our purpose and function - compcom sa€¦ · i the commission currently has six divisions that are...

The Competition Commission of South Africa was

established in terms of the Competition Act (89 of

1998), as amended (the Act). Its purpose is to promote

and maintain competition in South Africa in order to:

• promotetheefficiency,adaptabilityanddevelopmentoftheeconomy

• provideconsumerswithcompetitivepricesandproductchoices

• promoteemploymentandadvancethesocialandeconomic welfare of South Africans

• expandopportunitiesforSouthAfricanparticipationin world markets and recognise the role of foreign competition in the Republic

• ensurethatsmallandmediumsizedenterpriseshaveanequitableopportunitytoparticipateintheeconomy

• promoteagreaterspreadofownership,inparticulartoincreasetheownershipstakesofhistoricallydisadvantagedpersons.

Toachievethesepurposes,theCommission’scorefunctions are to:

• implementmeasurestoincreasemarkettransparency• implementmeasurestodeveloppublicawarenessoftheprovisionsoftheAct

• investigateandevaluateallegedanti-competitiveconduct

•grantorrefuseapplicationsforexemptionfromtheapplication of the Act

• authorise,withorwithoutconditions,prohibitorrefermergersofwhichitreceivesnotice

• negotiateandconcludeconsentorders• refermatterstotheCompetitionTribunalofSouthAfrica

(the Tribunal), and appear before the Tribunal when required

• negotiateagreementswithanyregulatoryauthoritytocoordinateandharmonisetheexerciseofjurisdictionovercompetitionmatterswithintherelevantindustryorsector and to ensure the consistent application of the principles of the Act

• participateintheproceedingsofanyregulatoryauthority

• advise,andreceiveadvicefrom,anyregulatoryauthority

• overtime,reviewlegislationandpublicregulations,andreporttotheMinisterconcerninganyprovisionthatpermitsuncompetitivebehaviour

• dealwithanyothermatterreferredtoitbytheTribunal.

Our Purpose and Function

i

TheCommissioncurrentlyhassixdivisionsthatareresponsiblefortheday-to-dayimplementationofitsstrategicprioritiesandplans.TheCommissioner

andtheDeputyCommissionerprovideoverallguidancetotheorganisation.

Nandi Mokoena*Manager:Strategyand Stakeholder Relations

Simon RobertsChief Economist and Manager: PolicyandResearch

Keith WeeksManager: Enforcement and Exemptions

Wendy MkwananziChief Legal Counsel and Manager: Legal Services

Maarten van HovenManager: Mergers and Acquisitions

Nellie PillayChief Financial OfficerandManager: CorporateServices

Johan DreyerCompanySecretary

Executive Committee

Shan RamburuthCommissioner

Tembinkosi BonakeleDeputyCommissioner

Notes:*ResignedinFebruary2010andwasreplacedbyOupaBodibe.

ii

Aspen Pharmacare Holdings Limited (Aspen)

BusinessUnitySouthAfrica(BUSA)

Cape Town Iron and Steel Works (Cisco)

ConfederationofSouthAfricaTradeUnions(COSATU)

executivecommittee(Exco)

FederationofUnionsofSouthAfrica(FEDUSA)

Franchise Association of Southern Africa (FASA)

GlaxoSmithKlineSouthAfrica(Pty)Limited(GSK)

highdensitypolyethylene(HDPE)

IndependentCommunicationAuthorityofSouthAfrica(ICASA)

International Competition Network (ICN)

InternationalDevelopmentResearchCentre(IDRC)

NationalEconomicDevelopmentandLabourCouncil(NEDLAC)

NationalUnionofMetalworkersofSouthAfrica(NUMSA)

OrganisationforEconomicCooperationandDevelopment(OECD)

Pay-as-you-earn(PAYE)

polyvinylchloride(PVC)

SouthAfricanDevelopmentCommunity(SADC)

South African Iron and Steel Institute (SAISI)

SouthAfricanLocalGovernmentAssociation(SALGA)

SouthernAfricanBitumenAssociation(SABITA)

SouthernAfricanCustomsUnion(SACU)

Southern and Eastern African Competition Forum (SEACF)

UnitedNationsConferenceonTradeandDevelopment’s(UNCTAD)

Acronyms and Abbreviations

Commissioner’s Overview 2

Part 1: Prioritisation and Impact 4

Part 2: Reports from the Divisions 12

Enforcement and Exemptions 13

Mergers and Acquisitions 17

Legal Services 20

Policy and Research 24

Strategy and Stakeholder Relations 27

Our People and Resources 33

Part 3: Governance 36

Part 4: Financial Statements 40

Part 5: Performance against Targets 78

Table of Contents

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2

Enforcement for impactThe annual report for the 2009/10 financial year records the activities

that took the Competition Commission to its first decade of existence.

Indeed,theCommission’stenthanniversaryisasignificantmilestoneinthe

trajectoryofsteadygrowththatthecompetitionauthoritieshaveenjoyed.

This milestone was celebrated at the third annual competition conference,

heldinearlySeptember2009.Theconferencewasofwiderscopethanin

previousyearsandhosteddelegatesfromabroadbaseofinterestgroups.

These included: competition authorities from across the globe, including

from Africa; scholars and academics; government departments; legal

practitioners and other professionals; and former staff members of the

Commission. Itwasanappropriatetimetopaytributetotheworkof the

foundersofthecompetitionauthorities,whoprovidedthesolidfoundation

from which it has been able to grow.

TheCompetitionCommission is clearly continuingon itsgrowthpath. It

is a highly respected institution locally and internationally, responding

effectivelytothechallengesofthelocalandinternationalenvironment.

The Commission’s three-year strategies are carefully devised to give

direction and vision to the organisation’s activities, and to use its

resources intelligently. The 2006-2009 strategicplan,which hadguided

theCommission througha significantgrowthphase, came toanend in

the year under review. A key measure of a resilient organisation is its

abilitytodealwithchangeand,inthedynamicandchallengingbusiness

environmentover thepast fewyears, theCommissionhasshown that it

is more than able to do this. The importance of the strategic plan was to

ensureamoreproactiveapproachtoourworkandaconsciouseffortto

introduce,manageandsteerchange.Webeginthenextyearwithanother

mediumtermstrategicframework.Keyprioritiesidentifiedinthestrategic

plan include prioritisation for impact, increased stakeholder engagements

andbuildingahighperformancecompetitionauthority.

TheCommissioncontinueditsfocusonproactiveenforcementworkwitha

focusoncartelbehaviourintheidentifiedprioritysectors.Tomanagethis

moreeffectively,weare in theprocessofsettingupadedicatedcartels

unit.Wereceived79applicationsforleniencyintermsoftheCommission’s

corporateleniencypolicyintheyearunderreview,asubstantialincrease

fromthe13applicationsinthepreviousyear.Significantly,mostofthese

applications (53) are in the infrastructure and construction market,

suggestingsignificantcartelbehaviourinthisbroadsector.Theincrease

alsoshowsthatfirmsarebecomingmoreawareofcompetitionlawandof

thefactthattheCompetitionCommissionhasteeth,andtheyareusingthe

leniencyprocesstovoluntarilycomplywiththelaw.

TheCommissionhasbeenveryactiveinitsprioritysectors.(infrastructure

and construction, food and agro-processing, intermediate industrial

products and financial services). This is evident in its completing its

prosecutions with all members of the bread cartel. Pioneer Foods, the

lastmemberof thecartel,wasfinedaheftyR195million, theequivalent

of10percentof thebreaddivision’s turnover for2006.TheCommission

alsoreachedasettlementwithSasolforitscollusiveconductinrelationto

fertiliserproducts,inwhichSasolagreedtopayR250millionforitsrolein

thefertilisercartel.Investigationsintoothermembersofthecartelarestill

ongoing. In the intermediate industrial products sector, the Commission

uncoveredcartelsinvariousmarketsforsteelproductsandreferredfour

cartelcasestotheTribunal.Thereferralsinvolvesomeofthemajorplayers

in the steel industry such as Arcelor Mittal and Aveng. In the financial

servicessector,theCommission’sworkcontinuedtofocusonimplementing

Commissioner’sOverview

3

therecommendationsoftheBankingEnquiry.TheCommissionhasbeen

workingwithNationalTreasury, theSouthAfricanReserveBankand the

Department of Trade and Industry to take the Banking Enquiry panel’s

recommendations forward, with themajor banks agreeing to implement

19ofthe28recommendations.This isasignificantsteptowardsamore

transparent andpro-competitivebanking system thatwill operate to the

benefitoftheconsumer.

Measuring the impact of our activities on consumers and the economy

requires theCommission to increase its engagementswithgovernment,

stakeholdersandpolicymakerstoinfluenceeconomicpolicyanddecision

making that will be consistent with the principles of pro-competitive

practices. Increased engagement with government includes our bid-

riggingseminars,thepublicsectorconsultativeforumandourinvolvement

withNationalTreasuryintheBankingEnquiryoverthepastthreeyears.

An increase in themerger threshold for intermediate and large notified

mergers,combinedwithaweakeconomicenvironmentresultedinadrop

inthenumberofnotifiedmergers(190intheyearunderreviewcompared

to415inthepreviousyear).TheCommissionalsowitnessedanincrease

in the number of notifications affecting firms in financial distress.While

job losses are an inevitable part ofmerger activity, where possible, the

Commission has tried to mitigate the effects by approving mergers on

conditionthatmechanismsareimplementedtominimisetheimpactofjob

losses.Inparticular,theCommissioncalledonmergingpartiestoinvestin

thetrainingandskillsdevelopmentofaffectedemployeestoenablethem

toaccessotherjobs.

In termsofour international focus,wehavebecomemore involvedwith

competition authorities from the African continent. An example is our

participationwiththeZambianandEgyptiancompetitionauthoritiesinthe

JointFoodProject,which isexamininganticompetitivepractices in food

products. Our work with other competition authorities in forming a joint

competitionforumforAfricanauthoritieswillprovideaplatformforsharing

experiencesandstrengtheningourcapacity.

Becoming a high performance competition authority requires good

governanceandstrongleadershipwithintheorganisation.TheCommission

identifieditsmiddlemanagersasakeytierofmanagementinthecontextof

severeresourceconstraints.Anumberofinitiativestodevelopthecapacity

of middle management were undertaken. In order for the organisation

to continue to be effective, particularly in the face of thegrowing scale

andcomplexityofenforcement, investigationsandprosecution,ourstaff

numbersaresettogrowoverthenextfewyears.

Recognising that people are our greatest asset, we value all our staff

membersandtheimportanceofgoodstaffmorale.Wehavebenchmarked

our working conditions and salaries with our peers in the public sector and

arepleasedtonotethatthestaffturnoverhasstabilisedcomparedtoother

years.Onthisnote,Iwouldliketothankallstaffandourstakeholdersfor

allthatyouhavedonethisyeartoensurethattheCommissioncontinuesto

achieveitsgoaltowardsafairandefficienteconomyofallSouthAfricans.I

wouldalsoliketothanktheDeputyCommissionerandmyExcocolleagues

forhelpingtosteerthisshipinthelastyear.Yourcollectivewisdomiswhat

keeps us sane in troubling times.

TheCommissioncontinuestobenefitfromgovernment’sfinancialsupport

toexecuteitsmandate.However,resourcesarelimitedandtheworkload

has increased substantially. The mismatch between resources and the

demandplaced on theCommission resulted in a deficit in the financial

year. This would have been bigger were it not for the financial support

receivedfromtheMinistryofEconomicDevelopment.

TheCommissionwillnowreporttotheMinisterofEconomicDevelopment.

We look forward to working with the Minister and new colleagues. We thank

theMinister of Tradeand Industry andcolleagues in theDepartment of

TradeandIndustryfortheirsupportandcollaborationoverthepastyears.

The Commissioner’s officeFront row: Sesule Mojapelo, Mittah Sibanyoni, Innocent Tau, Tembinkosi BonakeleBack row: Hardin Ratshisusu, Shan Ramburuth, Leonard Morapedi, Malefyane Mogale, Anisa Kessery

Prioritisation and Impact

Part 1

How the Commission prioritises its workThewaytheCommissionprioritisesitsworkisbasedonthreemaincriteria:thepotentialandactualimpact

ofanticompetitiveconducton low incomeconsumers, thealignmentof theCommission’sactivitieswith

government’seconomicpolicy,and,whetherthereisthelikelihoodofanticompetitiveconduct.Thismeans

thatlikelycartels,whichareaper secontraventionoftheAct,arealmostalwaysaprioritywheninformation

suggeststhattheymaybeinoperation.

Intheyearunderreview,majorprogresshasbeenmadeasaresultoftheCommission’ssustainedfocus

on itspriorities.TheCommissionhasreferredmorecases thaneverbefore,with themajority relating to

collusion,whilesomerelatetocontraventionsofarangeofsectionsoftheAct(seefigure1).Inaddition,the

totalamountofpenaltiesconfirmedordeterminedbytheTribunalintheyearunderreviewishigherthanin

anypreviousyear,atclosetoR500million.

Fromtheprioritisationframework,theCommissionidentifiedfourbroadsectorsinwhichitwouldundertake

proactiveanalysisofpossiblecompetitionrelatedproblems.Theseare:food,agro-processingandforestry;

25

20

15

10

0

5

30

1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10

9(1)

8(c)

8(a)5(1)

4(1) (a)

8(d)

8(b)

5(2)4(1)(b)

Number of cases

Source: Competition Commission

Figure 1: Referral of complaints to the Tribunal for adjudication against the corresponding sections of the Act

5

6

infrastructureandconstruction;intermediateindustrialproducts;andfinancial

services (banking). The Commission has also done considerable work in

areas such as telecommunications and healthcare in response to complaints

brought to it. And, as amatter of course, theCommission investigates all

complaintslodgedwithitandanalysesallmergersthatarenotified.

In termsof sector, staple foodshaveproved tobeamajor focus forall

the criteria, while the infrastructure and construction sector is important

becauseofboththeimportanceingovernment’seconomicdevelopment

strategy and the likelihood of cartels. The Commission’s investigations

intoanticompetitiveconductinthefoodsectorcontinue,withmajorcases

comingbeforetheCompetitionTribunalin2009/10.Thesearementioned

undertherelevantsectorsbelow.TheCommissionisalsolookingatother

ways of ensuring competitive outcomes, one of which is assessing the

implications of competitors exchanging information,whichmay result in

coordinated outcomes which limit competition.

Thehardworkovertheyearsisbearingfruit.Forexample,initialresearch

carriedouttoidentifyareaswheretherearepossiblecompetitionproblems

intheconstructionsectorhasledtoseveralverylargeinvestigationsbeing

initiated and, in the year under review, to a rush of corporate leniency

applications, most of which are linked to bid-rigging of construction

tenders.Overtheperiod,therewere79applicationsforcorporateleniency,

compared to 13 in theprevious year.Applicationsoblige firms to admit

tohavingcontravened the lawprohibitingcollusionand toproviding the

Commission with information that enables it to prosecute the remaining

cartel members.

The importance of following through on cases is a key element in

maximising the impact of competition enforcement. This also relates to

theCommission’s aim toengagemorewithotherpublic institutionsand

governmentasawholetoimprovethealignmentbetweentheworkofthe

Commissionandotherinstitutions,suchasregulatorybodies.

Prioritysectors

Food, agro-processing and forestry

MuchoftheCommission’sworkinthissectorhasbeenwithstaplefoods,

which includemealiemeal, breadand flour, dairy, poultry, and fats and

oils (cooking oil and margarine). The pricing of these products impacts

particularlyonlowincomeconsumers.

The Commission’s investigations into cartel conduct in wheat flour and

mealiemealwerereferredtotheTribunalduringtheyear.Theinvestigations

focused on possible collusion among the main milling companies after

thebreadcartelwasexposed,andwiththebenefitofthecooperationof

PremierFoodsandTigerBrands.Bothhadcomeforwardinexchangefor

conditional leniency, meaning that no penalty would be sought against

them.

The Commission is continuing to look at all kinds of problematic conduct in

thesectorthatmayleadtoanticompetitiveoutcomes,whichmayinclude

theunderminingofnewentrantsandcompetitorsexchanginginformation.

This is based on the premise that competitive outcomes are about the

abilityoffirmstoparticipateeffectively,includingaccessingcompetitively

priced inputs.

The bread cartelInFebruary2010,theTribunalhandeddownitsdecisioninwhichitfound

theremainingmemberof thebreadcartel,PioneerFoods(Pty)Ltd,had

contravened section 4(1) (b) of the Act, which refers to cartel related

conduct. Pioneer Foods had denied contravening the Act. The Tribunal

imposedarecordbreakingpenaltyof10percent (themaximumpenalty

thattheActallowsinpercentageterms)oftheturnoverofSasko,Pioneer’s

bread division, in relation to one of the complaints. Despite this, the

Commission has appealed this decision as it concluded that the Tribunal

misconstrued its powers when determining that the penalty should be

based only on the firm’s turnover from the bread division. The penalty

it imposedwas therefore not a sufficient deterrent and theCommission

contendsthat itshouldratherbebasedonthefirm’swiderturnover.The

appeal is pending before the Competition Appeal Court and will be heard

inSeptember2010.

Themillingcartel:wheatflourandmealiemealAninvestigationintoanticompetitivebehaviourinthemillingindustrystarted

in2007,followingadisclosurebyPremierFoodsduringthebreadcartel

investigationthatthecartel,whichinvolvedlargelythesamecompanies,

wasalsoactiveinrelationtomillingoperations.

During the investigations, theCommission found thatseveralwheatand

maizemillershadbeendiscussingpricing,hadagreedonpriceincreases

and their timing, and had allocated markets to each other. Employees

andrepresentativesofthefirmsdidthisthroughthetelephoneandsecret

7

meetings held at different venues

such as churches, stadia and

hotels.

Theinvestigationsledtotwocases

relating to wheat flour andmealie

meal (milled white maize) being

referredtotheTribunal.forcollusive

practices. The Commission has

asked the Tribunal to impose an

administrativepenaltyof10percent

of annual turnover for 2009/10

on each of the firms involved.

This would not apply to Premier

Foods and Tiger Brands, which

weregrantedconditional immunity fromprosecutionby theCommission

providedthattheyfullycooperateintheCommission’sinvestigationsand

prosecutionofthecase.KeystoneMillingwasoneofthefirstrespondents

inthewhitemaizemillingcarteltosettlewiththeCommissionandwillpay

afineofR6.7million.

Other firms involved are currently negotiating settlements with the

Commission.TheCommission iscontinuing to investigateotherkindsof

anticompetitiveconduct, including theexchangeof informationbetween

competingfirms,andpossiblecollusiveconductbyfirmsdealinginanimal

feedforwhichmilledmaizeisanimportantinput.

FertiliserThefertiliserindustryhasbeenaconcernoftheCommissionforanumber

of years, with two complaints relating to collusive behaviour by firms

referredtotheTribunalinApril2005andMay2006.

Fertiliseristhesinglelargestcostinagriculturalproductionandtherehave

been indications of extensive anticompetitive conduct overmany years.

Long-runninginvestigationsbytheCommissionledtosomeofthecases

coming close to being finalised in 2009/10. It concluded a settlement

agreement with Sasol Chemical Industries Limited on behalf of its operating

division in the nitrogenous fertiliser market, Sasol Nitro. In terms of the

agreement,Sasoladmittedtoitscollusiveconductintwoseparatematters

involvingnitrogenousfertiliserproductsandphosphoricacidandagreed

topayapenaltyofR250.7million.Thiswasthehighestamounteveragreed

between the Commission and a respondent.

In relation to the alleged cartel in nitrogenous fertiliser products, two

respondents, Omnia Fertilizer and Yara South Africa (Pty) Ltd, are still

defending the case. There are also remaining abuse of dominance charges

againstSasol forexcessivepricingandexclusionaryconduct,whichare

duetobeheardlaterin2010.

Box 1: The Joint Food Project

In 2009, the Competition Commission joined forces with the Egyptian

Competition Authority and the Zambian Competition Commission in

a project that aims to evaluate competition issues in the production,

supply and pricing of staple food products through collaboration and

informationsharingworkshops.TheprojectisfundedbytheInternational

DevelopmentResearchCentre(IDRC).Ithasbeenorganisedintothree

phases:

• phaseone:initiatingtheprojectandbuildingtheteamcapacityineach

competitionagency

• phasetwo:collatingtheavailableinformationandanalysisrelatedto

foodpricesineachcountryleadingtothecompilationofanoverview

report

• phasethree:examiningcloselycompetitionissuesinaselectedsetof

markets.

South Africa and Zambia carried out studies to examine the factors

affecting the fertiliser and maize milling sector, and South Africa and

Egypt lookedat theedibleoilsector.Egyptalsoexaminedcompetition

issues relating to food supply in the informal sector. These studies

highlightedtheimportanceofpractitionershavingadeepunderstanding

ofmarketdynamics,andthewaysinwhichproductsareproducedand

sold. Theproject hasalso identified theneed forgreater collaboration

between competition authorities in the southern African region to deal

more effectively with anticompetitive conduct by companies operating

across the region.

Infrastructure and construction

TheCommission’sworkintocollusionintheinfrastructureandconstruction

sector is intwomainareas:first,theCommissionhasidentifiedthewide

range of products used in infrastructure that it needs to monitor; and

second,itislookingintocollusivebid-riggingbyconstructioncompanies

on a contract-by-contract basis. Anticompetitive conduct in both areas

increasesthecostsofinvestmentinnewandimprovedinfrastructure.Itis

clear that collusion has been endemic in this broad sector for some time.

8

Inrelationtoproducts,therehavebeenanumberofreferralsandsettlements

in cast concrete products, plastic pipes, bitumen and reinforcing steel. In

addition, investigations into the cement, bricks and pilingsmarkets are

ongoing.

Intermsofbid-rigging,theincreasedawarenessoftheCommission’swork

in thesectorappears tohavepersuadedseveralcompanies toproperly

addresstheirownconductandtofileapplicationsforleniencywherethey

have identifiedcontraventions. TheCommission is allocating substantial

resources to investigating all forms of anticompetitive conduct that are

beingidentified,aswellaspursuingwiderinvestigationsinareasalready

recognised as problematic.

In the year under review, the Commissioner initiated five complaints in

this sector.Of the 79 corporate leniency applications received over the

year, around two-thirds were in construction alone (see figure 2 in the

EnforcementandExemptionssection).TheCommissionconcludedthree

consent agreements with respondents in two cartels relating to plastic

pipes and concrete pipes. In the case of collusion in the manufacture and

supplyofplasticpipesmadeofpolyvinylchloride(PVC)andhighdensity

polyethylene (HDPE),MarleyPipesSystemsagreed topayapenalty of

R31.1million.OtherfirmsimplicatedinthecartelincludePetzatakis,Swan

Plastics,DPIPlastics,GazellePlasticsandAmitechSouthAfrica.

