The victims of collusion

2011-02-12 11:54

Labour and consumers are ­unhappy. The money ­generated by competition authorities will go to the state instead of members of the public, who are the direct victims of anti-competitive behaviour.

Their concerns come after the Competition Commission announced a probe into construction companies suspected of tender collusion on projects linked to the World Cup stadiums and the ­Gautrain.

After the commission fines ­companies that were involved in collusion, the funds are channelled to the Treasury’s National Revenue Fund.

Sidumo Dlamini, the president of labour federation Cosatu, demanded that there should be more transparency on how the funds were being used.

“The only thing the public hears is that companies have been fined a certain amount of money and that is the end of the story,” he said.

“The public doesn’t know where those funds really end up.”

He suggested that the government needed to come up with transparent statements of account showing how the money was being used.

“This would help to ensure that the money that companies steal from consumers is returned to them because they suffer the most from collusion,” he said.

National Consumer Forum chairperson Thami Bolani said the group was also discontented.

“Since the victims of these practices are consumers, a part of the fines should go directly to consumer organisations so that we can ­afford to institute a class action against the perpetrators,” said Bolani.

If consumer bodies win the class action, they will then determine the means by which to channel those funds to consumers directly.

“Two years ago we made a ­request to government that a ­certain portion of the fines should go to the consumers, but we didn’t get positive feedback.

“It’s not fair for all the money to go to the state while the victims are the consumers,” he said.

Black Sash advocacy ­programme manager Nkosikhulule Nyembezi said the money should rather be allocated to ­poverty alleviation programmes.

“This is because the impact of collusion on prices of basic foodstuff undermines social poverty ­alleviation programmes and the poor,” said Nyembezi.

“The prices of foodstuff should also be decreased as the perpetrators have already conceded that they artificially increased the ­prices and the consumers are ­paying more,” he said.

Andile Nikani, a competition lawyer at Fluxmans Attorneys, said the law had to be amended to allow the commission to design ­innovative means of distributing the funds raised by means of fines to members of the public.

“And judging by the manner in which the fine was imposed on ­Pioneer Foods, it is possible for the commission to distribute the fines in a more meaningful way that could benefit members of the ­public,” said Nikani.

The commission imposed a R500 million fine on Pioneer Foods last year for being involved in a bread cartel.

From the penalty, R150 million was supposed to be allocated to product price reductions in the Western Cape. This made the ­penalty unique and consumers benefited directly.

“At present, however, affected members of the public would have to rely on the civil process established under the Competition Act, which entitles them to sue for ­damages in the High Court,” said Nikani.

Oupa Bodibe, the spokesperson for the Competition Commission, said the parastatal held no view on how the fines could be channelled to benefit consumers directly.

Deneys Reitz director Heather Irvine says the public benefited indirectly from the penalties through the government’s service delivery.

“There is no doubt the public is encouraged by seeing offenders getting punished,” she said.

However, consumers received no direct compensation.

“The only way for consumers to claim compensation is through a class action, but such litigation is incredibly costly as it takes time to finalise,” said Irvine.

She said the competition law should be reviewed to make it cheaper for the less fortunate to ­embark on a class action against guilty companies.

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