SA could see crackdown on cartel conduct - expert

The possibility of harsher punishment for cartel conduct should not be ignored in SA, according to Ahmore Burger-Smidt, a director at Werksmans Attorneys.

Amendments to the Competition Act came into effect on 1 May 2016.

The amendments introduced criminal liability for directors and individuals with "management authority" who are responsible for – or knowingly acquiesce – in cartel conduct.

Meanwhile, other countries are also pursuing harsher sanctions for cartel conduct, Burger-Smidt points out. These factors, she believes, merit attention.

Cartel conduct involves businesses acting together instead of competing against each other, while maintaining the illusion of competition, in an effort to increase profits. It includes the fixing of prices and trading conditions, market division, and collusive tendering.

Staff members at all levels in the management chain - not only directors - are potentially at risk of prosecution in terms of these provisions.

Burger-Smidt notes that in July two former traders - Philippe Moryous and Christian Bittar - were found guilty of plotting to rig a key interest rate benchmark and were sentenced by a London criminal court to more than 13 years in prison.

The sentences followed a trial that lasted over 11 weeks. The trial involved five people accused of conspiring to manipulate the Euribor rate between 2005 and 2009 to benefit the positions of traders at their banks.

For Burger-Smidt, the clearest indication that the South African Competition Commission is seriously considering pursuing criminal prosecutions going forward, lies in a statement by Commissioner Tembinkosi Bonakele in June this year that guilty parties who do not show remorse "must be considered for criminal prosecution".

This followed confirmation by the Competition Tribunal of a consent agreement between the Competition Commission and three vessel owners who ferry passengers between Robben Island Museum and the V&A Waterfront in Cape Town. The companies admitted to charges of price fixing and collusive tendering.

"Robben Island is an iconic site that represents the saddest and richest history of this country dating back centuries...The actions of these vessel owners exhibited disdain for this country’s history and utter disrespect for the people.

"Those who show neither remorse nor shame must be considered for criminal prosecution," said Bonakele.
 
Burger-Smidt believes SA businesses could face a crackdown, and should be proactive in avoiding harsh disciplinary actio. Companies should, first and foremost, help employees prevent contraventions, she argues.

"This risk definitely should not be ignored in South Africa.

"Proactive compliance initiatives and empowering employees with the necessary know-how to prevent competition law contraventions are important, and should definitely not be ignored," she said.

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