In precast concrete products, including pipes, two consent agreements

wereconfirmedwithCobroConcrete (Pty) LtdandConcreteUnits (Pty)

LtdforpenaltiesofR4millionandR5.8millionrespectively.InMarch2010,

theCommissionreferreditsfindingsofpricefixinginthesupplyofbitumen

againstChevronSA(Pty)Ltd,EngenLimited,ShellSA(Pty)Ltd,TotalSA

(Pty) Ltd,Masana, SouthernAfricanBitumenAssociation, Sasol Limited

andTosas(Pty)LtdtotheTribunalforadjudication.Thisfollowedaleniency

applicationbySasolanditssubsidiaryTosasinJanuary2009.

The Commission found that the respondents engaged in collusive

conductfromaround2000untilatleastDecember2009.Therespondents

collectively determined and agreed on pricing principles, including

a starting reference price and monthly price adjustment mechanism.

Discussionsandagreementswerefacilitatedthroughmeetingsconvened

by theSouthernAfricanBitumenAssociation (SABITA), correspondence

through SABITA and direct communication between the oil companies.

TheCommission’s investigation intoreinforcingsteelwasalsooneof the

results of the assessment of important construction products. There were

fourreferralstotheTribunalinthissectorintheyearunderreview,which

are discussed below under intermediate industrial products.

Box 2: Raids on firms in the cement industry and PPC’s admission

InJune2009,theCompetitionCommissionraidedtheofficesofPretoria

Portland Cement Company Ltd (PPC), Afrisam, La Farge Industries

South Africa (La Farge) and the Natal Portland Cement Company

(NPC), following a complaint initiated by the Commissioner based on

theCommission’s research intoconstructionproducts.Thiswasbased

on reasonable suspicion by the Commissioner that the four cement

producerscolludedtocontrolquantitiesofcementextendersavailableto

thedownstreamindustry,fixedpricesofcement,dividedcementmarkets

andengagedincollusivetendering.Thecomplaintwasalsoinitiatedon

thebasisoftherebeingpossibleabuseofdominancebyPPCaimedat

foreclosing independent cement blenders.

Shortlyaftertheraid,PPCappliedforcorporateleniencyforitscollusive

conduct,andwasgrantedconditionalleniencyfromprosecutioninrelation

to the division ofmarkets. The information that PPC provided showed

that the four cement producers agreed to divide the cement market

among themselves to maintain the market shares that each producer

heldupto1996,whenalawfulcementcartelexisted.Themarketdivision

agreementwasimplementeduntil2009throughthehighlydisaggregated

sales information each producer submitted to the Cement and Concrete

InstituteofSouthAfrica.Inaddition,PPC’sinformationrevealedthatthere

isaterritorialmarketdivisionagreementbetweenPPCandLaFargein

terms of which the two parties agreed that PPC would not compete in the

NorthernKwa-ZuluNatalmarketinexchangeforLafargenotcompeting

withPPCintheBotswanamarket.

Intermediate industrial products

Intermediateindustrialproductswereidentifiedasakeyareaofinvestigation

duetotheimpactthatanticompetitivepricingandotherconductcanhave

onthosedownstream,generallymorelabour-absorbingindustriesthatuse

theproductsasinputs.TheDepartmentofTradeandIndustry’sindustrial

policyhasrepeatedlyidentifiedanticompetitiveconductasanobstacleto

growthandemploymentcreationinadiversifiedindustry.TheCommission’s

workhasfocusedinparticularonsteelandpolymerchemicals,inresponse

9

to formal requests from the department for the Commission to undertake

investigations. Four referrals in relation to anticompetitive conduct in

steel productsweremade to the Tribunal in the year under review, and

investigationsintothepolymerchemicalsindustryarecontinuing.

InvestigationsintothesteelsectorOverthepasttwoyears,theCompetitionCommissionhasbeeninvestigating

variouspartsofthesteelindustry.Anexampleisthedownstreamsupply

ofreinforcingbar,steeltradersandtinplate.Inthelatterpartof2009,the

Commission referred four separate cartel cases to the Tribunal in this sector.

These relate to: the manufacturing and supply of long steel products;

includingreinforcingsteelbars;thesupplyofwireandwireproducts,the

supplyofminingroofbolts;andthesupplyofreinforcingwiremesh.Twoof

the cases are highlighted below.

• CompetitionCommissionvsArcelorMittalandothers:longsteel

InApril2008, theCommission initiatedacomplaintagainst, interalia,

the producers of long steel products in South Africa: ArcelorMittal South

AfricaLimited,CapeGate(Pty)Ltd,CapeTownIronSteelWorks(Pty)Ltd

andScawSouthAfrica(Pty)Ltd.Thecomplaintrelatedtotheiralleged

collusive conduct. The Commission decided to initiate the complaint

followingconcernsraisedbytheDepartmentofTradeandIndustryand

basedonresearchconductedbytheCommission,whichshowedthat

formanyyearsthesteelmillshadbeenchargingcustomersatcloseto

importparity levels,even thoughSouthAfricahasalwaysbeenanet

exporterofsteel.

After the search and seizure operation conducted at thepremises of

CapeTown Iron&SteelWorks (Cisco),HighveldSteelandVanadium

(aproducerofflatsteel)andtheSouthAfricanIronandSteelInstitute

(SAISI),theCommissionreceivedanapplicationforcorporateleniency

from the Scaw Metals Group regarding the conduct of price fixing,

market-allocationandcollusivetenderinginthesupplyofproductssuch

asreinforcingbar,wirerodandsections.Basedonevidenceprovided

byScaw,aswell asevidenceobtained through itsown investigation,

in September 2009, the Commission referred the complaint to the

Competition Tribunal for adjudication. The Commission’s referral

includedpricefixing,marketallocationandcollusivetendering.Itwas

foundthatSAISIwasusedtofacilitatethesecollusivepracticesthrough

facilitatingtheexchangeofcommerciallysensitiveinformation.

• CompetitionCommissionvsAveng(Africa)andothers:reinforcingmesh

This complaint was referred to the Tribunal in December 2009 and

concerns the involvement of large reinforcing mesh suppliers in

SouthAfrica in theconductofpricefixingandmarketallocation.The

Commission’s investigation was triggered mainly by the leniency

application filed by one of the participants in the cartel, BRC Mesh

Reinforcing(Pty)Ltd,asubsidiaryofMurray&RobertsSteel.

The Commission’s investigation revealed that the leniency applicant,

AvengAfrica(tradingasSteeledale),VulcaniaReinforcing(Pty)Ltdand

CapitalAfricaSteel(Pty)Ltd(tradingasReinforcing&MeshSolutions),

engagedintheconductofpricefixingandmarketallocationbetween

2001and2008.TheCommission found that thecartelwas facilitated

through formal meetings held under the auspices of the industry

association, the South African Fabric Reinforcing Association. The

meetingswerelaterreplacedbyinformalgatheringsinplaceslikepubs

andrestaurants,aftertherespondentswereadvisedthattheirconduct

wasunlawful.At thesemeetings,agreementsweremadetofixprices

and discount structures for reinforcing mesh products, and not to sell to

eachother’scustomers.

TherejectionofAllensMeshcoexemptionapplicationAllensMescho(Pty)Ltd,oneofthebiggestmanufacturersofwireandwire

productsinSouthAfrica,soughtatwo-yearexemptionenablingittodiscuss

pricesandexportsrelatingtowireproductsandprices,aswellasprices,

profitmarginsandverticalagreementswithCapeGate,ConsolidatedWire

Industries, ArcelorMittal SA and Scaw South Africa. Allens Meschco argued

thatitshouldbeexemptedfromtheapplicationoftheCompetitionActon

the grounds that the restriction on competition arising from its discussions

withcompetitorswasnecessarytopromoteexports.Further,itsubmitted

that it is a small business and that the restriction was needed in order for it

tocompeteeffectively.

The Commission rejected the application after taking into account the

varioussubmissions.TheCommission found that theobjectiveofexport

promotion can be achieved without the coordinated conduct, and that

AllensMeshcodoesnotmeetthestatutorydefinitionofasmallbusinessas

definedintermsoftheNationalSmallBusinessAct(1996),asamended.

The Commission considered its findings in previous investigations

whichrevealedahistoryofcollusion in thewire industry involvingAllens

Meshco.Anapprovalof thisexemptionapplicationcouldundermine the

10

Commission’spreviousfindingsinsimilarmattersandgivetheimpression

that the conduct previously found to have been a contraventionmay in

factbejustifiable.Inaddition,AllensMeshcowasnowbeingexposedto

greatercompetitiongiventhatitspreferentialsupplyagreementwithMittal

had come to an end.

Banking

TheCommission’sworkinretailbankinginthereportingperiodcontinued

tofocusonimplementingthe28recommendationsoftheBankingEnquiry

Panel.TheEnquiryidentifiedabroadrangeofconsumerandcompetition

concerns,manyofwhichcalledforchangesthattheCommissioncannot

introduceonitsown.Asteeringcommittee,chairedbyNationalTreasury,

wasestablishedtorevieweachofthe28recommendations,andprovide

an opportunity for the sector’s regulators to consider each from their

respectivepositions.

The committeemet for the first time inMarch 2009, and approximately

everytwomonthsthereafterthroughouttheyear.

Steeringcommitteemeetingsweresupportedbymorefrequenttechnical

engagements between the Commission, National Treasury and the

DepartmentofTradeand Industry, inconsultationwith theSouthAfrican

Reserve Bank where necessary. To facilitate debates the Commission

generatedsixdiscussionpapersthatcovered:ATMpricing;penaltyfees

for dishonoured debit orders and problems with debit order management;

competition in thenationalpaymentsystem; recommendationsaimedat

improvingtheconsumerexperience;andtwopapersontheissuesrelated

topaymentcardsandelectronicpayments.

Theoverallgoalwastogenerateenoughconsensusamongtheinstitutions

involvedon thebestway forward foreachsetof recommendations. It is

commonlyunderstoodthatbankingisdifferentfrommostotherindustries

as aiming for more competition cannot compromise on the need to maintain

financialstability,aprovenstrengthofSouthAfrica’sbankingregulators.

IthasbeentheCommission’s jobtoshowthatchangescanbemadeto

improvethecompetitiveenvironmentwithoutsignificantly increasingrisk.

Rates of progress in thedifferent areas varied,butby early 2010,most

of the technical work had been completed and communication with

industryparticipantsandassociationshadimproved.TheCommissionis

confidentthat,overall,theprocessismovingintherightdirection,butis

stillmaintainingavigilantpositionandrespondingtocomplaints.

TheCommission’soverarchingobjectiveistoincreasecompetitioninretail

banking, which will benefit the consumer. Where prospects of greater

competition are limited, more direct consumer-friendly interventions are

beingintroduced.Forexample,SouthAfricanconsumerscanlookforward

togreatercontrolovertheirdebitorders,anditwillbeeasiertocompare

bankingproductsandswitchbanks. It is crucial, however, thatNational

Treasury takes the lead in ensuring better consumer protection in retail

banking. The Commission is not a consumer protection authority and

cannot respond to this kind of complaint.

TheCommissioncontinuestoworkwithNationalTreasuryandconsultwith

the South African Reserve Bank on the recommendations that banking

industryparticipantscandolittleaboutontheirown.Itisclearthatthese

issueswill require theongoingattentionofpolicymakersand regulators;

that this is now happening is one of the most important legacies of the

BankingEnquiry.

Healthcare

Aswiththetelecommunicationssector,(coveredintheEnforcementand

Exemptionssection)complexcompetitionmattersarisinginthehealthcare

sectorhavedemandedtheCommission’sattention.

Aspen/GlaxoSmithKlinemergerIn 2009, the Competition Commission had to consider the merger

transaction between Aspen Pharmacare Holdings Limited (Aspen) and

GlaxoSmithKline South Africa (Pty) Limited (GSK). Aspen is a generic

11

pharmaceutical company and GSK is an originator pharmaceutical

company.

In termsof the transaction filed inSouthAfrica (which formedpart of a

broader international transaction), Aspen acquired control over the

pharmaceuticalbusinessofGSKinSouthAfrica.Inreturn,GSKbecame

thesingle largestshareholder inAspen,holding16percentof theentire

issued share capital of Aspen.

TheCommissionfoundthatthesufficientnumberofcompetitorsremaining

inthesemarketspost-mergerwillbeabletoconstrainthemergedentity’s

behaviourandconcludedthatthemergerisunlikelytosubstantiallyprevent

or lessen competition in these markets.

During the investigation, GSK publicly announced its commitment to

voluntarily licenseanantiretroviralproduct,Abacavir,onanon-exclusive

basistoAspen.AbacavirisaGSKpatentedproductusedmainlyforthe

treatmentofchildrenwithHIV.GSKistheonlysupplierofthisproductin

South Africa at present. The Commission voiced its concern about the

mergingparties’agreementthatAbacavirwouldbelicensedonlytoAspen

andnotothergenericfirms.GSKthenextendedthevoluntarylicencesto

Adcock Ingram,CiplaMedpro,Ranbaxy,BiotechLaboratoriesandFeza

PharmaceuticalsandprovidedtheCommissionwithcopiesofthelicensing

agreementssignedbyGSKinAugust2009.TheCommissionexpectsthat

thefinalised licenceagreementswillensure thatAbacavirwillbepriced

morecompetitivelydue to the increasedcompetitionamong thegeneric

manufacturers.

RejectionoftheBoardofHealthcareFunders’exemptionapplicationTheCommissionreceivedanapplicationforanexemptionfromtheBoard

ofHealthcareFunders.Theboardisanindustrybodyrepresentingmore

than 85 percent of medical schemes in South Africa. Its main functions

includelobbyinggovernmentandotherorganisationstoinfluencepolicies

onbehalfoftheindustry.

Theboardfiledtheapplicationonbehalfofitsmembers,requestingtobe

exemptedfromtheprovisionsofSection4of theAct, toenablemedical

aidschemestoengagecollectivelyinawaythatmaycontravenetheAct.

The Commission decided not to grant the exemption on a number of

grounds. First, it acknowledged that the healthcare market is unique in

that it coversacombinationof servicesandproductsandhascomplex

institutionalarrangements,likethoseinvolvingmedicalaid,andmanaged

healthcare providers. But this does not exempt it frombeing subject to

competition scrutiny like other industries. Further, the Commission took

theviewthatthe“ruleofreason”provisionsintheAct,whichallowforthe

Commissiontoconsidertechnological,efficiencyorotherpro-competitive

benefits, are sufficient to cater for the peculiarities found within the

healthcareindustry.

Second, in the competitive analysis, the Commission found that the

conduct that the Board of Healthcare Funders was proposing would

amount toacontraventionofsections4(1)(b)(i)and/orsection4(1)(b)(ii)

of theAct, andcouldalsohave theeffect of substantiallypreventingor

lessening competition in the medical schemes market. The other grounds

fortheexemptionwerenotconvincing;theassertionthattheindustryisin

a declining state could not be substantiated.

The Commission also engaged the Ministry and Department of Health

oncompetition in thehealthcaresector,particularly related toprices in

the industry.TheCommissionwillcontinue thesediscussions in thenext

financialyear.

Reports from the Divisions

Part 2

13

EnforcementandExemptionsThedivision’smainfunctionisinvestigatingandprosecutingprohibitedpracticesassetoutinChapter2

oftheCompetitionAct.Chapter2prohibitsthreeclassesofanticompetitiveconduct:restrictivehorizontal

practices,restrictiveverticalpractices,andtheabuseofadominantposition.Complaintsareeitherinitiated

bytheCommissionerorfiledbymembersofthepublicorprivatefirms.Whereaprohibitedpracticehas

beenestablished,thematterisreferredtotheCompetitionTribunalforadjudication.

During theperiodunder review, theCommission received172complaints from thegeneralpublic.The

Commissioner initiated 31 complaints and 86 cases were carried over from investigations in previous

years.Ofthe289casesunderinvestigationduringthereportingperiod,27complaintswereincludedinthe

13referralstotheTribunalforadjudication,102caseswereclosedatscreening,15caseswereclosedafter

furtherinvestigation,6caseswerewithdrawnandconsentagreementswereconcludedin5cases.

58 56

86

125 131

172

1023

31

193210

289

Complaints carried overfromprevious

year

Complaints receivedfromthe

public

InvestigationsinitiatedbytheCommission

Total

2007/08 2008/09 2009/10

300

250

200

150

100

50

0

Figure 2: Enforcement cases under investigation, by year


14

Mostof the31 investigations initiated in thereportingperiodwere in the

priority sectors identified in the Commission’s strategic plan (see figure

3). The investigations initiated in other sectorsweremainly into cartels,

whichisconsistentwiththeCommission’spriorityfocusontacklingcartel

conduct.

Figure 3: Cases initiated in 2009/10, classified by sector


Figure 4: Corporate leniency applications received, by year


InvestigationsintocartelsTheCommission’s corporate leniencypolicy hasproven to be effective,

with79leniencyapplicationsmadeduringtheperiodunderreview.Each

leniencyapplicationrevealsanallegedcartelandmustbeevaluated,either

asaseparateinvestigationor, insomecases,asmultiplecontraventions

formingpartofalargeinvestigationintoaparticularsector.Intheperiod

underreview,broadinvestigationswereinitiatedintoallegedcartelconduct

insectorsasdiverseasconstructionandpoultry.

Asfigure4shows,thedivisionhasexperiencedasubstantialincreasein

thenumberof leniencyapplications, resulting inaverysteeprise in the

numberofcartelcasesunderinvestigation.Theinvestigationofcartelsisat

the core of competition regulation because it deals with the most egregious

formofanticompetitiveconduct,includingpricefixing,customerallocation,

andbid-rigging.Asthiskindofconductundermineseconomicgrowthand

development, the division continues to carry out its investigations and

prosecutionswithvigour.However,thesubstantialincreaseinthenumber

ofcaseshasplacedaconsiderableburdenonthedivision’sresources.

Of the 13 cases referred to the Tribunal for adjudication, 12 included

findingsofcartelactivity.The31 investigations initiatedthisyeararestill

underinvestigation,with26outofthe31involvingcartelconduct.Included

inthe26cartelcases isonebroadinvestigationthathasattractedmore

than50leniencyapplications,intheconstructionsector.Theseareamong

the79leniencyapplicationsthatarestillbeingevaluated.

Thesuccessoftheleniencypolicyhascreatedabacklogofapplicationsand

investigationsthathavetobecompleted,whichhasplacedconsiderable

strainontheresourcesofthedivisionandtheCommission.

Foodandagro-processing

Infrastructure and construction


Other (media, transport, packaging, glass, skin products,tyres,furniture,franchisingandadvertising)

80

70

60

50

40

30

20

10

02007/08 2008/09 2009/10

15

Figure 5: Corporate leniency policy applications by sector for 2009/10


The Commission is committed to increasing its enforcement capacity,

particularlyintheareaofcartelinvestigations.Tothisend,thedivisionhas

establishedaspecialinvestigativeunitdedicatedtocartelinvestigations.

Thisisprovidingthenecessaryfocusfordealingwiththeincreasednumber

ofcartelrelatedcases.Butthedivisionhasbeenconstrainedinhiringthe

requirednumberofstaff,whichisaffectingitsabilitytoexecuteitsmandate

optimally.TheunitiscurrentlyhousedintheEnforcementandExemptions

division,andtheaimisforittobecomeastandalonedivision.

InvestigationsintoabuseofdominanceIn the period under review, 7 of the investigations initiated by the

Commissioner involved allegations of abuse of dominance, and

these investigations are still ongoing. This was in addition to a further

36investigationsinvolvingallegationsofabuseofdominancecarriedover

fromthepreviousfinancialyear.While9ofthesewerecompletedandwere

notreferredtotheTribunalastheCommissiondidnotfindanycontravention

oftheAct,22complaintsarestillunderinvestigation.Theinvestigationof

5complaintswascompletedandtheywerereferredtotheTribunal.

In October 2009, the Commission referred 5 complaints involving

allegations of abuse of dominance against Telkom (including those lodged

by Internet Solutions, Verizon South Africa Ltd, MultiChoice Subscriber

ManagementServices (MWeb)and InternetSolutions) as one referral as

the complaints all dealt with conduct relating to the backbone required for

theprovisionofinternetanddataservices.

Thesecomplaintswerelodgedatdifferenttimesbetween2005and2007

butforpurposesofinvestigationtheCommissioncombinedthecomplaints,

astheyraisedoverlappingissues.

Addressingthisconductdecisivelyshouldcontributetothepromotionof

competitiveoutcomesintheICTindustrytothebenefitoftheeconomy.

Box 3: Supreme Court of Appeal confirms the Commission’s jurisdiction in telecommunications

InrelationtoamatterreferredbytheCommissionagainstTelkomtothe

TribunalinFebruary2004,theCompetitionCommissionhasbeenfighting

various legal challenges brought by Telkom. In the reporting period,

the Commission won its appeal in the Supreme Court of Appeal in the

decisionof theHighCourt to reviewandsetaside itsdecision to refer

certaincomplaintsofanticompetitiveconductbyTelkom.

In its application to the High Court, Telkom challenged the Tribunal’s

jurisdictiontohearthecomplaintandhadsoughtanordersettingaside

the decision to refer it to the Tribunal on the basis that it was vitiated

bybiasorprejudiceandbyotherproceduralirregularities.TheSupreme

CourtofAppealheldthattheTribunalhadcompetencetoadjudicatethe

complaint and that therewerenogrounds to review theCommission’s

decision to refer. The effect of this decision was that Telkom was obliged to

answertothemeritsoftheCommission’scomplaintreferral,filedwiththe

TribunalinFebruary2004.ThismatterisstillpendingbeforetheTribunal.

Abuseofdominancecasesarecomplex,involvingacombinationoflegal,

economic, and investigative skills. Unlike cartel infringements, abuse of

dominance is not per se illegal.Mere evidence of an agreement (to fix

prices for example) is not sufficient to establish a contravention; the

Commission is required to weigh up anticompetitive effects against the

claimedefficienciesandotherbenefits thatmayariseasa result of the

unilateral conduct of dominant firms. This, in turn, places considerable

strainontheCommission’sresourcesasthesecasestendtotakelonger

to investigate and often require larger teams with a wider set of skills.

