB Economic Research Bureau “Enforcement” refers to the investigation and/or prosecution of anti- SCA Supreme Court of Appeal EDD Economic Development Department competitive conduct. ToR’s Terms of Reference EAP Economically active population EEA The Employment Equity Act “Exemptions” refers to the granting of exemption from prosecution GRMI Grocery Retail Sector Market Inquiry to firms for engaging in anti-competitive conduct for a specific period GDP Gross domestic product of time, through the process and criteria prescribed in Section 10 of the Competition Act. 2 COMPETITION COMMISSION ANNUAL REPORT 2019/20 3 LIST F TABLES LIST F FIGURES Table 1: Block Exemptions issued in response to the Covid-19 pandemic ....................................................................................... 26 Figure 1: M & A 2019 sectoral analysis ................................................................................................................................. 54 Table 2: Commission’s work in priority sectors 2019/20 .................................................................................................................... 28 Figure 2: Sectors with the most complaints ......................................................................................................................... 95 Table 3: Noteworthy M&A cases in priority sectors ............................................................................................................................ 36 Figure 3: Staff turnover for the past 5 years ......................................................................................................................... 115 Table 4: Strategic goals, outcomes and responsible divisions ........................................................................................................... 40 Table 5: Exemption applications finalised in 2019/20 ........................................................................................................................ 45 Table 6: Cartels case statistics ........................................................................................................................................................... 46 Table 7: Mergers and acquisitions thresholds applicable in the 2019/20 financial year .................................................................... 51 Table 8: Time frames set for assessing mergers of varying complexities .......................................................................................... 52 Table 9: Average turn-around times in 2019/20 against service standards ....................................................................................... 52 Table 10: Mergers notified and reviewed over five years ...................................................................................................................... 53 Table 11: Mergers approved with public interest conditions ................................................................................................................ 66 Table 12: Commission’s litigation load at the end of 2019/20 .............................................................................................................. 77 Table 13: Total administrative penalties levied over the last ten years ................................................................................................. 84 Table 14: Total administrative penalties levied in 2019/20 ................................................................................................................... 85 Table 15: Publications produced during 2019/20 ................................................................................................................................. 87 Table 16: 2019/20