competition tribunal integrated...

COMPETITION TRIBUNAL INTEGRATED REPORT

2014 / 2015

Presented by

NORMAN MANOIM

Tribunal Chairperson

LERATO MOTAUNG

Registrar

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Contents

• Case review

• Performance information

• Highlights

• Financial overview

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CASE REVIEW

Case review: highlights

• Mergers - New Approach to Public Interest

• Cartel – Furniture Industry

• Excessive Pricing- Sasol Polymer

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Case review: mergers

0%10%20%30%40%50%60%70%80%90%

100%

2013/2014Approved

2014/2015Approved

0%10%20%30%40%50%60%70%80%90%

100%

2013/2014Approved

withconditions

2014/2015Approved

withconditions

84.54%

75.00%

15.46%

25.00%

2013/2014 Total number of Mergers decided

2014/2015 Total number of Mergers decided

97

102

Approved mergers decided Approved with conditions mergers decided

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• In November Lewis Stores acquired 63 stores from Ellerine’s Beares division

• We expedited the take-over hearing because of the job losses anticipated

• It was the first case to come under business-rescue provisions of new Companies Act

• Imposed a condition preventing Lewis from retrenching any employees from viable stores and ordering Lewis to invite affected employees to apply for new positions

• Merger saved 339 jobs and created 126 new jobs

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• BB Investment Company / Adcock Ingram merger

• Why changes in employment policy may be merger specific

• What is proper consultation with labour?

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• Tribunal found that: • the distinction between merger specific

retrenchments and operational retrenchments was blurred in this case

• there had been no proper consultation with employees on whether retrenchments were merger related or not

• Tribunal approved the BB Investment Company / Adcock Ingram merger with a one year ban on all retrenchments

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Case review: prohibited practices

4

1

2

1

43

42

2014/2015

2013/2014

3

1

2

1

0

0

2014/2015

2013/2014

Orders Issued

Consent Orders Complaints from the Commission Complaint from the complainant

Reasons Issued

Consent Orders Complaints from the Commission Complaint from the complainant

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Case review: consent orders

• The furniture removal cartel is the largest cartel uncovered in terms of number of respondents and geographical scope

• Commission alleges more than 40 furniture removal companies involved in rigging 3 500 relocation tenders between 2007 and 2012

• Customers of colluding furniture removal companies included Eskom, SANDF, SAPS and PPC

• Tribunal confirmed 13 furniture removal settlements this year with penalties ranging from R39 260.00 to

R4 273 060.00

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Case review: complaints

Sasol Polymers

• In June the Tribunal imposed a R534 million penalty on Sasol Chemical Industries (SCI), a Sasol subsidiary, for charging excessive prices for purified propylene and polypropylene

• Both products are used in the manufacture of plastic

• The Competition Appeal Court has since overturned the Tribunal’s decision but this is being appealed to the Constitutional Court

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Case review: complaints

Sasol Polymers

• Competition Commission approach

• Competition Tribunal approach

• Competition Appeal Court approach

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PERFORMANCE INFORMATION

Highlights

• We heard 180 cases this year and decided 175

• Large mergers and consent orders made up 80.6% of cases decided

• We prevented 3 803 job losses in past 15 years

• We approved 8 large mergers with employment conditions this year

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Highlights

• Tribunal confirmed 43 settlement agreements this year, up from 42 last year

• Approved 84 mergers up from 82 last year

• Total administrative penalties levied was R725 million

• Fourth full-time Tribunal member appointed

• We achieved or exceeded 12 of our 18 performance targets

• We spent 91.38% of our budget

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Performance information

16

1

6

11 Number ofperformance

indicators

Strategic Focus Area

Tribunal hearings and decisions Stakeholder Awareness Operational Effectiveness

Total

18

0

3

3 Number of targetspartially achieved



Total

6

1

3

8 Number of targetsachieved orexceeded



Total

12

Tribunal hearings and decisions

17

3 of 11 Targets not

achieved


18

56%

Intermediate Mergers

0%


The percentage of reasons for

decisions issued within 20 days.

The percentage achieved- reasons only

issued in one matter (Oceana Group and FoodCorp) and they were issued 16 days out of time due to panel workload.

Target Performance

19

90%

Opposed prohibited practices-90% of

pre-hearing invitations to be

sent to parties with 20 business days.

The percentage achieved- 5

invitations and 1 issued 3 days out of

time due to administration error.

Target Performance

80%

*Target removed in 2015/2016

Intermediate Mergers Intermediate Mergers


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80%

Opposed prohibited practices-80% of decisions to be

issued within 100 business days of

hearing date.

The percentage achieved- 6 were out of time (Sasol out by 57 days and Buchanan out by 13). Delays arise

because of the complexity of issues to be decided,

length of record and panel workload

Target Performance

67%

*Target amended in 2015/2016 To vary with complexity of the matter




Stakeholder Awareness

21

3 of 6 Targets not

achieved


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97%

Opposed prohibited

practices-97% to be posted on

Tribunal website within 24 hours.

The percentage achieved- 14 of 120

decisions posted out of time. Delay was due to

website being upgraded and

confidentiality claims by parties.

Target Performance

88%

*Target amended in 2015/2016 to refer to non confidential version of reasons.




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100%

Government gazette-percentage of merger decisions

issued within 20 days of final

decision.

The percentage achieved- 7 of 111 decisions sent late

due to admin error.

Target Performance

94%

*Target excluded in 2015/2016.



FINANCIAL OVERVIEW

Financial overview

• Tribunal received an unqualified audit

• No material findings on the annual performance report concerning the usefulness and reliability of the performance information

• Fruitless, wasteful and irregular expenditure

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Financial overview

• Fruitless and wasteful expenditure - penalties of R10 138.42 paid to SARS pertaining to a voluntary disclosure process in the 2011/2012 year. Disclosure related to incorrect application of perks tax.

• Irregular expenditure for project management of CMS development over 3 years (R476 805.00)

• Irregular expenditure for procurement of furniture in the 2014/2015 (R208 630.74)

• Condonation from National Treasury sought for both

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Financial overview

88.10% Percentage of Budget spent

2012/2013

Total Budget: R31.11 million Total expenditure: R27.47 million


2013/2014



2014/2015


Exceeded Not spent Spent

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Financial overview

Expenditure category

2014/2015 2013/2014

R’m % R’m %

Personnel 19 095 57.69 16 170 49.76

Compliance costs 1 739 5.26 1 797 5.53

Administrative expenses

3 007 9.08 3 436 10.56

Travel and subsistence

412 1.24 638 1.96

Unitary payments to dti

1 759 5.31 1 652 5.08

Professional services

2 411 7.28 3 859 11.87

Staff training 1 337 4.04 1 427 4.39

Fees to part-time members

3 342 10.10 3 526 10.85

Total 33 102 100 32 495 100

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Follow up on prior issues

•Tribunal member vacancies

•Office space

•Funding requirements

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Tribunal member vacancy

•Two PT vacancies since August 2014

•No Deputy Chairperson since February 2012

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Office Space

• Physical

• Financial

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Funding requirement

• No extra funding required for 2016/2017

• EDD/NT in recent allocated awarded us with additional R8.92 m for 2017/2018 AND

• Additional R12.74 m required for 2018/2019

• R37.84 m for 2019/2020 – no budget allocation communicated as yet

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Top Corporate Publication

• Received first prize for our 2013/2014 Annual Report in the SA Publication Forum’s Corporate Publication Competition in October 2015

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• Cover and pages of winning annual report

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Conclusion

• Thank you

• Questions

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