Construction


Foodandagro-processing

Others

16

Nevertheless,effectiveenforcementoftheChapter2provisionsonabuse

ofdominanceremainsanimportantcomponentofpromotingcompetitive

outcomesintheSouthAfricaneconomy.

ThewayforwardIt is imperative that theCommission continue to build capacity. It plans

to do this by developing the cartels unit into a standalone division

specialisingincartelinvestigationandenforcement.Emphasiswillalsobe

placedondeepeningcapacityandexpertiseintheinvestigationofabuse

ofdominanceandrestrictiveverticalandhorizontalpracticesthatrequire

the Commission to show that the anticompetitive effects outweigh any

efficiencyjustifications.

The Enforcement and Exemptions division, and the Commission as a

whole,willcontinuetobefrustratedinachievingtheseobjectivesifhuman

resourcecapacity isnot improvedand increased.Thiswill involvehiring

more staff and devoting more resources to training and development.

Althoughimportantstepshavebeentakentodothis,thecurrentresources

and budgetary limitations are preventing the levels of success that the

organisation would like.

Enforcement and ExemptionsFront row: NeoChabane;MapatoRakhudu;VanessaKruger;CassandraMongake;SallyMashiane;XolelaNokele;MosimaTambani;Keith Weeks Second row: WilliamKganare;NyadzaniMabasa;ThapiMatsaneng;SamanthaNiemann;NompucukoNontombana;LameezVania;MakgaleMohlala;ShadrackRambau;EdwinaRamohlolaThird row: SiphoMtombeni;PerceiveMaswanganyi;PhilAlves;JohanLiebenberg;KwenaMahlakoana;NellySakata;KatlegoMonarengBack row: ElphusMudimeli;AnthonyNdzabandzaba;NeoMolefe;ThabeloMasithulela;LebogangMadiba;TotoFiduli;MarlonDasarath

17

Mergers and Acquisitions The Mergers and Acquisitions division is responsible for administering

Chapter 3 of the Competition Act. The division’s core function is to

investigateandanalysemergers.

Chapter 3 of theCompetition Act requiresmerging parties to notify the

Commission of a merger before it is implemented if the proposed merger

meets or exceeds the threshold stipulatedby theMinister of Trade and

Industryfor intermediateandlargemergers.Thethresholdrelatestothe

turnoverandassetvaluesoftheacquiringandtargetfirms.Smallmergers

maybenotifiedvoluntarilyorontheCommission’sdirective.

The Commission investigates all notifiedmergers to determine whether

the transaction is likely to lead to a substantial prevention or lessening

ofcompetition,orhaveanegativeeffectonthepublic interest.Similarly,

it seeks to encourage a dynamic environment by evaluating mergers

that may result in innovation or efficiency gains, and hence contribute

to amore competitive landscape. TheCommission has the authority to

approve, approvewith conditions, or prohibit intermediatemergers. For

large mergers the Commission makes a recommendation to the Tribunal to

approve,approvewithconditions,orprohibitthemerger.

ActivitiesIntheyearunderreview,twofactorsresultedinfewermergernotifications

totheCommission.First,thethresholdfornotifyingmergersincreased;and

second, the economywas just beginning to recover from theeconomic

slowdown. From 1 April 2009, the combined threshold for mandatory

notification of intermediate mergers increased to R560 million from the

previous R200 million, with the threshold for the target firm increasing

from R30million to R80million. The combined threshold formandatory

notificationoflargemergersincreasedfromR3.5billiontoR6.6billion,with

thethresholdforthetargetfirmincreasingfromR100milliontoR190million.

Theaimofthesignificantincreaseinmergerthresholdsistodecreasethe

numberofmergersthatrequirenotificationandtolightentheadministrative

loadoftheCommission.Whilethischangedefinitelyaffectedthenumber

ofmergernotificationsintheperiodunderreview,thedepressedeconomic

environmentalsocontributedtothesharpdecline(seetable1).

Table 1: Number of notified mergers over a three year period

Year 2007/08 2008/09 2009/10

Small 13 9 10

Intermediate 394 303 136

Large 106 103 44

Total 513 415 190


About 8 percent of the total number of transactions notified to the

Commissionrelatedtofirmsinfinancialdistress.

Table2showsthatsomeofthemergerandacquisitiontransactionsresulted

inabout2,000joblosses,summarisingthenumberofskilledandunskilled

jobs lostasa resultofmergeractivity.The lossesoccurred in19of the

190transactionsnotifiedtotheCommissionduringtheperiodunderreview.

Figure 6: Outcome of merger reviews for 2007/08, 2008/09 and 2009/10


455424

190

1198

38

1

1117

480458

208

0 100 200 300 400 500

Approved

Approvedwithconditions

Prohibited

Withdrawn/ nojurisdiction

Cases finalised

9

2009/102008/092007/08

18

Mostjoblossesinboththeskilledandunskilledcategorieswerearesult

of two transactions: Nedbank acquiring Imperial Bank, and Harmony

acquiringPamodziFreeState(Pty)Ltd(seeboxes4and5).

Table 2: Job losses arising from mergers

Skilled Unskilled

Totalnumberofanticipatedjoblosses 715 1,542

Joblosses(excludingthetransactionscoveredinboxes4 and 5)

251 342


Duringthereportingperiod,11transactionswereapprovedonthecondition

that the likely effect of the transaction on employment be mitigated. In

order to try and reduce the number of job losses occurring as a result

ofmergers,ormitigatetheireffects,theCommissionrestrictedjoblosses

byconditionallyapprovingmergersandforcingpartiestoup-skillaffected

employeestoenablethemtogetworkelsewhereorbecomeself-employed.

Box 4: Nedbank and Imperial Bank: 464 job losses for skilled

employees

TheCommissionapprovedthismergerdespitetheestimatedretrenchment

of260permanentemployeesand204temporaryemployeesthatwould

result from themerger. In approving themerger, theCommission took

into consideration that the retrenchments affected less than 1 percent of

the entire workforce of the merging parties. And out of the permanent

employeesthatwouldbeaffected,mostareskilled,qualifiedindividuals

withyearsofexperience,and theywouldbeable tofindworkatother

institutions. The Commission was mindful of an agreement with the union

to redeployand re-skill staff tominimise thenegativeeffectsas far as

possible. The Competition Tribunal made adherence to the agreement a

conditiononwhichthemergerwasapproved.

Box 5: Harmony and Pamodzi Free State: 1,200 job losses for unskilled employees

ThismergerwasapprovedbytheCommissiondespitetheresultingjob

lossesofapproximately1,200.Inapprovingthemerger,theCommission

wasmindfulof the fact that if themergerwasnotapproved,a totalof

3,606 employees of Pamodzi Free State would have permanently lost

their jobs, as Pamodzi Free State was facing final liquidation. At the

time the merger transaction was notified, employment contracts had

already been suspended. The National Union of Mineworkers and

Solidarity, the two unions representing the largest number of Pamodzi

employees had signed agreements with Harmony Gold Mining

Company Limited in terms of whichHarmony undertook to re-engage

2,400employeeswithin24months.Theunionsprovidedlettersofcomfort

in support of the merger. The Competition Tribunal made Harmony’s

undertakingsconditionsfortheapprovalofthemerger

MergeractivitybysectorFigure7showstheindustriesinwhichtheCommissiondecidedonmergers

andacquisitions.Therewasamarkedincreaseinactivityinthewholesale

sector(increasingto12percentfrom5percentin2008/09).Aparticularly

active firm was Massmart. The only transaction that the Commission

prohibitedinthereportingperiodwasMassmart’sproposedacquisitionof

FinroCash&Carry.TheCompetitionTribunalsubsequentlyapprovedthe

transactionwithoutconditions(seebox6).

Figure 7: Merger decisions by sector

Telecommunications1%

Transport1%

InformationTechnology5%

Financial7%

Construction2%

Mining11%

Other11%Manufacturing

21%

Hotel and Restaurant3%

Agricultural1%

Retail9%

Wholesale12%

Property16%


19

Box 6: Massmart and Finro Cash & Carry

The Commission recommended to the Tribunal that it prohibit the proposed

transactionbetweenMassmartandFinroCash&Carry.TheCommission

wasoftheviewthatthetransactionwouldresultinhigherwholesaleprices

ofgroceryproductstothedetrimentoflowincomeconsumers.TheTribunal

subsequently approved the transaction unconditionally after the hearing

thatwasheldonthematterinAugust2009.ThemainfocusoftheTribunal’s

decisionwastheanalysisofthepotentialanticompetitivehorizontalunilateral

effectsarisingintherelevantmarketasaresultofthemerger.

The Tribunal found that Finro is undoubtedly an effective competitor to

Massmart in the Port Elizabeth grocery wholesale market. However, the

Tribunalstatedthatthisfactorandthefactthatthemarketwouldbehighly

concentrated post-merger must be assessed in the context of other

evidence.Thiswason thebasis that there is substantialdifferentiation in

thismarket,withsignificantdifferencesinindividualfirmsintermsofproduct

range and product mix, customer profiles, margins, location, delivery

arrangements and credit terms. It stated that post-merger, there would

stillbesignificantcompetitorsintherelevantmarket, includingthreelarge

wholesalers effectively competing with themerged entity as well as four

smaller competitors.

EvidenceprovidedinthehearingandwhichtheTribunalacceptedshowed

that a number of constraints that the Commission had disputed in its

recommendations were in fact relevant and could collectively inhibit the

merged entity’s ability to raise prices post-merger. These are: the ability

of incumbent firms to expand and/or reposition their competitive offering

inresponsetoapriceincentive(forexample,rivalfirmsmayrepositionor

expandtheirproductranges);thesignificantdirectsupplyofcertainproduct

linesbygrocerymanufacturerstogroceryretailers;andretailers’procurement

of suppliers throughbuyinggroups,which is adistinct alternative for the

larger retailers.

TheTribunalconcludedthattheCommission’sscenarioofthemergedentity’s

abilitytounilaterallyincreasepricespost-mergerwasweak.Italsomaintained

that there was no basis to conclude that consumers would be worse off as a

resultofthisacquisition,eitherfromapricingorservicedeliveryperspective.

Itacknowledgedthatthereareindeedhighbarrierstoentryintherelevant

market,butconcludedthat,basedontheavailableevidence,theacquisition

wasunlikelytoresultinasubstantialpreventionorlesseningofcompetition

intherelevantmarket,eitherfromahorizontalorverticalperspective.Inits

decision, the Tribunal alsoprovided someguidance on the future use of

economicmodellingandcustomersurveyandstatisticaldataanalysis.

TrackingmergeractivityThedivisionhas improveditsprocessesfor trackingmergeractivitywith

the aim of ensuring not only that there is compliance with the Act, but

also toreviewandconsidersmallmergers thatare likely tosubstantially

preventorlessencompetition.Tocreateawarenessofthis,theCommission

publishedaguidetosmallmergeractivity,whichindicatesthatfirmsthat

are subject to current enforcement investigation and/or prosecution are

requested to inform theCommissionof any smallmergers that theyare

proposing, after which the Commission will inform the parties whether or

nottheyneedtonotifytheCommission.Thereactiontotheguidewasslow

at first, butwithmore firmscoming forward, there is clearly acultureof

compliancedeveloping.TheCommissionreceived16requestsintheyear

underreview.

Mergers and AcquisitionsFront row:MaartenvanHoven;BrendaMaseko;LindiweKhumalo;ThembaMahlangu;NazeeraRamroop;GrashumMutizwaBack row:AlexConstantinou;ThabeloRavhugoni;FrancinaYedwa;Mfundo Ngobese

20

LegalServicesThe Legal Services division’s primary responsibility is managing all the

Commission’slitigationbeforetheTribunalandcourts.Itservesastheexit

point forcomplex largemergers, intermediatemergerdecisions thatare

appealed, and complaints that are referred to the Tribunal. Thedivision

also manages litigation in the Competition Appeal Court, the High Court

and the Supreme Court of Appeal. The division assists the Mergers

and Acquisitions, and Enforcement and Exemptions divisions with their

respective investigations of mergers and complaints by participating in

investigationsasteammembersandprovidinglegalsupportandanalysis.

Thedivisionalsoprovidesadvisoryopinionsandclarificationstoexternal

stakeholdersandnon-caserelatedlegaladvicetotheCommission.

Intheyearunderreview,thedivisionsawasteadyincreaseinitsinvolvement

inenforcementcasesandadecline inmerger-relatedcases.This trend

mirrorstheCommission’sstrategicdecisiontoshiftitsfocustoaddressing

competitionconcernsintheidentifiedprioritysectors,particularlyinrelation

to enforcement.

Activities

Prosecution

In the year under review, the division had

a caseload of 148 cases, of which 41 were

merger cases and 107 were enforcement

cases. Of the enforcement cases, 32 were

referrals, 6 investigations were finalised

and 69 are still under investigation. Of the

32 referrals, 20 were carried over from the

previous financial year and 12 were new

referrals. A record 16 complaints were

referred to the Competition Tribunal. Of these

complaints, 9 related to cartel conduct, the

investigations of which were prompted by applications for leniency in

termsoftheCommission’scorporateleniencypolicyinvariousindustries,

whichincluded:maizeandwheatmilling,theproductionanddistributionof

tyres,theproductionandsupplyofbitumenproducts,theproductionand

supplyofminingroofbolts,reinforcingmeshandfencingproducts,andthe

productionoflongsteelproductssuchasrebarbyprimarysteelproducers.

Five of the complaints referred to the Tribunal pertained to allegations

of Telkom’s abuse of dominance behaviour in the telecommunications

industry, including exclusionary conduct and excessive pricing, and

the remaining 2 involved allegations of resale price maintenance. In

the reporting period, the division also attended to the prosecution of

5 matters before the Competition Appeal Court and 1 before the Supreme

Court of Appeal. Two of these matters pertained to the interlocutory

applications that have been mounted by the respondents against the

Commission’sprosecutionofthemilkcartelwhich,despitebeingreferred

totheTribunalin2007,hasyettobeheardonthemerits.

TheTribunal’sfindingsintheCommission’sreferralagainstSenwesLimited

were also the subject of appeals to the Competition Appeal Court and

the Supreme Court of Appeal. All these matters are still pending before

the Supreme Court of Appeal.In the course of its prosecution of pending

complaints,thedivisionhasattendedtodefendingtheCommissionagainst

anumberofinterlocutorychallengesthathavebeenfiledbyrespondents.

Thesecaseshavemainlysought tochallenge theCommission’s internal

proceduresandtoobtainaccesstotheCommission’sinvestigationrecord

priortothecloseofpleadings.Interlocutoryapplicationsdelaythehearing

ofcasesontheirmeritsandaddtotheCommission’shighlitigationcosts.

Settlement

Wherepossible, theCommissionusessettlementasanappropriateway

of curtailing proceedings in the Competition Tribunal. This is dependent

ontheCommissionbeingabletonegotiatewithawillingpartyappropriate

terms of settlement that address the anticompetitive conduct and that

enable the Commission, through negotiation, to achieve an outcome

it would probably have achieved if it had prosecuted thematter in the

Tribunal. Invariably,when settlingmatters, theCommission requires that

the agreement incorporates, among others, the following material terms:

anadmissionofacontraventionoftheAct;paymentofanadministrative

penaltyand/orwhereappropriate,theimplementationofanyotherremedy;

cessationoftheanticompetitiveconduct;implementationofacompliance

programmeasatooltoempoweremployees,managementanddirectors

andenablethemonitoringanddetectionofanyfuturecontraventionsofthe

21

Act;andtheparty’sfullcooperationwiththeCommissioninitsprosecution

ofanyotherrespondents.

In the period under review, the division assisted the Commission in

negotiating and concluding 5 consent and settlement agreements. The

most significant was the agreement concluded with Sasol Chemical

IndustriesLimitedonbehalfofSasolNitro,itsoperatingdivisionactiveinthe

nitrogenous fertiliser market. This agreement was concluded in settlement

of that part of the complaints referred to the Tribunal in April 2005 and

May20061,relatingtoacontraventionofsection4(1)(b)oftheAct.Sasol

paidarecordpenaltyofR250680000.00(twohundredandfiftymillion,

sixhundredandeightythousandrands).Despitetheobviousbenefitsof

earlycooperationandsettlement,theCommission’sexperiencehasbeen

that the settlement negotiations it engages in with respondents tend to be

protractedandtime-consuming,evenincircumstanceswhereapartydoes

notdisputetheCommission’sfindings.ThroughtheLegalServicesdivision

together with teammembers from other divisions, the Commission has

adoptedastrategythatseekstoensurethattheprosecutionofcasesisnot

delayedduetoprotractednegotiations.Thisincludestheprinciplethatthe

levelofpenaltyimposedreflectsthevaluethattheCommissionplaceson

cooperationandearlysettlement.Itishopedthatallthesemeasuresyield

anincreaseinthenumberoffinalisedconsentandsettlementagreements

increasing in the next financial year, which should be evident in more

mattersbeingresolvedthroughnegotiatedsettlement.

Table 3: Consent agreements (R million)

RespondentMarket/

sectorDescription of

conductConditions of

the order

Penalty amounts

(R million)

Cobro Concrete (Pty)Ltd Construction

Pricefixingandfixingoftrading

conditions, market allocation and col-lusivetendering

Penalty,admis-sion of guilt, compliance programme

R4,023

MarleyPipe Systems(Pty)

Ltd

Steel tubes and pipes


conditions, market allocation and col-lusivetendering


R31,078

BMWSouthAf-rica(Pty)Ltdt/aBMWMotorradand 13 others

Retail motor cycles

Abuse of dominance and customer fore-

closure

Behaviouralremedy Nopenalty

Sasol Chemi-cal Industries

LimitedGas


conditions

Penalty,admis-sion guilt,

compliance programme

R250,680

ConcreteUnits ConstructionPricefixingandfixingoftrading

conditions


R5,764


Figure 8: Total administrative penalties levied by the Commission through consent orders

Advisory opinions and clarifications

ThroughtheLegalServicesdivision,theCommissionprovidesnon-binding

advisoryopinionsandclarificationsontheinterpretationoftheAct.

Inthereportingperiod,theCommissionreceived32requestsforadvisory

opinions and 150 requests for clarifications. The substantial increase in

requests was unexpected and the result of the growing awareness of

theCommission’sworkand role in regulatingcompetition in themarket.

Advisory opinions are largely sought by firms of attorneys on behalf

of their clients, while clarifications are submitted by individuals. The

issues raised in advisory opinions range from theacquisition of control,

exclusive agreements, exclusionary conduct and the vexed topic of

information exchange.With regard to clarifications, however, it is noted

thatapproximately90percentofthesepertaintonon-competitionrelated

matters such as sms competitions, disputeswith service providers and

concerns about unfairness in the awarding of tenders.

1 NutrifloCCvs.SasolChemicalIndustries(Pty)Ltd,OmniaFertiliserLtdandYaraSouthAfrica(Pty)LtdCCcasenumber2003Dec770referredtotheTribunalon4May2005andProfert(Pty)LtdvsSasolChemicalIndustries(Pty)Ltd,OmniaFertiliserLtdandYaraSouthAfrica(Pty)LtdCCcasenumber2004Aug1148referredtotheTribunalon25May2006


R99,384,870

R331,423,704

2007/08 2008/09 2009/10

R487,262,183

22

150

120

90

60

30

0

4553

2213

32

150

2007/08 2008/09 2009/10

Figure 9: Number of advisory opinions and clarifications issued


Highlighted cases

CompetitionCommissionvsPioneerFoodsPtyLtd

The Commission prosecuted the remaining member of the bread cartel,

PioneerFoods(Pty)LtdoveraperiodofsixdaysinJune2009.InFebruary

2010,theTribunalhandeddownitsdecision,inwhichitfoundthatPioneer

Foodshadcontravenedsection4(1)(b)oftheAct.Initsdecision,theTribunal

awardedarecordbreaking10percentoftherelevantturnoverofSasko,

Pioneer’sbreaddivision, in respectofoneof thecomplaints.This is the

highestpercentagepenaltythattheTribunalhasawardedtodate.Despite

this, the Commission has appealed this decision as it concluded that the

Tribunalmisconstrueditspowerswhendeterminingthatthepenaltyshould

bebasedonlyonthefirm’sturnoverfromthebreaddivision.Thepenalty

it imposedwas therefore not a sufficient deterrent and theCommission

contendsthat itshouldratherbebasedonthefirm’swiderturnover.The

appeal is pending before the Competition Appeal Court and will be heard

inSeptember2010.

CompetitionCommissionvsTelkomLtdandanother

The Competition Commission appealed the decision of the High Court to

reviewandsetasideitsdecisiontorefercertaincomplaintsofanticompetitive

conduct by Telkom to theCompetition Tribunal. In its application to the

HighCourt,TelkomhadchallengedtheTribunal’s jurisdiction tohear the

complaint and had sought an order setting aside the decision to refer on

thebasisthatitwasvitiatedbybiasorprejudiceandbyotherprocedural

irregularities.

The Supreme Court of Appeal held that the Tribunal had competence to

adjudicate the complaint and that there were no grounds to review the

Commission’sdecisiontoreferthecomplainttotheTribunal.Intermsofthis

decision,TelkomwasobligedtoanswertothemeritsoftheCommission’s

complaintreferral,whichithadfiledwiththeTribunalinFebruary2004.This

matter is pending before the Tribunal.

CompetitionCommissionvsSenwesandanother

InDecember2006,theCommissionreferredacomplaintagainstSenwes,a

dominant supplier of grain storage facilities, to the Tribunal. In its complaint,

theCommissionallegedthatSenweswasengagedinexclusionaryconduct

as it had induced farmers not to deal with its competitors in the market

forthetradingofphysicalgrain.Inaddition,throughitsdifferentialpricing

policy in which it charged farmers and traders a different price for the

sameservice,theCommissionallegedthatthefirmwasengagedinprice

discrimination. The Commission further claimed that Senwes was engaging

inamarginsqueezeasitwascharginggraintradersahigherfeethanits

trading arm, Senwes Trading, paid for the storage of grain. All this resulted

in the undermining of competition in the grain trading market.

InFebruary2009,theTribunalfoundthatSenwes’conductdidnotconstitute

acontraventionofsections8(d)(i)and9(1)aspleadedbytheCommission,

butinsteadconstitutedamarginsqueezeincontraventionofthegeneral

prohibition against exclusionary conduct contained in section 8(c) as it

pleadedinthealternative.Thisdecisionisimportantinthatitrecognises

marginsqueeze,whichisnotexpresslymentionedintheAct,asaclassof

exclusionaryconductthatcontravenestheActundersection8(c).

