Collusive tendering and price fixing will land you in jail for 10 years

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Provisions in new laws that will see people found guilty of cartel conduct being fined up to R500 000 or imprisoned for up to 10 years came into effect on June 9, 2016.

This was revealed in a written response in Parliament on Tuesday, after Democratic Alliance MP Michael Cardo asked Economic Development Minister Ebrahim Patel when this provision under the new Competition Act would take effect.

Patel said the implementation of “Section 13 of the Competition Amendment Act, 2009 (Act No1 of 2009) came into effect on the publication of the Proclamation in the Government Gazette on 9 June 2016”.

That means those guilty of market allocation, collusive tendering and price fixing between competitors could get face severe penalties or jail time.

However, Maphanga Maseko, associate in competition law at TGR Attorneys said in May that by individualising criminal sanctions, the act – which came into effect on May 1 without the above provisions – appears to be a duplication of enforcement and borders on redundancy.

“We believe the Prevention and Combating of Corrupt Activities Act may provide for better remedies against cartel conduct as it imposes harsher sanctions and penalties,” he said.

The Prevention and Combating of Corrupt Activities Act appears to treat collusive tendering as corruption and provides for sentences ranging from five years to life imprisonment, depending on the court that presides over the prosecution, he said.

“In addition, a court can make an order that the person or company found guilty of corruption be blacklisted by the National Treasury and thus be prevented from doing business with the state and/or that the current contracts with the state be terminated,” said Maseko.

“National Treasury can blacklist the guilty director, manager or company concerned for a period of up to 10 years,” he said.

Maseko said the amendment could scupper the effectiveness of the Corporate Leniency Policy (CLP), which is the cornerstone of competition policy and assists the Competition Commission to uncover cartel conduct that would otherwise have gone unnoticed.

The CLP encourages businesses involved in cartel activity to come clean about such conduct and exposes those other companies involved.

A company is given immunity from prosecution in exchange for giving information and/or evidence of the cartel to the Competition Commission. The evidence is used to prosecute the other businesses involved in the cartel, he said.

“The CLP has been an overwhelming success and has led to a number of cartels being uncovered and billions of rand in fines being paid by the guilty companies. Regrettably, the effect of the amendment may undermine the success of the CLP as it may lead to the managers or the directors concerned not informing their employers of their involvement in the cartel for fear of criminal liability. This could result in less cartels being uncovered or going underground,” he said.

“It seems the amendment may make the tasks of uncovering cartels much harder in the future,” said Maseko.

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