Presentation to Consumer Goods Council of South Africa...
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Presentation to Parliament’s Portfolio Committee of Economic Development Commissioner Shan Ramburuth 14 October 2011 Annual Report 2010/2011
Transcript of Presentation to Consumer Goods Council of South Africa...
Presentation to Parliament’s Portfolio Committee of Economic DevelopmentCommissioner Shan Ramburuth
14 October 2011
Annual Report 2010/2011
The work of the Commission
Enforcement casesunder investigation
Priority sectors
Enforcement cases Initiated (classified by sector)
Food and agro-processing
Corporate leniency applications received
Infrastructure and construction
• Incentivisesettlement
• Strengthen evidence
• Minimize legal costs
• Promote • competition in
construction
• 150 marker applications• 65 bid‐rigging case involving over 70 projects valued approx. R29bn
Intermediate industrial products
Financial services
Referrals of complaints to the Tribunal against corresponding sections of the Act
0
5
10
15
20
25
30
1999/20002000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
9(1) 8(d)
8(c) 8(b)
8(a) 5(2)
5(1) 4(1)(b)
4(1)(a) Number of cases
Litigation
Total cases 141
Mergers 21
Enforcement 120
Complaints referred to
Tribunal
11
Before Competition
Appeal Court
6
Before Supreme Court of
Appeal
2
Before High Court 1
Consent and settlement
agreements
22
Total admin. penalties R794 109 704
• Merits of the case vs
technical challenges
• Adverse
rulings
allow
cartels
to
evade
prosecution
• Protracted
litigation
adds
to
frustration
and strains limited resources
• Affects
the
Commission’s
ability
to
initiate
and investigate complaints.
• Withdrawal
against
milk
cartel
based
on
validity
of
initiation
of
complaint
and
summons
• Unable
to
prosecute
firms
involved
in
cartel
in
fertilizer.
CAC
ruled
against
Commission
based
on
validity
of
amendments to complaint
Mergers notified from 2007/2008 to 2010/2011
Merger reviews
• 200 mergers approved without conditions:
65 large
135 intermediate
• 14 mergers approved with conditions:
4 requiring divestiture
4 placing restrictions on job losses
2 placing obligations to supply
1 involving access to infrastructure
• 2 intermediate mergers prohibited
• 12
transactions with a negative impact on
employment
• Anticipated job losses involved 2775
employees, mainly from:
Metropolitan and Momentum merger (1500 employees)
Rhodes Foods and Del Monte Fruit merger (1037 employees)
Outcome of merger reviews 2007/2008 to 2010/2011
Acquisition of Massmart by Walmart
• Walmart:
USA
retailer
of
groceries,
electronics,
furniture, clothing
• Massmart:
wholesaler/retailer
of
groceries,
liquor,
general
merchandise‐
Game,
Dion,
Makro,
Builder’s
Warehouse, Cambridge
• Merger
did
not
increase
concentration
in
wholesale
and retail markets
• Concerns
about
impact
on
employment
and
the
effect
of
Walmart’s
procurement
strategies
on
local
manufacturing
• Recommended approval of large merger‐
assurances to
honour
union
agreements,
abide
by
labour
law,
and
source products locally.
• Objections
from
the
dti,
EDD,
DAFF,
SACTWU,
SACCAWU
and
the
Small,
Medium
and
Micro
Enterprises Forum
• Subsequent conditional approval by Tribunal on appeal
to CAC
Pioneer Hi-Bred and Pannar Seeds merger
• Commission prohibited the intermediate merger
• High
level
of
concentration
and
collaboration
in
cross‐
licensing of IP
• From
a
3‐player
oligopoly
to
a
duopoly
in
the
maize
seed market
• Strong
technological,
efficiency
and
procompetitive
gains from combining germplasm
and
introducing new
breeding technologies
• Concerns
of
further
concentration,
high
prices,
lower
and/or reduced customer choices, collusion and higher
entry barriers
• Public
interest
issues
relating
to
food
sovereignty,
GM
seeds vs
non‐GM seeds preferred by farmers
• Lack of competition as a result of IP protections
• Hearings in the Tribunal
Market shares pre‐merger
Market shares post‐merger
Advocacy
International relations
International recognition
• Awarded Agency of the year in Africa, Asia and Middle East by Global
Competition Review
• Ranked
9
out
of
60
jurisdictions
on
merger
regulation
in
the
Global
Merger Control Index by the Center for European Law and Economics
• Commissioner
ranked
41
among
100
affecting
business
ethics
in
the
world by Ethisphere
Institute
• Chief
Economist,
Dr
Simon
Roberts,
recognised
as
one
of
three
leading
South
African
competition
economists
by
the
International
Who’s Who of Competition Lawyers and Economists
Communications
• Total
staff
complement
including
graduate trainees: 163
• Graduate trainees: 14
• 6
graduate
trainees
from
2009/2010
were employed in junior positions
• Additional
human
resource
capacity
required going forward
• Revised
organisational
structure
to
be
submitted to the EDD
• 112
learning
and
development
interventions
• Management development programmes
attended by 12 senior staff members
Year % Females % Males
2008/09 45% 55%
2009/10 47.2% 52.2%
2010/2011 52% 48%
Human resources
Employment equity (gender)
IT and knowledge management
• IT replaced 80 laptops and 40 computers which were irreparable or
had expired useful lives
• Continued focus on growing a knowledge management technologies
to assist performance and increase productivity
• Knowledge
management
system
designed
to
integrate
with
case
management system
• Case management system and share point server were revamped
• Enables case management by tracking the workflow of all cases
• Improved collaboration, accessibility and reporting
• Change management, inductions, training and ongoing support
Financial performance review
REVENUE 2011 (R’000) 2010 (R'000)
Government grant 117,661 80,739 Fee income 37,955 30,380 Other income 5,831 186 Interest received 1,423 1,987 Total revenue 162,870 113,292
EXPENDITURE 2011 (R’000) 2010 (R'000)
Personnel 82,496 71,557 Administrative expenses 3,303 3,263 Depreciation and amortisation 2,886 2,431 Finance costs 155 228 Operating Expenses 52,193 51,194 Loss on disposal of assets and foreign
exchange 71 ‐Total expenditure 141,104 128,673 Surplus / (Deficit) 21,766 (15,381)
Expenditure for 2010/2011
Corporate governance
• Meetings– 40 Commission and 17 Exco– 3 case management– 3 Mancom– 5 audit committee
• No material breakdown in the functioning of internal financial controls and systems
• Compliance with legislation:– Quarterly reports, monthly expenditure reports, strategic and business plans– Annual training report and workplace skills plan– Contribution to skills levy fund was R646 196
• Unqualified audit opinion ‐
6th
successive year
• No findings on performance information
• AG’s
emphasis
of
matter
on
procurement
and
contract
management
practices
(legal counsel expenses)
Risk management
• Inaugural meeting of Risk Committee
• Top 5 risks identified by the Commission:
– Unmanageable caseload
– Reputation harm
– Independence undermined
– Under/over spending and mismanagement of funds
– Adverse decisions from courts on powers and procedures