Senwes appealed the Tribunal’s decision of February 2009 to the

CompetitionAppealCourt inNovember2009.TheCommissionopposed

Senwes’appealandinturncross-appealedtheTribunal’sdismissalofthe

inducement complaint. In itsdecisionhandeddown inNovember2009,

theCompetitionAppealCourtdismissedtheappealandtheCommission’s

crossappeal.SenwesappealedtheCompetitionAppealCourt’sdecision

onmeritanditsapplicationforspecialleavetoappealispendingbefore

the Supreme Court of Appeal.

23

Legal Services Front row:SbusisoMadonsela;MosidiSibaya;WendyMkwananzi;ThandileCharlieMiddle row:KhotsoModise;MoshThulare;NgoakoMoropene;LuckyTshigomana;ThaboKhumaloBack row:MervinDorasamy;JabulaniNgobeni;RomeoKariga;HyltonPetersen;RiziaBuckas;PaulinaMfomme;BukhosibakheMajenge

24

PolicyandResearchThePolicyandResearchdivisionisresponsibleforundertakingeconomic

analysisformergerandenforcementcases.Divisionmembersworkwith

teamsfromthedifferentdivisions.

The division continued to grow its capacity and expertise to undertake

economic analysis of competition matters. This was matched by the

demands for this expertise in complex cases under investigation such

as on information exchange between competitors which might lead to

collusion.Otherhighlightsincludedseveralpaperspresentedatlocaland

internationalconferences,contributionstotheCommissionandTribunal’s

Ten Year Review, and work on the Joint Food Project together with the

competitionauthoritiesofEgyptandZambia.

Themajor analyses for cases of possible anticompetitive conduct were

those in the Commission’s priority sectors, discussed elsewhere in this

report. In addition, the division undertook in-depth economic analysis

for investigations into telecommunications. These included looking into

conduct on the part of Telkom where the Commission concluded that Telkom

hadchargedexcessivepricesforhighbandwidthfornationalleasedlines

andhadexcludeditscompetitorsindownstreammarketssuchasinthe

supplyofvirtualprivatenetworksandrelatedservices.

Thedivisionhasalsobeen involved insubstantialworkoncartel-related

investigations.Manycartelcasesrelatedtoagreementsonpricefixingor

customer allocation, that are prohibited per se and do not require economic

analysis.However,theCommissionisincreasinglyfocusingoninformation

exchangearrangementsthatmayamounttoanagreementtocoordinate

pricingand/ormarketshares.Thedivision isalsoexamining factors that

facilitate ongoing coordination. Without addressing these factors, firms

can continue to charge above competitive prices through dampening

competitiverivalrybetweenthemselves.Overtheyear,thedivisionworked

on29mergercases,severalofwhichinvolvedeconomicevidencebeing

presented at the Competition Tribunal.

International networksThe field of competition economics research is international both because

marketsandfirmsoperateacrossbordersandbecausethebodyofliterature

andanalysisisinternationalinnature.

In terms of economic research, the division has been part of the

Commission’s teamworkingon theJointFoodProjectwithauthorities in

Egypt and Zambia. The project involved studies of the same products

acrossthedifferentcountries.Maizemillingandfertiliserwerestudiedin

bothZambiaandSouthAfrica,andedibleoilwasstudied inEgyptand

SouthAfrica,whileEgyptalsolookedattheimplicationsofalargeinformal

sector for competition analysis of food markets. The project provided

insightsintothenatureofcompetitionandpossibleanticompetitiveconduct

in food markets.

Over time, the division has been building wider international networks

to build its analytical capabilities through learning from international

experience and drawing on international expertise. In 2009/10, the

Commissiondrewonleadinginternationalcompetitionexpertstoassistin

keycompetitionissues,includinginformationexchangeandexclusionary

abuse of dominance cases. These included professors Massimo Motta,

expert in competition andmarket regulation at the BarcelonaGraduate

School of Economics; Joseph Harrington, professor of economics at

JohnsHopkinsUniversityandKaiUwe-Kühn,competitionandregulatory

specialistattheUniversityofMichigan.Allprovidedhighleveltrainingand

advicetocaseteams.

Conferences, publications and economic briefsAnimportantpartofthedivision’sworkiscontributingtotheunderstanding

of competition more widely. This includes commenting on all policies,

legislationandregulationsthathaveabearingoncompetition.Thedivision

submittedseveralcommentsonissuesoftelecommunicationsregulation,

and also commented on the Department of Trade and Industry’s new

IndustrialPolicyActionPlanfor2010/11to2012/13.Analysesandreviews

weredone for theDepartmentofEconomicDevelopmenton theEskom

proposedelectricityprice increases,andoncompetition issues in food,

infrastructure and telecommunications.

Thedivision’sstaffpresentedpapersatlocalandinternationalconferences

onavarietyof topicsrangingfromcompetition inbankingto information

exchange(seetable4).Threepaperswerepublishedas journalarticles

25

orbookchapters.In theyearunder review.Thedivisionalsowroteeight

briefing papers on key competition questions for internal use in the

Commissionandhostedaseriesofseminarswithexternalpresenters.

Table 4: Conference papers and publications

Author Publication

L. Mncube & H. Ratshisusu

‘On merger simulation and its potential role in South African mergercontrols’,South African Journal of Economic and Man-agement Sciences

C.Lavoie ‘SouthAfrica’sCorporateLeniencyPolicy:AFive-YearReview’,World Competition

S. Roberts & Z.Rustomjee*

‘Industrialpolicyunderdemocracy:apartheid’sgrownupinfantindustries?IscorandSasol’,Transformation

S. Roberts

‘Competitionpolicy,competitiverivalryandadevelopmentalstateinSouthAfrica’,inO.Edighejied.Constructing a Demo-cratic Development State in South Africa: Potentials and Chal-lenges, HSRC Press, Pretoria

S. Roberts‘Food production in South Africa: corporate conduct and eco-nomicpolicy’,InitiativeforPolicyDialogueTaskForceonAfrica,Pretoria,9-10July,2009

R. das Nair & L. Mncube

‘Theroleofinformationexchangeinfacilitatingcollusion–in-sightsfromselectedcases’,CompetitionCommissionandCom-petitionTribunalTenYearReviewConference,3-4September2009,Pretoria

L. Mncube, M. Ngobese & L. Khumalo

‘Doverticalmergersfacilitateupstreamcollusion?’,CompetitionCommissionandCompetitionTribunalTenYearReviewConfer-ence,3-4September2009,Pretoria

R. Hawthorne

‘Localloopunbundlingversusencouragingthegrowthofwire-lesslocalloops:lessonsforSouthAfricafromothercountries’,CompetitionCommissionandCompetitionTribunalTenYearReviewConference,3-4September2009,Pretoria

K.Moodaliyar*&K.Weeks

‘A framework for promoting competition in electronic communi-cations:clarifyingtheroleofthecompetitionauthorityandthesectorregulator’,CompetitionCommissionandCompetitionTribunalTenYearReviewConference,3-4September2009,Pretoria

P. Ncube & T. Paremoer

‘CompetitionpolicyinSouthAfricaandsmallbusiness:Areviewofenforcementcases’,CompetitionCommissionandCompeti-tionTribunalTenYearReviewConference,3-4September2009,Pretoria

H. Ratshisusu

‘Theuseofbehaviouralremediesinthereviewofverticalmerg-ersinSouthAfrica’,CompetitionCommissionandCompetitionTribunalTenYearReviewConference,3-4September2009,Pretoria

J. Greenberg‘TestingforcompetitionintheSouthAfricanbankingsector’,EconomicSocietyofSouthAfricaconference,30September2009,CapeTown


Notes: These include papers by employees of the Competition Commission and not only of the Policy and Research division

* Not an employee of the Competition Commission

Information resource centre Duetotheconvergenceofcompetitionlawworldwide,theCommissionhas

been following the jurisprudenceofanumberofcompetitionauthorities.

More recently, following a comparison of Westlaw International and

LexisNexis International, the two major international legal databases,

the Competition Commission took out a company-wide subscription to

LexisNexisInternational.Duringtherolloutoftheserviceandthroughoutthe

year,68staffmembersfromtheCommissionandtheTribunalweretrained

onthedatabase. Inaddition,30newstaffmembersreceivedorientation

trainingon thecentre’s resources. In total, the resourcecentre recorded

1,048loansofpublications,added18newtitlestothebookcollectionand

dealt with 398 requests for information.

KnowledgemanagementIn the year under review, the planned implementation of an upgraded

case management system with an enhanced knowledge management

functionality was slowed down by technical problems, which the

Commissioncouldnotsolveonitsown.Inanticipationoftheimplementation

andtrainingneedsforthenewsystem,asystem“superuser”groupwas

established,whichbegantousethesystemandattempttoironoutsome

oftheproblems.Thegroupismadeupofmembersfromeachdivision.

While the primary focus of the knowledge management sphere was to

resolve the problems of the implementation of the case management

system,and toprepare for theeventual transition into theCommission’s

environment, the Commission’s strategic goals in relation to knowledge

management were also addressed. These included ongoing divisional

capacity building sessions, internal and external knowledge sharing

sessions, and the sharing and retention of materials and related knowledge

gainedviatheavailablesystems.

Thecurrentcaseandknowledge-basedsystemswereimprovedthroughout

theyear,enablingimprovedcollaborationforcasesandprojects,improved

accessibilityandimprovedreportingonmanagementinformationsystems.

Moreover, the existing system that supports improved knowledge

management was enabled and exploitedmore vigorously. This has led

tomoreavailable informationbeingcompleted in thesharedknowledge

space, and an increase in the use of the Commission’s organisational

knowledge.

26

Policy and Research Front row: AzraaMohamed;PamelaNqojela;HerminahRasetlola;GennaRobbMiddle row:YongamaNjisane;BongisaLekezwa;ReenaDasNair;KholiswaMnisi;AnnaleevanReenen;RakshaDarji;AndrewSylvesterBack row:JuniorKhumalo;TrudiMakhaya;NtsakoMgwena;RakgoleMokolo;AviasNgwenya;LibertyNcube;SimonRoberts;GilbertMuzata

27

Strategic planningThisdivisionishousedwithintheCommissioner’soffice.Acoreresponsibility

during the reporting period was to plan for the Commission’s strategic

priorities for 2010 to 2013. A planning workshop was held with all the

middlemanagersandtheexecutive.ItwasaddressedbyMinisterofTrade

andIndustryRobDaviesandtheformerchairpersonoftheTribunal,David

Lewis.Thefocuswasonimprovingefficienciesandensuringcompetitive

outcomestomakeapositiveimpactontheeconomyinthecontextofthe

global economic recession. The strategic planning workshop determined

threekeystrategicprioritiesfortheCommissionoverthenextthreeyears.

ThesearefortheCommissionto:achievedemonstrableoutcomesthrough

the continuous prioritisation of sectors and cases and the assessment of its

impactontheeconomy;increaseitsengagementswithkeystakeholders

intheeconomytoinfluencepolicyformulationanddecision-making;and

buildahighperformancecompetitionauthoritythroughefficientbusiness

processes,staffdevelopmentandretention,andeffectivedecisionmaking.

AdvocacyandeducationTheCommission’sadvocacystrategyaimsto:raiseawarenessaboutthe

Competition Act and the role of the Commission; mobilise civil society

organisations’ active participation in the Commission’s processes and

encourage voluntary compliancebybusiness; and influencepolicy and

legislation to ensure synergy between the Competition Act and other

policiesandlegislation.(Tothatend,theCommissionengagesgovernment

departments, sector regulators and legislatures on its positions in relation

to existing or proposed legislative amendments). Also, in the course of

enforcementandlegislationinallindustrialsectors,policyissuesariseand

theaimoftheCommissionistobringthesetotheattentionoftherelevant

governmentdepartmentorsectorregulator.

AlthoughtheCommissionhasadedicatedadvocacydivision,thisfunction

happensasamatterofcourseintheCommission’swork.TheCommissioner

andtheDeputyCommissionerundertakeimportantadvocacywork,asdo

otherdivisionalmanagersandcaseteams.Asitisnotpossibletorecordall

advocacyactivities,thisreportprovidesthehighlightsofourengagements

with stakeholders.

Government

The Commission’s public sector consultative forum engages national

government departments, state owned enterprises and municipalities.

Themainprojectfortheyearunderreviewwasthefocusonbid-rigging.

The Commission’s investigation into a range of infrastructure projects

revealedthatbid-rigginghasbeenwidelypractised,wherepartiescollude

anddeliberatelymisleadgovernmentintheirtenderdocumentation.One

practiceinvolvesthedirectriggingofcontractsinordertoachieveagreed

market-sharepositions.Theotherrelatesto“coverpricing”,wherebidders

appear tobeactingcompetitively,while in fact tenderpriceshavebeen

devisedtoensurethatonlyoneof thebiddingfirmsissuccessful.While

ithasbeenparticularlyprevalentininfrastructuretenders,bid-rigginghas

alsobeenpractised inothersectors.Clearly, thiskindofanticompetitive

behaviourpractisedonawidescale isagreatcost togovernment.The

bid-riggingawarenessprojecthas threeelements: trainingandcapacity

building;policyand legislative reforms;andencouraginggovernment to

claimbackdamagesfromtheconspiringfirms(seebox7).

Business

The Commission reached out to the business community to propagate

the idea of voluntary compliance and to increasegeneral awareness of

theCompetition Act. TheCommission’s workwith business has yielded

important outcomes, such as the increased number of applications for

corporateleniency.Thedivisionmakescontactwithbusinessinavariety

ofways, suchasengagingwithparticular firmsandmeetingwith trade

associations.Whileovertheyears,theCommissionhadfocusedonsmall

andmediumenterprises, thehighlightof theyearunder reviewwas the

Commission’smeetingwithbigbusiness(seebox8).

StrategyandStakeholderRelations

28

Box 7: The Commission’s war on bid-rigging intensifies

Enforcementandadvocacyareregardedasthetwinpillarsofcompetition

compliance. Through its advocacy section, theStrategy andStakeholder

Relations division has tackled bid-rigging, a current component of the

Commission’s enforcement strategy, both from a policy and education

perspective.Thedivisionhasdevelopedabid-riggingbrochureandheld

various workshops with business and government departments on bid-

riggingintheperiodunderreview.InJanuary2010,theCommissionmadea

submissiontoNationalTreasuryontheuseoftheCertificateofIndependent

Bid Determination in the procurement process. The certificate requires

bidderstodiscloseallmaterialfactsaboutanycommunicationthattheyhave

hadwithcompetitorspertainingtotheinvitationtotender.Theobjectiveof

thesubmissionwastoinfluenceNationalTreasury’sprocurementpolicyto

addressthatthegapsthathavebeenidentifiedbyadoptingthenecessary

measurestopreventbid-riggingbeforebidsaresubmitted.Thecertificate

willassistpurchasersbyinformingbiddersabouttheillegalityofbid-rigging

andprovideforadditionalpenalties.Inresponsetothesubmission,National

Treasurydevelopedapracticenoticeintermsofsection76(4)ofthePublic

Finance Management Act (PFMA). The note is an instruction to accounting

officersinallspheresofgovernmenttoensurecompliancewithsection4(1)

(b)(iii)oftheCompetitionAct.ThenotewillbeofficiallyissuedbytheMinister

ofFinance in2010/11.Thegeneralconditionsofcontracthavealsobeen

amended to includeclause34,whichcovers theprohibitionof restrictive

practices.

Clause 34 now provides for the prohibition of collusive tendering and

the referral of bidder(s) who have engaged in collusive tendering to the

Commissionfor investigationandthepossible impositionofadministrative

penalties.ThesedevelopmentsaresignificantvictoriesfortheCommission

andshouldhavefar-reachingconsequencesforpublicsectorprocurement.

TheCommissionhascommentedonthefollowingprocurementpolicyand

legislation: theGuidelinesonSupplyChainManagement, thePreferential

ProcurementPolicyFrameworkAct(2000),thePublicFinanceManagement

Act (1999) and the Prevention and Combating of Corrupt Activities Act

(2004).Competitionconcernsinrelationtothelegislationandpolicieswere

submitted toNationalTreasury. In theyearunder review, theCommission

provided training to procurement officers from the private and public

sectors on the prevention, detection and reporting of bid-rigging during

the tendering process. The Commission started conducting bid-rigging

trainingworkshopsfortheprovincialsphereofgovernment.Thiswasdone

throughprovincialbid-riggingworkshopsinKwaZulu-Natal;WesternCape;

Gauteng and EasternCape, in partnershipwith the provincial treasuries.

Atotalof243procurementofficialswerereached.Thedivisionalsomade

presentations and held workshops with the business community through

breakfastmeetingswithcompanydirectors.Theobjectiveoftheworkshops

wastoeducatebusinessabouttheCompetitionAmendmentAct(2009)and

its implications for directors of companies, as the Act introduces criminal

liabilityforindividualsinvolvedinbid-rigging.Thisresultedinanincreasein

applicationsforleniencyfromfirms.

Box 8: The Commission reaches out to the business community

TheCommissionhelditsfirstbusinessconsultativeforuminJohannesburg,

inNovember2009.Theforumwasattendedby90businessdelegates.

The objective of the forum was to establish relations with the South

Africanbusinesscommunity,todeveloparelationshipthatisnotbased

solelyonenforcementaction,buttofosteramutualunderstandingofthe

respectiveenvironmentsandchallenges,aswellastoidentifycompetition

championswithinthebusinesscommunity.TheCommissionhostedthe

foruminpartnershipwithBusinessUnitySouthAfrica.

29

Trade unions

TheCommissionregardstradeunionsasakeystakeholdertobeengaged.

The aim of interacting with the trade union movement is to increase

awareness and mobilise trade union participation in merger processes as

requiredbytheCompetitionAct.Tradeunionsalsohaveavestedinterest

intheCommission’senforcementandinvestigationwork.TheCommission

has established the trade union forum and the working committee to ensure

regularinteractionandinformationsharing.TheCommissionalsoprovided

training in mergers and acquisitions to shop stewards and other trade

unionofficialsforthemtounderstandtheirroleandtheCommission’srole

in these transactions.

Consumers

The Commission interacts with consumer organisations from time to time

to highlight key consumer issues emanating from its investigations and

enforcementwork.Anactiveconsumermovementisvitaltothecompetitive

process, and can give impetus to firms to compete by offering better

pricesandquality.Whilemuchworkremainstobedoneinthisarea,non-

governmental organisations and consumer forums that take an active

interestintheCommission’sworkincludetheSouthAfricanHumanRights

Commission,theBlackSashandtheConfederationofSouthAfricaTrade

Unions(COSATU).

Table 5: The Commission’s key engagements with stakeholders

Stakeholders Type of interaction Outcome

Government

Thirdpublicsectorconsultativeforum 59delegatesfromgovernmentdepartments,regulatorybodies,stateowned enterprises and public entities

Presentationonbid-riggingatthepublicsectorsummit 120procurementofficials

Provincialbid-riggingworkshops 243procurementofficialsinKwaZulu-Natal,EasternCape,Gautengand Western Cape

SubmissiontoNationalTreasuryontheuseofthecertificateofindependentbiddetermination in their general conditions of tender N/A

CapacitybuildingtoemployeesoftheNationalLiquorAuthority’slicensingdepartmentonthegeneral assessment of competition issues and the application of competition principles of law and economics

N/A

Business

Breakfastmeetingswithbusiness.TheobjectivewastoeducatecompanydirectorsabouttheimplicationsfornotcomplyingwiththeCompetitionAct.Meetingswereco-hostedwiththeInstituteofDirectorsandtheprovincialChambersofCommerce

150delegatesinKwaZulu-Natal,Limpopo,EasternCapeandMpumalanga

PresentationtoconstructioncompanyonthevoluntarycompliancewiththeCompetitionAct 60stakeholdersreached

Miningmanagersonbid-rigging 59 stakeholders reached

South African Institute of Internal Auditors 100stakeholdersreached

Trade unions

FederationofUnionsofSouthAfrica(FEDUSA) 19 stakeholders reached

NationalUnionofMetalworkersofSouthAfrica(NUMSA) 39 stakeholders reached

Workshopswithprovincialandregionaltradeunionsonhowtoparticipateinmergerproceedings and to encourage whistle blowing

243tradeunionistsreachedinGauteng,KwaZulu-Natal,LimpopoandNorth West

Establishment of the trade union working committee. The committee will implement decisions takenattheannualtradeunionconsultativeforumandtotacklecompetitionrelatedchallenges

N/A

30

Stakeholders Type of interaction Outcome

Consumers

Meetingstocommunicateconsumerissues,developmentsandhighlightsofwhatotherinstitutionshavedoneforconsumerprotection 49 delegates attended from Gauteng and Western Cape

The Commission attended and participated in the following consumer protection conferences:2009consumerrightsconference,hostedbythenationalconsumerforumFirstAfricandialogueconsumerconference,hostedbytheDepartmentofTradeandIndustry

100stakeholdersreached

Consumeradvocacyworkshops 133consumersreachedinNorthWestprovince

Twocompetitionlawpresentationsonconsumeradvocacy 49 stakeholders reached

Small and medium enterprises

SevenpresentationswithSMEsheldinKwaZulu-NatalandGauteng 229stakeholdersreached

Franchise industry

Participationintheinternationalfranchiseexpo 100stakeholdersreached

Participation in the franchise breakfast seminar 80franchisesattended,32%werenotmembersoftheFranchiseAssociation of South Africa

ParticipatedinthefranchiseworkshopshostedbytheDepartmentofTradeandIndustryonthe new Consumer Protection Act 20stakeholdersreached


Table 5: The Commission’s key engagements with stakeholders (continued)

Source:owncalculationsfromdatasuppliedbyNewsclipmediamonitoring

2007/08 2008/09 2009/10

2002

3652

2492

3369

3878

3425

BroadcastMedia

Print Media

Communication

Media relations

TheperiodunderreviewhasseentheCommissioncontinuingtoreceive

widecoveragefromthemedia,evident in thenumberofnewsclippings

for both the print and electronic media. According to Newsclip media

monitoring, the Commission was covered in 7,303 news clippings

comparedto5,861in2008/09.The increasecanbelargelyattributedto

theCommission’smediaoutreachandinformationsharinginitiative,which

aims to:

• enrich themedia’s knowledgeof thework of theCommission and its

purpose

• improve the Commission’s understanding the media’s needs in its

interaction with the Commission

• update the media on the Commission’s programme in the identified

prioritysectors.

Intheyearunderreview,outreachworkshopswereheldinJohannesburg,

Cape Town and Durban with a total of 34 journalists who report on

competition related issues. In the year under review, 19media releases

wereissuedand181radioand73televisioninterviewswereconducted.

Figure 10: Media coverage: number of news items

31

Publications

TheCommissionusesvariouspublicationstocommunicatewithexternal

stakeholders. The following publications were printed and distributed in

the reporting period:

Table 6: Publications

Publication Number printed

Competition News 8,000*

SME Guide (reprint) 5,000

Franchise Notice (reprint) 2,000

Pocket Act (reprint) 1,500

Bid-riggingGuide 2,000

Ten-YearReview 2,000

2008/09AnnualReport 2,000


Note: * 4 per year at around 2,000 per batch.

TheCommissionpublishesCompetitionNewsonaquarterlybasis. The

aimofthejournal istohighlightkeycasesandotherkeydevelopments.

Thisalsoservesasavehicleforfeedbackfromkeystakeholders.

Website

TheCommissionlauncheditsrevampedwebsite(www.compcom.co.za)in

December2009.Thenewwebsiteismoreuser-friendlyandaimstocater

fortheneedsofthefrequentvisitor.ThenumberofhitstotheCommission’s

websitehasgrownconsiderably:in2009/10visitstothewebsitetrebledto

106,738from27,400in2008/09,andthenumberofvisitorsincreasedfrom

11,930to45,619.Therewasalsoanincreaseinthenumberofreturning

visitors, from 2,840 in 2008/09 to 11,630. Most visitors are from South

Africa(79percent),andthenfromtheUnitedKingdom,UnitedStates,Italy,

Germanyandothercountries.

Internal communication

The Commission’s efforts to improve internal communication are bearing

fruit. Inaneffort to improve internalcommunicationandcreateahealthy

andopenworkingenvironment,theCommissionhasundertakenanumber

ofinitiatives.Intheyearunderreview,22discussionforumswereorganised

andattendedbystaffmembers.Other teambuilding initiatives included

13staffmeetingsandeventssuchasanawardceremony/yearendfunction,

participation in the Cell C Take a Girl Child to Work and a team and brand

building race. There were 12 issues of the Competition Commission’s

internalnewsletterNewsflash.

International relationsIn the year under review, the division continued its role of coordinating

andimplementingtheCommission’sinternationalagenda.Thereisavery

strong international community in the area of competition law practice,

because although enforcement takes place at the national level, many

businessesarecompetingininternationalmarkets,wherecartelsmayform

and cross-bordermergers take place. So international cooperation and

networksnotonlyinvolvememberslearningfromeachother,butarealso

concernedwith jointenforcementprojectsandensuringthesmoothand

consistentreviewofinternationalmergers.

The consolidation of the African Agenda, as the principal focus of South

Africa’sforeignpolicy,hasbecomeoneoftheCommission’spriorityareas.

Significantefforthasgone intohostingstaffexchangesand fact finding

missions involving staff members from competition agencies on the

continent. In linewith itscommitment to theeconomicdevelopmentand

economic integration of the SADC, South Africa chaired the meeting of the

SADC regionalworkshopon competition lawandpolicy inBotswana in

August2009.ItispartofSouthAfrica’sforeignpolicytoplayanactivein

thedifferentforumsoftheUnitedNations,particularlyinrelationtoissuesof

globalgovernance.TheCommissionthereforecontinuestoparticipatein

UnitedNationsConferenceonTradeandDevelopment’s(UNCTAD)annual

intergovernmentalexpertmeetingoncompetitionlawandfindsthistobe

avaluableforumwherememberstatescanshareexperiences,successes

and challenges in the world of competition.

Specific activities in the international arena

Joint Food Project:ThisiscoveredinthePrioritisationandImpactsection

of this report. The Commission is engaging its peers in the SADC region to

implementasimilarprojectonidentifiedfood items.

International publications: The Commission submitted a contribution to

the 2009 edition of theGlobal Competition Review’s Rating Enforcement

publication,which is anannual surveyof theworld’s leadingcompetition

authorities.

32

The prospect of an African competition forum: In March 2010, the

Commissioner attended the African stakeholders’ workshop’ in Nairobi,

Kenya.ThemeetingfocusedontheformationofanAfricancompetitionforum

whichwillfocusonAfrica-specificprojects,activities,needsandchallenges

incompetition.TheCommissionerhasbeenappointedasvice-chaironthe

interim steering committee that has been tasked to set up the forum.

The Namibian Competition Commission: TheCommissionergave the

opening address at the launch of the Namibian Competition Commission in

October2009.

Capacitybuilding

Facilitated by the SADC, the Commission’s principal investigator at the

Competition Commission was attached to the Competition Commission

of Mauritius in July 2009 to provide technical assistance to the newly

establishedinstitution.InSeptember2009,theCommissionhostedastudy

tour for delegates from the Fair Competition Commission and Tribunal of

TanzaniainSeptember2009.ThisvisitwasfacilitatedbyProfessorEleanor

Fox, professor of trade regulation at New York University School of Law.

TheCommissionalsohostedastudytourfordelegatesfromtheGambian

Competition Commission in December 2009. The Commission hosted

three officers fromBotswana for capacity building for the newBotswana

competitionauthority.TheywerebasedinthePolicyandResearchdivision

fromFebruarytoMarch2010.

Participation in international organisationsInternational Competition Network: The Competition Commission is

anactivememberof the InternationalCompetitionNetwork (ICN)and the

Commissioner is a member of its steering group. A delegation from the

Commission attended the network’s eighth annual conference in Zurich,

SwitzerlandinJune2009.Staffmembersfromrelevantdivisionsparticipated

intheICN’scartelsworkinggroupinOctober2009inEgypt.

Organisation for Economic Cooperation and Development (OECD):

TheCommissionandtheTribunalhaveparticipated in theOECD’sGlobal

Competition Forum since 1999, when the South African competition

authorities were established and participated at its meetings held in June

andOctober2009andFebruary2010.

Southern and Eastern Africa Competition Forum: South Africa is a

member of the Southern and Eastern Africa Competition Forum and the

CommissionerandDeputyCommissionerattendeditsinauguralmeetingin

May2009.

SADC: The Commission chaired the second meeting of the SADC regional

workshoponcompetitionlawandpolicyinBotswanainAugust2009.

Strategy and Stakeholder Relations

Front row: ItebogengPalare;MolebogengTaunyane;OupaBodibe;NericeBarnabas;ZibuyileJafta;Keitumetse Letebele

Back row: MziwodumoRubushe;TebelloSello;BusisiweMolefe;FredaMathaba;Andile Mangisa

33

Our People and ResourcesTheCommission’shumancapitalassetisthelifebloodoftheorganisation.

TheHumanResourcesdivisionisresponsibleforawidescopeofactivities

withspecificemphasisontheperformancemanagementandlearningand

development of the organisation’s primary asset, its staff. Performance

contractsaredrawnupannuallyandarealignedwith theCommission’s

strategicobjectives.OneoftheCommission’scorestrategicobjectivesis

toachieveandmaintainahighperforminginstitution.Thisisbeingrealised

throughachievingindividualandorganisationalperformancegoalsthrough

performancecontractsanddivisionalbusinessplans.

Human capitalAttheendoftheperiodunderreview,theCommission’sstaffcomplement

was 138. This includes the 11 graduate trainees which had been recruited

aspartof thesuccessfulgraduate traineeprogramme.Overall, the total

numberofstaffincreasedby19percentfrom2008/09.Thetotalnumbers

for 2007/08, 2008/09 and 2009/10 are 116, 132 and 138. Thegraduate

traineesprovideapoolofskilledandqualifiedpeoplethattheCommission

can draw from for permanent junior positions. During the period under

review, four graduates were absorbed into the Commission’s structure.

Astheorganisation’scaseloadisputtingincreasingpressureonthestaff

complement,more staff will have to be hired over the next three years

for theCommissiontocontinuetodelivereffectivelyonitsmandate.The

number of staff is thus expected to grow to about 190 over this three-

yearperiod.Mostofthenewstaffwillbringlegalandeconomicexpertise

as theCommission’s enforcement activities becomemore complex and

demanding, although there will also be a need for more support staff.

Learning and development

The Commission encourages the personal development and growth of

itsemployees.The learninganddevelopment functionwithin theHuman

Resources division supports this objective and has helped to establish

theCommissionasalearningorganisation.Interventionsincludeinternal

capacitybuildingprogrammes,trainingabroad,studyloanassistanceand

localcustomisedtraininginterventionsinidentifiedpriorityareas.

Learning and development initiatives support the retention of the

organisation’s skilled and professional staff complement. As part of its

commitment to retain and nurture high quality people, the Commission

emphasises its growth and development interventions to current and

prospectiveemployees.

Figure 11: Staff profile as a percentage of total staff, as at 31 March 2010


Box 9: The Commission’s management development programme

Duringtheperiodunderreview,asuccessfulmanagementdevelopment

programmewaslaunchedandattendedby20seniorstaffmembers.The

programmekickedoff inSeptember2009andwashostedoffsitewith

leading subjectmatter expertsmaking presentations. This customised

programme was aimed at equipping senior staff members with the

necessaryskillsformanagingsubordinates,thusstrengtheningalllevels

of the organisation’s management. Participants submitted portfolios of

evidenceaspartoftheprogrammeandtheirhighstandardpointstothe

programme’ssuccess.Theprogrammewillbeextendedtoothersenior

employeesinthenextfinancialyear.

51%Graduates

Man

Support

Law & Econ

36%

4%

34

The Deloitte employer survey showed that the Commission’s efforts in

developing its staff had yielded high levels of job satisfaction. In 2009,

theCommissionwontheDeloitteBestCompanyToWorkForawardinits

industrysectorforthesecondconsecutiveyear.TheDeloittesurveyresults

aresharedwithallstaffandareusedasavaluabletoolforguidingfuture

initiativeswithintheCommission.Monthlystaffmeetingsanddifferentforms

ofongoingcommunicationwithstaffarepartofensuringthatemployees

enjoy good levels of job satisfaction. The declining staff turnover rate

suggeststhatlevelsofjobsatisfactionareincreasing(seetable7).

Table 7: Staff turnover over the past three years

Year % Turnover

2007/08 26%

2008/09 16%

2009/10 15%


EmploymentequityandtransformationAsarelativelynewinstitution,theCommissionhashadtheadvantageofnothaving

todealwithissuesoftransformationandequity.Thestaffprofilelargelyreflects

SouthAfricandemographics.Black femaleprofessionalsarewell represented

atthemanagementlevelandblackemployeesoverallcomprise78percentof

theseniortierintheorganisation.Thestaffcomplementof138employeesis

madeupof66females(47.8percent)and72males(52.2percent).This

showsthattheCommissionisnotfarfromachievingitstargetof50percent

femalesand50percentmales,inlinewithgovernmentguidelines.

Table 8: Employment equity comparison for 2008/09 and 2009/10

Year % Females % Males

2008/09 45% 55%

2009/10 47.2% 52.2%


Figure 12: Employment equity (race and gender) over a three year period


EmploymentequityreportsaresubmittedtotheDepartmentofLabouras

pertherequirementsoftheEmploymentEquityAct(1998).

RemunerationTheDepartmentofTradeandIndustryapprovedtheimplementationofthe

resultsofasalarybenchmarkingexerciseacrossalltiersoftheCommission

inAugust2009.

Thebenchmarkingexercisealigned theCommission’ssalarybandswith

the public sector. This will also serve the Commission in retaining and

attracting staff, as staff are assured that they are being remunerated at

marketrelatedlevels.

EmployeewellbeingThe Commission takes a keen interest in the wellbeing of its staff members

andsupportsacomprehensiveserviceatnocosttoitsemployees.

ThefollowingstaffmembershavebeenattheCommissionfor10yearsandreceivedcertificatesforlongservice:fromleftMogalaneMatsimela,BrianMoeng, Binu Idiculla, Bellah Kekana, Nomsa Zilindile, Wilfred Steenkamp,

LeonRossouwandAnnaleevanReenen*.

100

80

60

40

20

0

84

19

511

93

18

5

16

100

20

5

15

African

White

Coloured

Asian

2007/08 2008/09 2009/10

* Missing from the photo are Johan Dreyer, Brenda Maseko, Charlie Ndlovu, Mittah Sibanyoni and Johnny Wilke.

35

Through the Independent Counselling and Advisory Services, staff

membershave24/7accesstoatollfreehelplinethatoffersservicesand

counsellingonarangeofmatters.Employeesarefrequentlyremindedof

thebenefitsof theprogramme.TheannualHealthDays,wherestaffare

able to have health screenings, are another successful intervention that

contributetothewellbeingoftheCommission’sstaff.

Employeesreceiveregularfeedbackontheirhealthstatusthroughemail

desk drops.

The Commission supports annual HIV/AIDS awareness initiatives and

speakers on various health-related topics have been invited to help

increase awareness of health related issues.

EmployeerelationsTheCommission’sdisciplinaryandgrievancepolicieshavebeenreviewed

to ensure that best practice is followed at all times. Labour related matters

thatmayariseintheCommissionaresettledasamicablyandaspromptly

as possible.

Apartfromminorgrievanceslodgedandresolvedduringtheperiodunder

review,no formaldisciplinaryenquirieswere instituted.TheCommission

hasnothadanymajorityunionoperatinginitsenvironmentsince2008.

InformationtechnologyThe IT department provides a secure, user friendly and efficient IT

environment forallemployees. Ithas introducedvarious informationand

communicationtechnologiestoensurebetterefficiencyandproductivityin

theorganisation.Thecasemanagementsystemandthesharepointportal

serverwererevampedduringtheyearunderreview,enablinginteractive

information management. The department has also acquired a knowledge

managementsystemwithvariousworkflowandcollaborationtechnologies.

Any upgrade of computer equipment is scheduled for the forthcoming

year,with80computersduetobereplaced.

Securities and facilitiesAs the Commission is a growing organisation with an increasing workload,

soitsneedsinrelationtoofficespaceandfacilitiesarechanging.Itisthe

functionofthesecurityandfacilitiesbusinessunittoaddresstheseneeds.

The unit has focused on improving the facilities management system,

exploring ways of acquiring more facilities and resources that include

officespace,furniture,accommodation,construction,designandparking.

Theanticipatedgrowthinstaffnumbersoverthenextfewyearsisthemain

challengefortheCommission’sfacilities.

Thecurrentofficespaceof4,700m2makesitdifficultfortheorganisation

tomeetallitsobjectivesoptimally.Forthistohappenitwillneed6,000m2

andspecificspacestandardsfordifferentlevelsofstaff.TheCommission

iscurrentlyoccupying twobuildings,which isnot idealas thiscanslow

downprocessesandinterrupttheworkflow.Theunitislookingintowaysof

addressing the space constraints, which will get more pressured as more

staffarehiredoverthenextfewyears.

Corporate GovernanceFront row: TsholofeloSebiloane;TshepisoDiremelo;WilfredSteenkamp;CharlieNdlovu;LaylaSadickMiddle row: JoePhele;SuzanNyamane;CarolineLegwai;BellahKekana;PinkyNxumalo;BonoloSuping;NicoleGounder;KarenHudson;Kelebogile MekoaBack row:LeonRossouw;ElmarieWiehahn;NomsaZilindile;AletAucamp;RhimeLetsoalo;BinuIdiculla;AbramTiro

Prioritisation and Impact

Part 1CorporateGovernance

Part 3

37

CorporateGovernanceStructuresanddecision-makingThepowersoftheCommissionarevestedintheCommissioner,who,aschiefexecutiveofficer,isresponsible

to theMinisterofTradeand Industry (In thenext reportingperiod, thiswillbe theMinistryofEconomic

Development).TheCommissionerisresponsibleforthegeneraladministrationoftheCommissionandfor

performinganyfunctionsassignedtoit intermsoftheCompetitionAct.AccordingtotheAct,decisions

oncasesmustbetakenbyboththeCommissionerandtheDeputyCommissioner,whotogether,formthe

Commission.Tothisend,thereareweeklyCommissionmeetingsduringwhichdecisionsoncasesaretaken.

TheCommission’smeetings are attendedbydivisionalmanagers and if necessary, case teams,which

advisetheCommissionerandDeputyCommissioner.Inaddition,executivecommittee(Exco)meetingsare

heldonamonthlybasistodecideonadministrative,humanresourcesandfinancialissues.

Oversightresponsibilities

The audit committee

TheauditcommitteesupportstheCommission’sexecutivecommitteeinfulfillingitsoversightresponsibilities

relating to internal controls, risk management, financial management and compliance with laws and

regulations.

Anindependentnon-executivememberchairsthecommitteeandbothinternalandexternalauditorshave

unrestricted access to the committee. The audit committee held four meetings in the reporting period. It

reviewedquarterlyinternalauditreports, internalandexternalauditplans,theriskassessmentplanand

financialstatementsfortheperiodending31March2010.

Audit committee members

Mr Jeff Rapoo (chairperson)

MrVictorNondabula(externalmember)

MsKarenTeixera(externalmember)

MsMaleshiniNaidoo(externalmember)

MrHermandeJager(externalmember,resignedMarch2010)

MrJohanDreyer(managementrepresentative)

38

Internal auditors

The internal auditing function for the Commission is outsourced, and in the

periodunderreviewwascarriedoutbyNgubane&Co.Duringtheinternal

audit process the company provided reports on the Enforcement and

ExemptionandLegalServicesdivisions,andtheCommissioner’soffice.

InternalfinancialcontrolsThe Commission has policies, procedures and systems designed to

providereasonableassuranceoftheintegrityandreliabilityofitsfinancial

statements,andtoadequatelyprotect,verifyandmaintainaccountability

for its assets. These internal financial controls are implemented by

qualifiedandtrainedpersonnelwithinasystemcharacterisedbychecks

andbalances.Theeffectivenessofinternalfinancialcontrolsismonitored

bytheCommission’smanagement,aswellasbytheinternalauditors.All

significantfindingsarereportedtotheauditcommitteeandCommissioner.

TheCommissionerandtheexternalandinternalauditorsarenotawareof

anymaterialbreakdown in the functioningof these internalcontrolsand

systemsintheperiodunderreview.

Risk managementWith the assistance of the internal auditors, management is responsible

for proactively identifying, evaluating, andmanaging andmonitoring all

significant risks facedby theCommission. Someof the significant risks

towhichtheCommissionwasexposedintheperiodunderreviewinclude

operational,technologicalandregulatoryrisks.Arevisedriskmanagement

strategywasdrawnupin2009withaviewtosafeguardingtheCommission’s

staff,assets,corporatecredibilityandreputation.Intheyearunderreview,

theCommissionstarted to implement theriskmanagementstrategyand

integrateitintotheCommission’sactivities.

Compliance with legislationTheCommissionisboundbythefollowinglegislation:

PublicFinanceManagementAct(1999) and Treasury regulations

In accordance with the Public Finance Management Act and Treasury

regulations, the Commission submitted the following documents to the

DepartmentofTradeandIndustryforapprovalintheperiodunderreview:

• MemorandumofagreementwiththeDepartmentofTradeandIndustry

• Requesttoretainsurplusesgeneratedasat31March2009

• QuarterlyreportsontheCommission’sexpenditure,budgetvariance,

activitiesandperformanceagainstsettargets

• Monthlyexpenditurereports

• Strategicplanandbudgetforthethree-yearperiod2009to2012.

SkillsDevelopmentAct(1998)

The annual training report and annual workplace skills plan was submitted

on30June2009.

SkillsDevelopmentLeviesAct(1999)

A skills development levy equal to 1 percent of the total payroll is paid

monthly to the South African Revenue Service. The Commission’s

contributiontotheskillslevyfundwasR562,959.Therewerenorefunds.

EmploymentEquityAct(1998)

With under 150 employees, the Commission is obliged to submit an

employment equity report every alternate year. An employment equity

reportwassubmittedinOctober2008,andthenextoneisdueinOctober

2010.

CompensationforOccupationalInjuriesandDiseasesAct(1993)

AreturnofearningswassubmittedinMarch2010.Thisprovidesanestimated

cost of possible claims that can be lodged against the Compensation Fund

in terms of this Act.

39

UnemploymentInsuranceAct(2001)

FortheperiodunderreviewallcontributionstotheUnemploymentInsurance

Fundwerepaidoveronamonthlybasis.Thesecontributionsconsistof

anemployeecontributionof1percentandanemployercontributionof1

percent,cappedatamaximumofR124.78.

OccupationalHealthandSafetyAct(1993)

Intheyearunderreview,theCommissiontookallreasonableprecautions

toensureasafeworkingenvironmentandconducteditsbusinesswithdue

regard for environmental issues. The Commission’s occupational health

and safety policywas reviewed and included in theCommission policy

manual.

IncomeTaxAct(1962)

TheSouthAfricanRevenueServiceexemptedtheCommissionintermsof

section10(1)(A)(i)oftheIncomeTaxAct(1962).

Levies and taxes

The Commission has registered for, and met its obligations in relation to the

followingleviesandtaxes:

• Skillsdevelopmentlevy

• Workmen’scompensation

• UnemploymentInsuranceFund

• Pay-as-you-earn(PAYE).

Annual FinancialStatements

Part 4

Contents

AccountingAuthority’sResponsibilitiesandApproval 42

Audit Committee Report 43

AccountingAuthority’sReport 45

ReportoftheAuditor-General 49

Statement of Financial Position 51

Statement of Financial Performance 52

Statement of Changes in Net Assets 53

Cash Flow Statement 54

Accounting Policies 55

Notes to the Annual Financial Statements 62

Competition Commission Annual FinancialStatementsfortheyearendedMarch31,2010

41

42

AccountingAuthority’sResponsibilitiesandApproval

TheAccountingAuthorityisrequiredbythePublicFinanceManagement

Act (1999), to maintain adequate accounting records and are responsible

forthecontentandintegrityoftheannualfinancialstatementsandrelated

financial information included in this report. It is the responsibilityof the

AccountingAuthority toensure that theannualfinancialstatements fairly

presentthestateofaffairsoftheentityasattheendofthefinancialyear

andtheresultsofitsoperationsandcashflowsfortheperiodthenended.

Theexternalauditorsareresponsibleforreportingonthefairpresentation

oftheannualfinancialstatements.

Theannualfinancialstatementshavebeenpreparedinaccordancewith

the effectiveStandards of Generally Recognised Accounting Practice

(GRAP), issuedby theAccountingStandardsBoard inaccordancewith

Section55of thePublicFinancemanagementAct(ActNo.29of1999).

Accounting policies for material transactions, events or conditions not

covered by the GRAP reporting framework have been developed in

accordancewithparagraphs7, 11and12ofGRAP3and thehierarchy

approvedinDirective5issuedbytheAccountingStandardsBoard.

Theannualfinancialstatementsarebaseduponappropriateaccounting

policiesconsistently appliedand supportedby reasonableandprudent

judgementsandestimates.

The going concern basis has been adopted in preparing the financial

statements.TheAccountingAuthorityhasnoreasontobelievethatthe

Commission will not be a going concern in the foreseeable future based

on forecasts and available cash resources. These financial statements

supporttheviabilityoftheCommission.

The external auditors are responsible for independently reviewing and

reportingontheentity’sannualfinancialstatements.Theannualfinancial

statementshavebeenexaminedbytheentity’sexternalauditorsandtheir

reportispresentedonpage49-50.

Theannualfinancialstatementssetoutonpage51-77,whichhavebeen

preparedonthegoingconcernbasis,wereapprovedbytheaccounting

authority:

Mr. M Ramburuth

43

ReportoftheAuditCommitteefortheyearended31March2010

ReportoftheAuditCommitteeoftheCompetitionCommission

TheAuditCommitteeispleasedtoreportthat,fortheyearunderreview,it

has complied with its responsibilities arising from section 55 (1)(b) of the

PFMAandTreasuryRegulations27.1.7and27.1.10(b)and(c).

AuditCommitteemembersandattendance:

TheAudit Committee of theCompetitionCommission (the “Committee”)

consists of the members listed hereunder and is required to meet four

timesperannumasperitsapprovedtermsofreference.Duringtheyear

underreviewfourmeetingswereheld.

Name of memberNumber of meetings attended

Number of meetings

held

J. Rapoo (Chairperson) Non-executive 4 4

M. Naidoo Non-executive 1 4

Prof. H. de Jager Non-executive 2 4

V.Nondobula Non-executive 3 4

K.Teixeira* Non-executive 1 4

J.Dreyer(CompanySecretary) Executive 4 4

The Committee’smeetings have regularly included the internal auditors

andrepresentativesfromtheAuditorGeneral’sOffice.

ResponsibilitiesoftheAuditCommittee

The Audit Committee reports that it has complied with its responsibilities

arisingfromsection55(1)(b)ofthePFMAandTreasuryRegulations27.1.7.

and27.1.10(b)and(c).

The Audit Committee also reports that it has adopted appropriate formal

terms of reference as its audit committee charter, has regulated its affairs

in compliance with this charter and has discharged all its responsibilities

as contained therein.

Accordingly,theCommitteeoperatesinaccordancewiththetermsofthe

saidcharter and is satisfied that it hasdischarged its responsibilities in

compliance therewith.

The quality of in year management and monthly/quarterly reports submitted in terms of the PFMA andtheDivisionofRevenueAct

TheAuditCommittee issatisfiedwith thecontentandqualityofmonthly

andquarterlyreportspreparedandissuedbytheAccountingAuthorityof

theCommissionduringtheyearunderreview.

The effectiveness of internal control

Thesystemofcontrols isdesignedtoprovidecosteffectiveassurancethat

assetsaresafeguardedandthatliabilitiesandworkingcapitalareeffectively

managed. In line with the PFMA and the King III Report on Corporate

Governancerequirements,InternalAuditprovidestheAuditCommitteeand

management with the assurance that the internal controls are appropriate and

effective.Thisisachievedbymeansoftheriskmanagementprocess,aswell

as the identification of corrective actions and suggestedenhancements to

thecontrolsandprocesses.FromthevariousreportsoftheInternalAuditors,

theAuditReport on theannual financial statements, and themanagement

reportoftheAuditor-General,itwasnotedthatnosignificantormaterialnon-

compliance with prescribed policies and procedures have been reported.

Accordingly,wecanreportthatsystemofinternalcontrolfortheperiodunder

reviewwasefficientandeffective.

* Appointed 3 September 2009

44

Evaluation of the annual financial statements

The Audit Committee has:

• reviewed and discussed the audited annual financial statements to

be included in the annual report, with the Auditor-General and the

AccountingAuthority;

• reviewedtheAuditor-General’smanagementreportandmanagement’s

response thereto;

• reviewedchangesinaccountingpoliciesandpractices;and.

• reviewedsignificantadjustmentsresultingfromtheaudit.

The Audit Committee would like to highlight that the Competition Commission

ishighlydependentontheapprovaloftheretentionofaccumulatedsurplus

fromNationalTreasury,aswellastheapprovaloftheannualgrantsfrom

theDepartmentofEconomicDevelopment inorder tomaintain itsgoing

concern status.

The Audit Committee concurs and accepts the Auditor-General’s

conclusionsontheannualfinancialstatements,andisoftheopinionthat

the auditedannual financial statementsbeacceptedand read together

withthereportoftheAuditor-General.

Mr. J.R Rapoo

Chairperson of the Audit Committee

Date:29July2010

45

AccountingAuthority’sReport

ReportbytheAccountingAuthoritytotheExecutiveAuthorityandParliamentoftheRepublicofSouthAfrica.

1. Natureofbusiness

TheCommissionderivesitsmandatefromtheCompetitionActNo.89of1998,asamended.Themainobjectives,asdeterminedbytheCompetitionAct,

are the following:

• Promoteefficiency,adaptabilityanddevelopmentoftheeconomy;

• Provideconsumerswithcompetitivepricesandproductchoices;

• Topromoteemployment,andadvancesocialandeconomicwelfareofSouthAfricans;

• ToexpandopportunitiesforSouthAfricanparticipationinworldmarketsandrecognisetheroleofforeigncompetitionintheRepublic;

• Toensurethatsmallandmediumsizedenterpriseshaveanequitableopportunitytoparticipateintheeconomy;and

• Topromotethegreaterspreadofownership,inparticulartoincreasetheownershipstakesofhistoricallydisadvantagedpersons.

2. Financialoverview/performance

2.1.FinancialHighlights 2010

‘000

2009

‘000

Revenue 111305 94719

Interestreceived 1987 4526

Total Revenue 113 292 99 254

Expenditure 128 673 110 638

Net deficit (15 381) (11 393)

Total assets 26 509 37 826

Total liabilities 20 675 16 609

No. of Merger cases filed 181 415

2.2.TotalRevenue

TotalrevenueincreasedfromR95millionin2009toR111millionin2010.Incomefromthegrantincreasedby83%fromR44millionin2009toR80,7

millionin2010whilstincomefromfilingfeesreducedby40%fromR50,5millionin2009toR30,3millionin2010.

Mergercasesfiledduringtheyeardecreasedby56%to181(2009:415).

Interestearnedontemporarilyavailablefundsdecreasedby56%andotherincomereceivedduetorepaymentofstudyloansaswellasarefund

from SASSETA remained constant.

46

2.3Expenditure

Expenditure increasedfromR111millionin2009toR128millionin2010reflectinganoverall increaseof15%.ThisamountedtotheCommission

spending86%ofitsbudgetedexpenditure.TheincreaseinexpenditurewasasaresultofthegrowingstaffnumberswithintheCommissiontoassist

withtheincreasedenforcementactivity,andthecommensurateincreaseinlitigationandconsultingfeesduetothecomplexityofcases.

2.4FinancialPerformance

TheCommissiongeneratedadeficitofR15,3million(2009:R11,4mdeficit)forthecurrentyear.ThecostsofrunningtheCommissionareincreasing

annuallyduetoincreasedactivityresultinginanincreaseinthedemandforhumanresourcecapacity.

TheCommissionreceivedadditional fundingofR13milliontoassistwith the increase in litigationcosts incurredonhighprofilecasesbeforethe

Tribunal.TheCommissioncarriesforwardanaccumulatedsurplusofR5,8m(CashsurplusofR2,5millionafterexpenditureonfixedassets)forthe

currentfinancialyear.

Theapprovedgrantfundingfromgovernmentfortheyear2010-11amountingtoR80,7m,incomefromfilingfeesplusanyaccumulatedsurplusthat

the Commission is allowed to retain will ensure that the Commission is able to continue as a going concern.

3. Executivecommittee

Thecompositionofthecurrentexecutivecommitteeduringtheperiodunderreviewisasfollows

Member Title

Mr. M. Ramburuth Commissioner

Mr.T.Bonakele DeputyCommissioner

Mr.J.Dreyer CommissionSecretary

Mr. S. Roberts Manager:Policy&Research

Ms.N.Pillay Manager:CorporateServicesandCFO

Ms.W.Mkwananzi Manager:LegalService

Ms. N. Mokoena Manager:StrategicandStakeholderRelations(Resigned28February2010)

Mr.M.vanHoven Manager: Mergers & Acquisitions

Mr.K.Weeks Manager:EnforcementandExemptions(Appointed1August2009)

4. Changesinnatureofproperty,plantandequipment

Nomajorchangesinthenatureofproperty,plantandequipmentorchangesinthepolicyrelatingtotheuseofproperty,plantandequipmenttook

placeduringtheyearunderreview.Changesregardingtheestimatedusefullifeoftheassethavebeentakenintoaccountinthecalculationofthe

depreciationvaluesoftheasset.

Computerequipmentnotinuseandwithazeronetvaluehasbeendonatedandallassetsbrokenandindisrepairhasbeendisposedoff.

47

5. Materialityframework

TheCommissiondeterminedaplanningmateriality figureofR340292 for theyearunder review. TheCommission’sbusiness is such that it is

notcapital intensiveandrevenuewasregardedasthebest indicatorofbusinessactivityandtherefore1%ofbudgetedfee incomewasused in

determiningthematerialityfigure.

Materialfactsandlossesofaquantitativenaturearedisclosedwhenthematerialityfigureisexceeded,oriftheyarosethroughcriminalconduct,

irregular/fruitlessandwastefulexpenditure.

DisposalofsignificantassetswhenoveralloperationalfunctionsoftheCommissionchanges,aredisclosed.

6. Eventssubsequenttofinancialpositiondate

Noeventstookplacebetweentheyear-enddate(31stMarch2010)andthedateonwhichthefinancialstatementsweresignedthatweresufficiently

material to warrant disclosure to interested parties.

HoweveritistobenotedthattheManagerCorporateServiceandCFO-N.Pillay,andtheCommission’sSecretary-JDreyer,resignedinMay2010.

7. Expenditurerelatedto2010SoccerWorldCup

TheCommissiondidnotincuranyexpenditureinthe2009/10financialyearrelatedtotheSoccerWorldCup.Thefollowingexpenditurewasincurred

inthe2010/11financialyear,whichrelatedtothepurchaseofSoccerWorldCupmerchandise:

2010/11

Purchase of World Cup apparel Quantity R’000

Items purchased:

BoogieBlaster/Vuvuzelas 150 4

Drawstring bags 150 5

Beanies 150 8

T-shirts 150 15

Scarves 150 11

Total World Cup expenditure 750 43

48

8. Commissionsecretary(acting)

ThedetailsoftheCommission’ssecretaryareasfollows:

Ms.AnisaKessery

Businessaddress: Thedticampus

BuildingC:Mulayo

77MeintjiesStreet

Sunnyside

TSHWANE

Postaladdress: PrivateBagX23

LynnwoodRidge

0040

TSHWANE

Telephone +27-12-3943336

Fax +27-12-3944336

Emailaddress: [email protected]

ThepreviousincumbentMr.JohanDreyerservedduringtheperiodunderreviewbutsubsequentlyresignedon14May2010.

9. Address

TheCommission’sregisteredofficesaresituatedat:-

The dti campus

BuildingC:Mulayo

77MeintjiesStreet

Sunnyside

TSHWANE

with the postal address

PrivateBagX23

LynwoodRidge

0040

TSHWANE

Webaddress:www.compcom.co.zaMr. M Ramburuth

Accounting Authority

49

ReportoftheAuditor-GeneraltoParliamentonthefinancialstatementsoftheCompetitionCommissionfortheyearended31March2010

Report on the financial statements

IntroductionIhaveauditedtheaccompanyingfinancialstatementsoftheCompetition

Commission,whichcomprisethestatementoffinancialpositionasat31

March2010,andthestatementoffinancialperformance,thestatementof

changesinnetassetsandthecashflowstatementfortheyearthenended,

andasummaryof significantaccountingpoliciesandotherexplanatory

information,assetoutonpages55to61.

TheAccountingAuthority’sresponsibilityforthefinancialstatementsThe Accounting Authority is responsible for the preparation and fair

presentation of the financial statements in accordance with the South

African Standards of Generally Recognised Accounting Practice (SA

Standards ofGRAP) and in themanner required by the Public Finance

ManagementAct of SouthAfrica.This responsibility includes: designing,

implementingandmaintaininginternalcontrolrelevanttothepreparation

and fair presentation of financial statements that are free frommaterial

misstatement, whether due to fraud or error; selecting and applying

appropriate accounting policies; and making accounting estimates that are

reasonable in the circumstances.

Auditor-General’sresponsibilityAsrequiredbysection188oftheConstitutionofSouthAfricaandsection4

ofthePublicAuditActofSouthAfricaandsection40(10)oftheCompetition

Act,myresponsibilityistoexpressanopiniononthefinancialstatements

basedonmyaudit.

I conducted my audit in accordance with International Standards on

AuditingandGeneralNotice1570of2009issuedinGovernmentGazette

32758of27November2009.ThosestandardsrequirethatIcomplywith

ethical requirements and plan and perform the audit to obtain reasonable

assuranceaboutwhether thefinancial statementsare free frommaterial

misstatement.

Anaudit involvesperformingprocedures toobtainauditevidenceabout

theamountsanddisclosuresinthefinancialstatements.Theprocedures

selecteddependontheauditor’sjudgement,includingtheassessmentof

therisksofmaterialmisstatementofthefinancialstatements,whetherdue

to fraud or error. In making those risk assessments, the auditor considers

internal control relevant to the entity’s preparation and fair presentation

of the financial statements in order to design audit procedures that are

appropriate in thecircumstances,butnot for thepurposeofexpressing

anopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalso

includesevaluatingtheappropriatenessofaccountingpoliciesusedand

the reasonableness of accounting estimatesmade bymanagement, as

wellasevaluatingtheoverallpresentationofthefinancialstatements.

IbelievethattheauditevidenceIhaveobtainedissufficientandappropriate

toprovideabasisformyauditopinion.

OpinionInmyopinion,thefinancialstatementspresentfairly,inallmaterialrespects,

thefinancialpositionoftheCompetitionCommissionasat31March2010,

anditsfinancialperformanceanditscashflowsfortheyearthenended

in accordance with South African Standards of Generally Recognised

Accounting Practice (SA Standards of GRAP) and in the manner required

bythePublicFinanceManagementActofSouthAfrica.

Report on other legal and regulatory requirements

IntermsofthePAAofSouthAfricaandGeneralnotice1570of2009,issued

inGovernmentGazetteNo.32758of27November2009,Iincludebelow

myfindingson the reportonpredeterminedobjectives,compliancewith

thePFMA,theCompetitionActandfinancialmanagement(internalcontrol).

50

FindingsPre-determinedobjectives

Usefulness of reported performance information

The following criteria were used to assess the usefulness of the planned

and reported performance:

• Consistency:Hastheentityreportedonitsperformancewithregardto

itsobjectives,indicatorsandtargetsinitsapprovedstrategicplan,i.e.

aretheobjectives,indicatorsandtargetsconsistentbetweenplanning

and reporting documents?

• Relevance: Is there a clear and logical link between the objectives,

outcomes, outputs, indicators and performance targets?

• Measurability:Areobjectivesmademeasurablebymeansofindicators

andtargets?Areindicatorswelldefinedandverifiable,andaretargets

specific,measurable,andtimebound?

Thefollowingfindingsrelatetotheabovecriteria:

Planned and reported performance targets not specific/measurable/

time bound

For theselectedobjectives:mergersandacquisitions,enforcementand

exemptionsandlegalservices,23%oftheplannedandreportedtargets

were not:

• specific in clearly identifying the nature and the required level of

performance;

• measurableinidentifyingtherequiredperformance;

• timeboundinspecifyingthetimeperiodordeadlinefordelivery.

Internal control

Iconsideredinternalcontrolrelevanttomyauditofthefinancialstatements

andthereportonpredeterminedobjectivesandcompliancewiththePFMA

andCompetitionAct,butnotforthepurposesofexpressinganopinionon

theeffectivenessofinternalcontrol.Themattersreportedbelowarelimited

tothedeficienciesidentifiedduringtheaudit.

LeadershipTheCompetitionCommissiondidnot havesufficientmonitoringcontrols

toensuretheproperimplementationoftheoverallprocessofreportingon

pre-determinedobjectives.

Pretoria

30July2010

51

Statement of Financial Position

2010 2009

Note(s) ‘000 ‘000

ASSETS

Current Assets

Inventory 165 55

Tradeandotherreceivablesfromexchangetransactions 11 652 119

Cashandcashequivalents 12 18,855 32,658

19,672 32,832

Non-CurrentAssets

Property,plantandequipment 13 4,987 3,461

Intangible assets 14 1,850 1,533

6,837 4,994

Total Assets 26,509 37,826

LIABILITIES

Current Liabilities

Finance lease obligation 15 880 23

Tradeandotherpayablesfromexchangetransactions 17 18,480 14,474

Provisions 16 154 2,112

UnspentDonorFunds 28 5 -

19,519 16,609

Non-CurrentLiabilities

Finance lease obligation 15 1,156 -

Total Liabilities 20,675 16,609

Net Assets 5,834 21,217

NET ASSETS

Accumulated surplus 5,834 21,217

52

Statement of Financial Performance

2010 2009

Note(s) ‘000 ‘000

Revenue

Governmentgrants&subsidies 2 80,739 44,000

Fee income 3 30,380 50,506

Other Income 5 186 183

Surplus on disposal of assets - 30

Total Revenue 111,305 94,719

Expenditure

Employeerelatedcosts 6 71,557 54,938

Administrativeexpenses 7 3,263 2,458

Depreciation and amortisation 2,431 808

Impairment - 75

Finance costs 8 228 25

Operatingexpenses 9 51,194 52,334

Total Expenditure (128,673) (110,638)

Interestreceived 4 1,987 4,526Deficit for the year (15,381) (11,393)

53

Statement of Changes in Net Assets

Accumulated surplus

Total net assets

‘000 ‘000

Balance at 01 April 2008 32,610 32,610

Changes in net assets

Deficitfortheyear (11,393) (11,393)

Total changes (11,393) (11,393)

Balance at April 01, 2009 21,215 21,215

Changes in net assets

Deficitfortheyear (15,381) (15,381)

Total changes (15,381) (15,381)

Balance at March 31, 2010 5,834 5,834

54

Cash Flow Statement2010 2009

Note(s) ‘000 ‘000

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts

Saleofgoodsandservices 30,380 50,506

Grants 80,739 44,000

Interest income 1,987 4,526

Other receipts 295 580

113,401 99,612

Payments

Employeecosts (71,578) (54,938)

Suppliers (53,143) (54,015)

Finance costs (228) (25)

(124,949) (108,978)Net cash flows from operating activities 18 (11,548) (9,366)

CASH FLOWS FROM INVESTING ACTIVITIES

Additionofproperty,plantandequipment 13 (3,315) (1,691)

Proceedsfromsaleofproperty,plantandequipment 13 - 228

Addition of other intangible assets 14 (960) (1,475)

Net cash flows from investing activities (4,275) (2,938)

CASH FLOWS FROM FINANCING ACTIVITIES

Movementinunspentdonorfunds 5 -

Financeleaserepayments 2,015 (260)

Net cash flows from financing activities 2,020 (260)

Net increase/(decrease) in cash and cash equivalents (13,803) (12,564)

Cashandcashequivalentsatthebeginningoftheyear 32,658 45,222

Cash and cash equivalents at the end of the year 12 18,855 32,658

55

1.BasisofpreparationTheannualfinancialstatementshavebeenpreparedinaccordancewith

the effective Standards of Generally Recognised Accounting Practice

(GRAP), issuedby theAccountingStandardsBoard inaccordancewith

Section55ofthePublicFinancemanagementAct(ActNo.29of1999).

Accounting policies for material transactions, events or conditions not

covered by the GRAP reporting framework have been developed in

accordancewithparagraphs7, 11and12ofGRAP3and thehierarchy

approvedinDirective5issuedbytheAccountingStandardsBoard.

Theannualfinancialstatementshavebeenpreparedonanaccrualbasis

ofaccountingandareinaccordancewithhistoricalcostconvention,unless

specificallystatedotherwise.Theprincipalaccountingpoliciesadoptedin

thepreparationofthesefinancialstatementsaresetoutbelow.

Asset, liabilities, revenues and expenses have not been offset except

whereoffsettingisrequiredorpermittedbyaStandardofGRAP.

Theaccountingpoliciesareappliedconsistentlywiththoseusedtopresent

thepreviousyear’sfinancialstatements,unlessexplicitlystated.Thedetails

ofanychangesinaccountingpoliciesareexplainedintherelevantpolicy.

Theseaccountingpoliciesareconsistentwiththepreviousperiod.

1.1Presentationcurrency

ThesefinancialstatementsarepresentedinSouthAfricanRands.

1.2Revenue

Revenue is recognised to the extent that it is probable that the

economicbenefitswillflowandcanbereliablymeasured.Revenueis

measuredatfairvalueoftheconsiderationreceivableonanaccrual

basis. The following specific recognition criteriamust also bemet

beforerevenueisrecognised:

Filing fees

Revenue comprises of case notification fees and facility charges

received.Revenuefromcasenotificationfeesisrecognisedwhenthe

case is acceptedby theCommission. Facility fees are recognised

on a monthly basis for services rendered by the Commission for

infrastructure usage by the Competition Tribunal. Other income is

recognisedasandwhenreceived

Governmentgrant

Governmentgrantsarerecognisedintheyeartowhichtheyrelate,

once reasonable assurance has been obtained that all conditions of

thegrantshavebeencompliedwithandthegranthasbeenreceived.

Interest income

Revenueisrecognisedasinterestaccruesusingtheeffectiveinterest

rate.

Other income

Other income is recognised on an accrual basis.

1.3Irregularexpenditure

Irregularexpendituremeansexpenditureincurredincontraventionof,

ornotinaccordancewitharequirementofanyapplicablelegislation

including the PFMA.

Irregularexpenditure isrecognisedasexpenditure inthestatement

of financialperformance.If theexpenditure isnot condonedby the

relevantauthorityitistreatedasanassetuntilitisrecoveredorwritten

offasirrecoverable.

On discovery of alleged irregular expenditure, such expenditure

will be left in theexpenseaccount and theAccountingOfficerwill

record the details of the expenditure in the irregular expenditure

register. The Accounting Officer will must investigate the alleged

irregularexpendituretodeterminewhethertheexpendituremeetsthe

definitionofirregularexpenditure.Duringtheperiodofinvestigation

the expenditurewill remain in the expense account. The results of

the investigation will determine the appropriate action to be taken

regardingtheexpenditure.

Should the investigation reveal that the expenditure is in fact valid

expenditureand thereforedoesnotconstitute irregularexpenditure

thedetailsof theexpenditurewillberetained in theregister for the

purposesof completion (and toprovideanappropriateaudit trail).

The register will then be updated to reflect the outcome of the

investigation. If the investigation indicatesthat theexpenditure is in

fact irregular expenditure the Accounting Officer will immediately

report, inwriting, the particulars of the expenditure to the relevant

Accounting Policies

56

Treasury.Inadditiontheirregularexpenditurewillalsobeincludedin

theentity’smonthlyreportonrevenueandexpenditureassubmitted

bytheAccountingOfficertotherelevantTreasury.

If the irregular expenditure is subsequently condoned by the

appropriateauthoritynofurtheractionisrequiredbythedepartment

as the amount has already been expensed in the statement of

financialperformance.Theregisterwillbeupdatedtoreflectthefact

thattheirregularexpenditurewascondoned.If,however,theamount

isnotcondonedbytheappropriateauthoritytheAccountingOfficer

willtakeeffectiveandappropriateactiontorecovertheamountfrom

theresponsibleperson,theseactionsmayalsoincludedisciplinary

steps.

1.4Fruitlessandwastefulexpenditure

Fruitlessexpendituremeansexpenditurewhichwasmadeinvainand

wouldhavebeenavoidedhadreasonablecarebeenexercised.

The expenditure portion of any fruitless andwasteful expenditure

is charged against income and the capital portion of irregular

expenditure is charged against the related liability in theperiod in

whichtheyaredetermined.

1.5Employeebenefits

Short term employee benefits

Thecostofshort-termemployeebenefits, (thosepayablewithin12

monthsafter theservice is rendered, suchaspaidvacation leave,

bonuses, and nonmonetary benefits such as medical care), are

recognisedintheperiodinwhichtheserviceisrenderedandarenot

discounted.Theexpectedcostofbonuspaymentsisrecognisedas

anexpensewhenthereisalegalorconstructiveobligationtomake

suchpaymentsasaresultofpastperformance.

Pension and post-retirement benefits

Paymentstodefinedcontributionretirementbenefitplansarecharged

asanexpenseastheyfalldue.Paymentsmadetoindustry-managed

(orstateplans)retirementbenefitschemesaredealtwithasdefined

contribution planswhere the entity’s obligation under the schemes

is equivalent to those arising in a defined contribution retirement

benefitplan.Theentityoperatesadefinedcontributionplanforallits

employees.

Contributions to the defined contribution plan are charged to the

statementoffinancialperformanceintheyeartowhichtheyrelate.

1.6Property,plantandequipment

Thecostofanitemofproperty,plantandequipmentisrecognisedas

an asset when:

• itisprobablethatfutureeconomicbenefitsassociatedwiththe

itemwillflowtotheentity;and

• thecostoftheitemcanbemeasuredreliably.

Property, plant and equipment are stated at historical cost less

accumulated depreciation. Depreciation is calculated on a

straight-line basis at rates considered appropriate to reduce the

costoftheassetslesstheirresidualvalueovertheestimateduseful

life.Usefullife,depreciationpolicyandresidualvalueareassessed

annually.

Theperiodoverwhichvariouscategoriesofassetsaredepreciated

is detailed below:

Item Average useful life

Furnitureandfixtures 10-14years

Motorvehicles 5-7years

Officeequipment 5-11years

IT equipment

•ComputerEquipment 3-8years

Leased Assets Period of the lease

The residualvalueand theuseful lifeofeachasset isassessedat

eachfinancialperiod-end.Eachpartofanitemofproperty,plantand

equipmentwithacostthatissignificantinrelationtothetotalcostof

theitemshallbedepreciatedseparately.Thedepreciationchargefor

eachperiodisrecognisedinsurplusordeficitunlessitisincludedin

thecarryingamountofanotherasset.Thegainor lossarisingfrom

the derecognition of an item of property, plant and equipment is

includedinsurplusordeficitwhentheitemisderecognised.Thegain

orlossarisingfromthederecognitionofanitemofproperty,plantand

equipment is determined as the difference between the net disposal

proceeds,ifany,andthecarryingamountoftheitem.

57

1.7Intangibleassets

An intangible asset is recognised when:

• it isprobable that theexpected futureeconomicbenefits that

areattributabletotheassetwillflowtotheentity;and

• thecostoftheassetcanbemeasuredreliably.

Intangibleassetsare initially recognisedatcostandarecarriedat

cost less accumulated amortisation and impairment losses. Computer

software costs that exceed beyond one year are recognised as

intangible assets. These assets are amortised from the date the asset

isbrought intouse,using thestraight-linemethodover theiruseful

lives.Theestimatedusefullifeofcomputersoftwareis3years.The

useful livesof theassetsare reviewedateachbalancesheetdate

andadjustedifappropriate.Computersoftwarehasnoresidualvalue

as the software is not resaleable.

Expenditure on research (or on the research phase of an internalproject)isrecognisedasanexpensewhenitisincurred.Anintangibleassetarisingfromdevelopment(orfromthedevelopmentphaseofaninternalproject)isrecognisedwhen:• it istechnicallyfeasibletocompletetheassetsothatitwillbe

availableforuseorsale.• thereisanintentiontocompleteanduseorsellit.• thereisanabilitytouseorsellit.• itwillgenerateprobablefutureeconomicbenefits.• there are available technical, financial andother resources to

completethedevelopmentandtouseorselltheasset.• theexpenditureattributabletotheassetduringitsdevelopment

canbemeasuredreliably.

Intangibleassetsarecarriedatcostlessanyaccumulatedamortisationandanyimpairmentlosses.

An intangible asset is regarded as having an indefinite useful lifewhen,basedonallrelevantfactors,thereisnoforeseeablelimittotheperiodoverwhichtheassetisexpectedtogeneratenetcashinflows.Amortisationisnotprovidedfortheseproperty,plantandequipment.Forallotherintangibleassetsamortisationisprovidedonastraightlinebasisovertheirusefullife.

The amortisation period and the amortisation method for intangible assets are assessd period-end. Reassessing the useful life of anintangible asset with a definite useful life after it was classified asindefiniteisanindicatorthattheassetmaybeimpaired.Asaresult

theassetistestedforimpairmentandtheremainingcarryingamountisamortisedoveritsusefullife.

Amortisation is provided to write down the intangible assets, on astraightlinebasis,totheirresidualvaluesasfollows:

Item Useful Life

Computer software 3years

1.8Leases

Aleaseisclassifiedasafinanceleaseifittransferssubstantiallyalltherisksandrewardsincidentaltoownership.Aleaseisclassifiedasanoperatingleaseifitdoesnottransfersubstantiallyalltherisksandrewards incidental to ownership.

Leased assets

Finance leases are recognised as assets and liabilities in the statementoffinancialpositionatamountsequaltothefairvalueoftheleasedpropertyor, if lower,thepresentvalueoftheminimumleasepayments.Thecorrespondingliabilitytothelessorisincludedinthestatementoffinancialpositionasafinanceleaseobligation.

Leases of assets are classified as finance leases whenever thetermsof the leasetransfersubstantiallyall therisksandrewardsofownership to the lessee

Assetsheldunderfinance leasesarerecognisedasassetsat theirfairvalueattheinceptionoftheleaseor,ifloweratthepresentvalueof theminimum lease payments. The corresponding liability to thelessorisincludedinthestatementoffinancialpositionasafinanceleaseobligation.Leasepaymentsareapportionedbetweenfinancecharges and reduction of the lease obligation so as to achieveaconstant rateof interest on the remainingbalanceof the liability.Financechargesarechargedtosurplusordeficit.

Thefinanceleasesaremeasuredatfairvalueinsubsequentperiods.Leasesunderwhichthelessoreffectivelyretainstherisksandbenefitsofownershipareclassifiedasoperatingleases.Obligationsincurredunder operating leases are charged to the statement of financialperformanceinequalinstalmentsovertheperiodofthelease.

Operating leases – Lessee

Operating lease payments are recognised as an expense on astraight-linebasis over the lease term. Thedifferencebetween theamounts recognisedasanexpenseand thecontractual payments

58

are recognised as an operating lease asset. This liability is notdiscounted.

Anycontingentrentsareexpensedintheperiodtheyareincurred.

1.9Inventory

Inventoryaremeasuredatthelowerofcostandnetrealisablevalue.Netrealisablevalueforconsumablesisassumedtoapproximatethecostpriceduetotherelativelyshortperiodthattheseassetsareheldin stock.

Inventoryaremeasuredatthelowerofcostandnetrealisablevalueonthefirst-in-first-outbasis.

Net realisable value is the estimated selling price in the ordinarycourse of business less the estimated costs of completion and the estimatedcostsnecessarytomakethesale.The cost of reporting date comprises of all costs of purchase, costs of conversionandothercostsincurredinbringingtheinventorytotheirpresent location and condition.

Thecostofinventoriesisbasedonthefirst-in-first-out(FIFO)methodandincludesexpenditureincurredinacquiringtheconsumablesandother costs incurred inbringing them to their existing locationandcondition

Whenconsumablesaredonatedorissuedtootherentitiesfornocost/nominalvalues,consumablesshallbemeasuredatthelowerofcostandnetrealisablevalue.

1.10Provisionsandcontingencies

Provisionsarerecognisedwhen:• theentityhasapresentobligationasaresultofapastevent;• itisprobablethatanoutflowofresourcesembodyingeconomic

benefits or service potential will be required to settle theobligation; and

• areliableestimatecanbemadeoftheobligation.

The amount of a provision is the best estimate of the expenditureexpected to be required to settle the present obligation at thereporting date.

Where theeffectof timevalueofmoney ismaterial, theamountofaprovisionisthepresentvalueoftheexpendituresexpectedtoberequired to settle the obligation.

The discount rate is a pre-tax rate that reflects current marketassessmentsofthetimevalueofmoneyandtherisksspecifictotheliability.

Wheresomeorallof theexpenditure required tosettleaprovisionisexpected tobe reimbursedbyanotherparty, the reimbursementis recognised when, and only when, it is virtually certain thatreimbursementwillbereceivediftheentitysettlestheobligation.Thereimbursement is treated as a separate asset. The amount recognised forthereimbursementdoesnotexceedtheamountoftheprovision.

Provisionsarereviewedateachreportingdateandadjustedtoreflectthe current best estimate. Provisions are reversed if it is no longerprobablethatanoutflowofresourcesembodyingeconomicbenefitsorservicepotentialwillberequired,tosettletheobligation.

Where discounting is used, the carrying amount of a provisionincreasesineachperiodtoreflectthepassageoftime.Thisincreaseisrecognisedasaninterestexpense.

Aprovisionisusedonlyforexpendituresforwhichtheprovisionwasoriginallyrecognised.

Provisionsarenotrecognisedforfutureoperatingdeficits.

Ifanentityhasacontractthatisonerous,thepresentobligation(netofrecoveries)underthecontract isrecognisedandmeasuredasaprovision.

No obligation arises as a consequence of the sale or transfer of an operationuntiltheentityiscommittedtothesaleortransfer,thatis,there is a binding agreement.

After their initial recognition contingent liabilities recognised in business combinations that are recognised separately aresubsequentlymeasuredatthehigherof:• theamountthatwouldberecognisedasaprovision;and• theamountinitiallyrecognisedlesscumulativeamortisation.

Contingent assets and contingent liabilities are not recognised. Contingenciesaredisclosedinnote24.

Competion Commission FinancialStatementsfortheyearended31March2010

59

1.11Financialinstruments

Classification

The Commission’s principal financial instruments are receivables,cashandcashequivalents,payablesandleaseliabilities.Classification depends on the purpose for which the financialinstruments were obtained / incurred and takes place at initialrecognition.Classificationisre-assessedonanannualbasis,exceptforderivativesandfinancialassetsdesignatedasatfairvaluethroughsurplusordeficit,whichshallnotbeclassifiedoutof the fairvaluethroughsurplusordeficitcategory.

Initial recognition and measurement

Financial assets are recognised in the Commission’s statementsof financialpositionwhen theCommissionbecomesaparty to thecontractualprovisionsofaninstrument.

Financial instruments are initially recognised using the trade dateaccounting method.Financialassetsareclassifiedasfinancialassetsatfairvaluethroughsurplusordeficit,loansandreceivablesorheldtomaturityinvestmentasappropriate.Whenfinancialassetsareinitiallyrecognisedtheyaremeasuredatfairvalue.

TheCommissiondeterminestheclassificationofitsfinancialassetsoninitial recognitionand,whereallowedandappropriate,re-evaluatesthisdesignationateachfinancialyearend.

Impairment of financial assets

Ateachendofthereportingperiodtheentityassessesallfinancialassets, other than those at fair value through surplus or deficit, todeterminewhetherthereisobjectiveevidencethatafinancialassetorgroupoffinancialassetshasbeenimpaired.

Impairmentlossesarerecognisedinsurplusordeficit.

Impairment losses are reversed when an increase in the financialasset’s recoverable amount can be related objectively to an eventoccurring after the impairment was recognised, subject to therestrictionthatthecarryingamountofthefinancialassetatthedatethat the impairment is reversedshallnotexceedwhat thecarryingamountwouldhavebeenhadtheimpairmentnotbeenrecognised.

Reversalsof impairment lossesare recognised insurplusordeficitexceptforequityinvestmentsclassifiedasavailableforsale.

Impairment losses are also not subsequently reversed for

available-for-saleequityinvestmentswhichareheldatcostbecausefairvaluewasnotdeterminable.

Asset carried at amortised cost

In relation to receivables aprovision for impairment ismadewhenthereisobjectiveevidence(suchastheprobabilityofinsolvencyorsignificantfinancialdifficultiesofthedebtor)thattheCommissionwillnot be able to collect all the amounts due under the original terms of theinvoice.Thecarryingamountofthereceivableisreducedthroughuse of an allowance account. Impaired debts are derecognised when theyareassessedasuncollectible.

Loans and other receivables

Loansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepayments thatarenotquoted inanactivemarket.After initial measurement loans and receivables are carried atamortisedcostusingtheeffectiveinterestmethodlessanyallowanceforimpairment.Gainsandlossesarerecognisedinsurplusordeficitwhen the receivables are derecognised or impaired, as well asthrough the amortisation process.

Tradeandotherreceivablesareclassifiedasloansandreceivables.

Payables

Trade payables are initially measured at fair value, and aresubsequentlymeasuredatamortisedcost,usingtheeffectiveinterestrate method.

After initial recognition, payables are subsequently measured atamortised cost using the effective interest method. Gains andlossesare recognised insurplusanddeficitwhen the liabilitiesarederecognised as well as through the amortisation process.

Cashandcashequivalents

Cash and cash equivalents in the statement of financial positioncomprisecashatbanksandonhandandcashequivalentswithanoriginalmaturityofthreemonthsorless.Forthepurposeofthecashflowstatement,cashandcashequivalentsconsistofcashandcashequivalentsasdefinedabove,netofoutstandingbankoverdrafts.

Cashandcashequivalentsarerecognisedatfairvalue.

1.12Impairmentofcash‑generatingassets

Cash-generating assets are those assets held by the entity withthe primary objective of generating a commercial return.When an


60

asset is deployed in a manner consistent with that adopted by aprofit-orientatedentity,itgeneratesacommercialreturn.

Impairment is a loss in the future economic benefits or servicepotentialofanasset,overandabove thesystematic recognitionofthe lossof theasset’s futureeconomicbenefitsorservicepotentialthrough depreciation (amortisation).

Carryingamount is theamount atwhichanasset is recognised inthestatementoffinancialpositionafterdeductinganyaccumulateddepreciation and accumulated impairment losses thereon.

A cash-generating unit is the smallest identifiable group of assetsheld with the primary objective of generating a commercial returnthat generates cash inflows from continuing use that are largelyindependentofthecashinflowsfromotherassetsorgroupsofassets.

Costs of disposal are incremental costs directly attributable to thedisposalofanasset,excludingfinancecostsandincometaxexpense.

Depreciation (Amortisation) is the systematic allocation of thedepreciableamountofanassetoveritsusefullife.

Fair value lesscosts tosell is theamountobtainable from thesaleofanasset inanarm’s length transactionbetweenknowledgeable,willing parties, less the costs of disposal.

Recoverable amount of an asset or a cash-generating unit isthe higher its fair value less costs to sell and its value in use. Usefullifeiseither:(a) theperiodoftimeoverwhichanassetisexpectedtobeused

bytheentity;or(b) the number of production or similar units expected to be

obtainedfromtheassetbytheentity.

Cashgeneratingunits

Ifthereisanyindicationthatanassetmaybeimpaired,therecoverableamount is estimated for the individual asset. If it is notpossible toestimate the recoverable amount of the individual asset, the entitydetermines the recoverable amount of the cash-generating unit towhichtheassetbelongs(theasset’scash-generatingunit).

If an active market exists for the output produced by an asset orgroupofassets,thatassetorgroupofassetsisidentifiedasacash-

generatingunit,even if someorallof theoutput isused internally.If thecash inflowsgeneratedbyanyassetorcash-generatingunitareaffectedbyinternaltransferpricing,theentityusemanagement’sbestestimateoffutureprice(s)thatcouldbeachievedinarm’slengthtransactions in estimating:• the futurecash inflowsusedtodetermine theasset’sorcash-

generatingunit’svalueinuse;and• thefuturecashoutflowsusedtodeterminethevalueinuseof

anyotherassetsorcash-generatingunits thatareaffectedbythe internal transfer pricing.

Cash-generatingunitsareidentifiedconsistentlyfromperiodtoperiodforthesameassetortypesofassets,unlessachangeisjustified.

Thecarryingamount of a cash-generatingunit isdeterminedonabasisconsistentwith theway the recoverableamountof thecash-generating unit is determined.

An impairment loss is recognised for a cash-generating unit if therecoverableamount of theunit is less than thecarryingamountoftheunit.Theimpairmentisallocatedtoreducethecarryingamountofthecash-generatingassetsoftheunitonaproratabasis,basedon thecarryingamountofeachasset in theunit.These reductionsincarryingamountsare treatedas impairment losseson individualassets.In allocating an impairment loss, the entity does not reduce thecarryingamountofanassetbelowthehighestof:• itsfairvaluelesscoststosell(ifdeterminable);• itsvalueinuse(ifdeterminable);and• zero.

Theamountoftheimpairment lossthatwouldotherwisehavebeenallocatedtotheassetisallocatedproratatotheothercash-generatingassets of the unit.

Whereanon-cash-generatingassetcontributestoacash-generatingunit,aproportionofthecarryingamountofthatnon-cash-generatingassetisallocatedtothecarryingamountofthecash-generatingunitpriortoestimationoftherecoverableamountofthecash-generatingunit.

1.13Relatedparties

A relatedparty transaction isa transferof resourcesorobligationsbetween related parties, regardless of whether a price is charged.


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Parties are considered to be related if one party has the ability tocontroltheotherpartyorexercisesignificantinfluenceovertheotherparty inmaking financial and operating decisions or if the relatedpartyentityandanotherentityaresubjecttocommoncontrol.

Related parties include:(a) Entities that directly, or indirectly through one or more

intermediaries,control,orarecontrolledbytheentity;(b) Associates (International Public Sector Accounting Standard

(IPSAS)7,“AccountingforInvestmentsinAssociates”);(c) Individuals owning, directly or indirectly, an interest in the

reportingentitythatgivesthemsignificantinfluenceover the entity, andclosemembers of the family of any suchindividual;

(d) Keymanagementpersonnel,andclosemembersofthefamilyofkeymanagementpersonnel;and

(e) Entitiesinwhichasubstantialownershipinterestisheld,directlyorindirectly,byanypersondescribedin(c)or(d),oroverwhichsuchapersonisabletoexercisesignificantinfluence

The following are deemed not to be related parties:(a) (i) Providersoffinanceinthecourseoftheirbusinessinthat

regard; and (ii) Trade unions; in the course of their normal dealings with

anentitybyvirtueonlyof thosedealings(althoughtheymaycircumscribe the freedomofactionof theentityorparticipateinitsdecision-makingprocess);and

(b) Anentitywithwhichtherelationshipissolelythatofanagency.


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Notes to the Annual Financial Statements

2010 2009

‘000 ‘000

2. Government grants and subsidies

Governmentgrantsandsubsidies 80,739 44,000

3. Fee Income

Facilityfee 1,891 1,688

Filing fees 28,489 48,818

30,380 50,506

The amount included in revenue arising from non-exchange Transactions are as follows: Governmentgrants&subsidies 80,739 44,000

Fee income 30,380 50,506

111,119 94,506

4. Interest received

Interest Revenue

Interestreceivedoninvestments 1,987 4,526

5. Other Income

Conferences,skillslevyrefundandrecoveriesfrominsurance 186 183

6. Employee related costs

Basic 55,962 42,041

Performance bonus 7,163 4,635

Cellphone allowance 715 579

Group life and pension administration 1,186 873

Other 6,531 6,810

71,557 54,938


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Accounting Authority’s emoluments

Annual Remuneration 1,054 959

PerformanceBonus 145 79

Group Life and pension admin cost 23 21

Cell phone allowance 22 16

1,244 1,075

Executive Committee emoluments

Annual Remuneration 7,003 5,354

PerformanceBonus 900 638

Group life and pension admin costs 163 112


8,143 6,184

Other employees

Annual Remuneration 47,905 35,728

PerformanceBonus 6,118 3,918

Group life an pension admin coss 1,000 740


Other staff related costs 6,531 6,810

62,170 47,679

Includedinothercostsarecostsrelatedtoemploymentofgraduatetrainees,traininganddevelopment,socialeventsandteambuilding,staffrecruitment

costs,employeeassistanceprogram,temporarystaffcostsandcontributionstoskillslevyandworkmen’scompensation.

7. Administrative expenditure

Generalandadministrativeexpenses 2,698 2,095

Auditorsremuneration-Externalauditfees 565 363

3,263 2,458

8. Finance costs

Leased assets (Photocopiers) 228 25

9. Operating expenses

Audit committee fees 247 66

Internal audit fees 926 480

Consulting and professional fees 5,941 9,620

Case related costs 20,622 19,849

Propertyrental 7,048 5,891


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Researchanddevelopmentcosts 185 109

Travelandaccommodation 2,384 2,447

Education and awareness 2,133 2,431

Maintenance, repairs and running costs 444 497

Fees paid to Tribunal 5,203 8,814

Otherexpenses 6,061 2,130

51,194 52,334

Includedinotherexpensesarecostsrelatedtocatering,security,storage,corporategifts,subscriptions,booksandpublications,softwarelicencesand

upgradesandcostsrelatedtotheCommission’s10yearreviewamountingtoR2,759

10. Comparative figures

Therehavebeennoadjustmenttoprioryearfigures.

11. Trade and other receivables from exchange transactions

Tradedebtorsfromexchangetransactions 190 99

Sundrydebtors 462 20

652 119

Trade and other receivables pledged as security

Noneofthetradeandotherreceivableshavebeenpledgedassecurityforanyobligations.

Fair value of other receivables

Thecarryingvalueoftradeandotherreceivablesapproximatesfairvalues.

12. Cash and cash equivalents

Cashandcashequivalentscomprisecashthatisheldwithregisteredbankinginstitutionsandaresubjecttoinsignificantinterestraterisk.Thecarryingamountoftheseassetsapproximatestheirfairvalue.

Cash on hand 2,182 2,823

Short-termdeposits 16,670 29,830

Othercashandcashequivalents 3 5

18,855 32,658

Cashandcashequivalentsheldbytheentitythatarenotavailableforusebytheentity. 18,855 32,658


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Credit quality of cash at bank and short term deposits, excluding cash on hand

Thecreditqualityofcashatbankandshort termdeposits,excludingcashonhand thatareneitherpastduenor impairedcanbeassessedbyreferencetohistoricalinformationaboutcounterpartdefaultrates.Noneofthefinancialinstitutionswithwhichbankbalancesarehelddefaultedinpriorperiodsandasaresultacreditratingofhighareascribedtothefinancialinstitutions.Thecompany’smaximumexposuretocreditriskasaresultofthebankbalancesheldislimitedtothecarryingvalueofthesebalancesasdetailedabove.Allbankbalancesareheldwithonebankinginstitutionincreasingtherelatedconcentrationrisk.However,tomitigatetheriskofloss,thecompanyonlytransactswithhighlyreputablefinancialinstitutions.

13. Property, plant and equipment

2010 2009

Cost /Valuation

Accumulated depreciation

Carrying value

Cost /Valuation

Accumulated depreciation

Carrying value

Furnitureandfixtures 2,224 (1,547) 677 1,924 (1,393) 531

Motorvehicles 442 (129) 313 442 (63) 379

Officeequipment 611 (467) 144 718 (491) 227

IT equipment 4,035 (2,132) 1,903 3,719 (1,424) 2,295

Photocopiersunderfinancelease 2,700 (750) 1,950 701 (672) 29

Total 10,012 (5,025) 4,987 7,504 (4,043) 3,461

Reconciliation of property, plant and equipment - 2010Opening Balance

Additions Depreciation Total

Furnitureandfixtures 531 299 (153) 677

Motorvehicles 379 - (66) 313

Officeequipment 227 - (83) 144

IT equipment 2,295 316 (708) 1,903

Photocopiersunderfinancelease 29 2,700 (779) 1,950

3,461 3,315 (1,789) 4,987

Reconciliation of property, plant and equipment - 2009

Opening Balance

Additions Disposals DepreciationImpairment

lossTotal

Furnitureandfixtures 566 70 - (37) (68) 531

Motorvehicles 197 437 (196) (59) - 379

Officeequipment 117 104 - 6 - 227

IT equipment 1,425 1,080 - (203) (7) 2,295

Photocopiersunderfinancelease 262 - - (233) - 29

2,567 1,691 (196) (526) (75) 3,461

TheCommissionisleasingphotocopiersunderafinancelease.Theleaseagreementdoesnotimposeanyrestrictions.Theleaseagreementcanbe

extendedattheendofthethreeyearperiodforafurtherperiod.


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14. Intangible assets

2010 2009

Cost / ValuationAccumulated

amortisationCarrying value Cost / Valuation

Accumulated

amortisationCarrying value

Computer software 2,999 (1,149) 1,850 2,039 (506) 1,533

Reconciliation of intangible assets - 2010

Opening Balance

Additions Amortisation Total

Computer software 1,533 960 (643) 1,850

Reconciliation of intangible assets - 2009

Opening Balance

Additions Amortisation Total

Computer software 339 1,475 (281) 1,533

Theusefullifeofcomputersoftwarestillinusewereassessed.Therearenoresidualvaluesincomputersoftwareascomputersoftwareisconsidered

not to be resaleable.

15. Finance lease obligation

Minimum lease payments due

-withinoneyear 1,061 23

-insecondtofifthyearinclusive 1,237 -

2,298 23less:futurefinancecharges (262) -

Present value of minimum lease payments 2,036 23

Present value of minimum lease payments due

-withinoneyear 880 23

-insecondtofifthyearinclusive 1,156 -

2,036 23

Non-currentliabilities 1,156 -

Current liabilities 880 23

2,036 23

Obligationsunderfinanceleasesaresecuredbythelessor’stitletotheleasedasset.Theaverageleasetermis3yearsandtheaverageeffective

borrowingratewas10%.


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16. Provisions

Reconciliation of provisions - 2010

Opening Balance AdditionsUtilised during

the yearTotal

Provision 2,112 154 (2,112) 154

Reconciliation of provisions - 2009

Opening Balance AdditionsUtilised during

the yearReversed during

the yearTotal

Provision 277 2,112 (79) (198) 2,112

TheprovisionsforthecurrentyearincludesaprovisionfortheCommissioner’sperformancebonusfortheyearendingMarch2010.

17. Trade and other payables from exchange transactions

Tradepayables 8,858 7,035

Leaveduetoemployees 2,768 2,731

Accrued performance bonus 6,854 4,708

18,480 14,474

Performancebonusistheaccruedamountduetoemployeesat31March2010.AmountaccruedwaspaidoutinApril2010.

Thetradeandotherpayablesareinterestfreeandarealsounsecured.

Fair value of trade and other payables

Fairvalueapproximatescarryingvalue.

18. Net cash flows from operating activities

Deficit (15,381) (11,393)ADJUSTMENTS FOR:

Depreciation and amortisation 2,431 808

Surplus on sale of assets - (30)

Impairmentdeficit - 75

Movementsinprovisions (1,958) 1,835CHANGES IN WORKING CAPITAL:

Inventory (110) (55)

Tradeandotherreceivablesfromexchangetransactions (533) 426

Tradeandotherpayablesfromexchangetransactions 4,003 (1,032) (11,548) (9,366)


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19. Movement in investments

Acquisitionofproperty,plantandequipment (3,797) (1,691)

Acquisition of intangible assets : computer software (960) (1,475)

Proceedsondisposalofproperty,plantandequipment - 228

(4,757) (2,938)

20. Retirement benefits

Defined contribution plan

AllemployeesaremembersofadefinedcontributionschemeadministeredbySanlamLtd.Theschemeiscurrentlyinvestedininvestmentpolicies

underwrittenbyMetropolitanLife.Asaninsuredfund,theCompetitionCommissionPensionFundcomplieswithregulation28ofthePensionFunds

Actof1956.

21. Income taxation exemption

TheCommissionisexemptedfromincometaxintermsofSection10(1)(a)oftheIncomeTaxAct,1962.

22. Changes In accounting estimates

Achangeinaccountingestimateisanadjustmentofthecarryingamountofanassetoraliability,ortheamountoftheperiodicconsumptionofan

asset,thatresultsfromtheassessmentofthepresentstatusof,andexpectedfuturebenefitsandobligationsassociatedwith,assetsandliabilities.

Changesinaccountingestimatesresultfromnewinformationornewdevelopmentsand,accordingly,arenotcorrectionoferrors.

Theeffectofachangeinanaccountingestimate,otherthanachangetowhichthefollowingparagraphapplies,shallberecognisedprospectively

byincludingitinsurplusordeficitin:(a)Theperiodofthechange,ifthechangeaffectstheperiodonly;or(b)Theperiodofthechangeandfuture

periods, if the change affects both.

Totheextentthatachangeinanaccountingestimategivesrisetochangesinassetsandliabilities,orrelatestoanitemofnetassets/equity,itshallbe

recognizedbyadjustingthecarryingamountoftherelatedasset,liabilityornetassets/equityitemintheperiodofchange.

Theusefullifeandresidualvalueofassetsstillinusewereassessed.Theusefullifeofassetsstillinusewereincreasedby1to3years.

23. Rental and finance lease commitments

Officerental

Thereisnowrittenleaseagreementwiththedti.Howeverpremisesarerentedfromthedtiandrentalpaymentsarebasedonamountsdeterminedby

thedtiIincludingannualCPIXchanges.

Finance lease commitments

Photocopiers

Upto1year 880 23

1to5years 1,156 -

2,036 23

TheCommissionisleasingequipmentunderafinancelease.Theleaseagreementdoesnotimposeanyrestrictions.

Theleaseagreementcanbeextendedattheendofthethreeyearperiodforafurtherperiod.


69

24. Contingencies liabilities

Accumulated surplus

TheaccumulatedsurplusofR5,8mhasbeenclassifiedasacontingentliabilityat31March2010astheCompetitionCommissionhadnotyetreceived

approvaltoretaintheaccumulatedsurplus.IntermsofthePFMASection53(3)entitiesarenotallowedtoaccumulatesurplusesunlessapprovedby

NationalTreasury.AnapprovalwasgrantedbyNationalTreasurytoretainthesurplusofR21,217m(March2009).TheCommissionisobligedtorepay

toNationalTreasuryanyamountofthesurplusnotgrantedforretention.TheCommissionisoftheopinionthatNationalTreasurywillgranttheapproval

andthereforetheCommisionwillnotberequiredtorepaythisamount.

Litigations and claims

TheCommissionhasnoknowledgeofanycontingenciesatdateofthefinancialstatements.However,theCommissionwishestoreportthataformer

employeewassuspenedinSeptember2007forfraudandsubsequentlyfoundguiltyofgrossinsubordinationbyanindependentChairpersonata

hearingandsummarilydismissed.TheformeremployeehassubsequentlyfiledanunfairlabourpracticedisputewiththeCCMAandtheCCMAruled

infavouroftheCommission.ApplicationforreviewfiledbytheemployeetotheLabourCourtwasopposed.Thematterisnowoverasthetimelimitfor

theemployeetoseekfurtherrelieffromtheLabourCourthasexpired.

25. Related parties

2010 2009

Relationships ‘000 ‘000

The Competition Tribunal PublicentityinNationalsphere

The Department of Trade and Industry

National Department in National sphere

Membersofkeymanagement Mr. M. Ramburuth (Commissioner),

Mr.T.Bonakele(DeputyCommissioner),

Mr.J.Dreyer(CommissionSecretary),

Mr.S.Roberts(Manager:Policy&Research),

Ms.N.Pillay(ManagerCorporateServiceandCFO),

Ms.W.Mkwanazi(Manager:LegalServices),

Ms.N.Mokoena(Manager:StrategyandStakeholder

Relations),

Mr.M.vanHooven(Manager:MergersandAcquisitions),

Mr.K.Weeks(Manager:Enforcements&

Exemptions)

Related party balances

Amounts Included In Trade Payables Regarding Related Parties

The Competition Tribunal 721 11The Department of Trade and Industry

85 64

806 75


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Related party transactions

The department of trade and industry

Governmentgrantreceived 80,739 44,000

Rent paid 7,048 5,480

Telephone and Internet costs paid 1,126 1,116AmountduebytheDepartmentofTradeandIndustryforthemaintenanceofthecasemanagementsysteminprioryearsetoffagainstgrantreceivedinyear2009

- (205)

The competition tribunal

Filing fees refunded 5,203 8,814

FacilityFeeincomereceived 1,891 1,688

Netemployeecostsrecovered 310 115

Netadministrationcostsrecovered 452 17

Penalties collected on behalf of related parties and transferred to related parties

TheDepartmentofTradeandIndustry 336,098 144,680

Compensation to key management

Memberofkeymanagement2010

R’000

2009

R’000Commissioner: Mr. M. Ramburuth Package 1,099 996Bonus 145 79

DeputyComissioner:Mr.T.Bonakele Package 1,114 806Bonus 177 113

ComissionSecretary:Mr.J.Dreyer Package 827 649Bonus 83 78

Manager:Policy&Research-Mr.S.Roberts Package 1,071 861Bonus 172 144

Manager:CorporateServices&CFO-Ms.N.Pillay Package 1,025 798Bonus 128 103

Manager:LegalServices-Ms.W.Mkwananzi Package 900 641Bonus 139 104

Manager:StrategyandStakeholderRelations-Ms.N.Mokoena(currentyear11months) Package 823 632Bonus - -


71

Manager:Mergers&Acquisitions-Mr.MvanHooven 96 Package 878 158Bonus 117 -

Manager:Enforcements&Exemptions-Mr.K.Weeks(currentyear8months) Package 605 377Bonus 84 -

ActingManager:Compliance-Mr.M.Rubushe - Package - 377Bonus - -

Manager:Enforcements&Exemptions-Mr.T.Kunene - Package - 600Bonus - -

Manager:LegalServices-Mr.M.Worsley - Package - 157Bonus - -

9,387 7,769

26. Financial risk management

ThemainrisksarisingfromtheCommissionsfinancialinstrumentsaremarketrisk,liquidityriskandcreditrisk.

Credit risk

TheCommissiontradesonlywithrecognised,creditworthythirdparties.ItistheCommission’spolicythatallcustomerswhowishtotradeoncredit

termsare subject to credit verificationprocedures. In addition, receivablesbalances aremonitoredon an ongoingbasiswith the result that the

Commisionexposuretobaddebtsisnotsignificant.ThemaximumexposureisthecarryingamountsasdisclosedinNote11.Thereisnosignificant

concentration of credit risk within the Commision.

WithrespecttocreditriskarisingfromtheotherfinancialassetsoftheCommission,whichcomprisecashandcashequivalents,theCommission’s

exposure tocredit riskarises fromdefaultof thecounterparty,withamaximumexposureequal to thecarryingamountof these instruments.The

Commisioncashandcashequivalentsareplacedwithhighcreditqualityfinancialinstitutionsthereforethecreditriskwithrespecttocashandcash

equivalentsislimited.

Exposure to credit risk

Themaximumexposuretocreditriskatthereportingdatefromfinancialassetswas:

2010 2009

Cashandcashequivalents 18,855 32,658

Otherreceivables 652 119

Total 19,507 32,777


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Concentration of credit risk

Themaximumexposuretocreditriskforfinancialassetsatthereportingdatebycreditratingcategorywasasfollows:

2010AAA and

governmentUnrated

Cashandcashequivalents 18,855 -

Otherreceivables - 652

2009AAA and

governmentUnrated

Cashandcashequivalents 32,658 -

Otherreceivables - 119

Ageing of financial assets

ThefollowingtableprovidesinformationregardingthecreditqualityofassetswhichmayexposetheCommissiontocreditrisk

2010Neither past due nor

impaired

Past due but not impaired-lessthan

2months

Past due but not impaired-morethan2months

Carryingvalue

Cashandcashequivalents 18,855 - - -

Otherreceivables 652 - - -

2009Neither past due nor

impaired

Past due but not impaired-lessthan

2months

Past due but not impaired-morethan2months

Carryingvalue

Cashandcashequivalents 32,658 - - -

Otherreceivables 119 - - -

Market risk

Market risk is the risk that changes in market prices, such as the interest rate will affect the value of the financial assets of the Commission.

Interest rate risk

TheCommissionisexposedtointerestratechangesinrespectofreturnsonitsinvestmentswithfinancialinstitutionsandinterestpayableonfinance

leases contracted with outside parties.

TheCommission’sexposuretointerestriskismanagedbyinvesting,onashorttermbasis,incurrentaccountsandtheCorporationforPublicDeposits.


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Sensitivity analysis

Increase/(decrease) in net surplus for the year

2010 Change in interest rates Upwardchange Downward change

Cashandcashequivalents 1.00% 189 (189)

Finance lease 1.00% (20) 20

2009

Cashandcashequivalents 1.00% 326 (326)

Finance lease 1.00% - -

Liquidity risk

TheCompetitionCommission’srisktoliquidityisarsultofthefundsavailabletocoverfuturecommitments.TakingintoconsiderationtheCompetition

Commission’scurrent fundingstructuresandavailabilityofcashresources theCommissionregards thisrisk tobe lowprovidedNationalTreasury

approvestheretentionofthesurplus

Exposure to liquidity risk

ThefollowingtablereflectstheCommission’sexposuretoliquidityriskfromfinancialliabilities:

2010 Carryingamount TotalcashflowContractual cash flowwithin1year

Contractual cash flowbetween1and

5yearsOtherfinancialliabilities 18,480 18,480 18,480 -

Lease Liabilities 2,036 2,036 880 1,156

2009 Carryingamount TotalcashflowContractual cash flowwithin1year

Contractual cash flowbetween1and

5yearsOtherfinancialliabilities 14,474 14,474 14,474 -

Lease liabilities 23 23 23 -

Financial Instruments

ThefollowingtableshowstheclassificationoftheCommission’sprincipalinstrumentstogetherwiththeircarryingvalue:

Financial instrument Categories Carrying amount 2010 Carrying amount 2009

Cashandcashequivalents Loansandreceivables 18,855 32,658

Receivables Loansandreceivables 652 119

Payables Financial liabilities 18,480 14,474

Finance Leases Financial liabilities 2,036 23

Financial risk management

Theentity’sactivitiesexposeittoavarietyoffinancialrisks:marketrisk,(fairvalueinterestraterisk,cashflowinterestrateriskandpricerisk),credit

riskandliquidityrisk.


74

27. New standards and interpretations

27.1 Standards and interpretations not yet effective

Theentityhaschosennottoearlyadoptthefollowingstandardsandinterpretations,whichhavebeenpublishedandaremandatoryfortheentity’s

accountingperiodsbeginningonorafterApril01,2010orlaterperiods:

Standard Summary and impact Effective date

GRAP18–Segmentreporting This standard establishes principles for reportingfinancialinformationbysegments.The impact on the financial results anddisclosure is considered to be minimal.

IssuedbytheASB–March2005Effective date - To be determined by theMinister of Finance

GRAP21–Impairmentofnon-cash-generatingassets

This standard prescribes the procedures that the Entity applies to determine whether anon-cashgeneratingasset is impairedandtoensure that impairment losses are recognised.The impact on the financial results anddisclosure is considered to be minimal.


GRAP 23 – Revenue from non-exchangetransactions

This standard prescribes the requirements for the financial reporting of revenue fromnon-exchange (grants and transfer paymentstransactions).The impact on the financial results anddisclosure is considered to be minimal.However, in terms of Directive 5, the Entity,considered the accounting principles of GRAP 23 and developed an accounting policy toaccount forgovernment transfersand foreignaid assistance.

IssuedbytheASB–February2008Effective date - To be determined by theMinister of Finance

GRAP24–Presentationofbudgetinformationinthefinancialstatements

This standard requires a comparison of budget and actual amounts and an explanation formaterial differences.The impact on the financial results isconsideredtobeminimal.Howevertheimpactondisclosureissignificant.

IssuedbytheASB–November2007Effective date - To be determined by theMinister of Finance

GRAP25-Employeebenefits The standard prescribes the accounting treatmentanddisclosureforemployeebenefits.The impact on the financial results anddisclosure is considered to be minimal.

IssuedbytheASB–November2009Effective date - To be determined by theMinister of Finance


75

GRAP 26 - Impairment of cash-generatingassets

This standard prescribes the procedures to determine whether a cash generating asset is impaired and to ensure that impairment losses are recognised.The impact on the financial results anddisclosure is considered to be minimal.


GRAP104–financialinstruments This standard establishes principles for recognising, measuring, presenting and disclosingfinancialinstruments.The impact on the financial results anddisclosure is considered to be minimal.

IssuedbytheASB–October2009Effective date - To be determined by theMinister of Finance

***ImprovementstothestandardsofGRAP Improvements are proposed to the followingstandards ofGRAP:GRAP1- 4, 9-14, 16-17,19and100aspartoftheASB’simprovementproject.The impact on the financial results anddisclosure is considered to be minimal.

Proposedeffectivedate01April2011

*AmendmenttoIFRS7–Financialinstruments: disclosures

-Presentationoffinancecost-Amendmentdealingwithimprovingdisclosuresoffinancialinstruments-Amendmentsenhancingdisclosuresoffairvalueandliquidityrisk.ThisstandardwillnothaveanimpactonthefinancialresultsordisclosureasithasbeenremovedfromtheframeworkprescribedinDirective5forperiodsbeginningon1April2010.

IssuedbytheIASBinMarch2009buttheeffectivedatewasbackdatedto01January2009.AsperconfirmationwiththeASB,thisstandardisnoteffectivefortheyearended31March2010.

**AmendmenttoIFRS7–Financialinstruments: disclosures

ClarificationsofdisclosuresTheamendmenttotheStandardclarifiescertain disclosures. ThisstandardwillnothaveanimpactonthefinancialresultsordisclosureasithasbeenremovedfromtheframeworkprescribedinDirective5forperiodsbeginningon1April2010.

01January2011

IFRS9–Financialinstruments New standard issued relating to the classificationandmeasurementoffinancialassets,whichwillreplacetherelevantportionsof IAS 39.ThisstandardwillnothaveanimpactonthefinancialresultsordisclosureasithasbeenremovedfromtheframeworkprescribedinDirective5forperiodsbeginningon1April2010.

01January2013

76

*AmendmenttoIAS19–Employeebenefits -Curtailmentsandnegativepastservicecost-Planadministrationcosts-Replacementofterm“falldue”-GuidanceoncontingentliabilitiesTheimpactonthefinancialresultsanddisclosure is considered to be minimal


AmendmenttoIAS32–Financialinstruments: presentation

Certainfinancialinstrumentswillbeclassifiedasequitywhereas,priortotheseamendments,theywouldhavebeenclassifiedasfinancialliabilities.ThisstandardwillnothaveanimpactonthefinancialresultsordisclosureasithasbeenremovedfromtheframeworkprescribedinDirective5forperiodsbeginningon1April2010.


*AmendmenttoIAS39–Financial instruments:recognition and measurement

-Reclassificationofderivativesintooroutoftheclassificationofatfairvaluethroughprofitorloss- Designating and documenting hedges at thesegmentlevel-ApplicableeffectiveinterestrateoncessationoffairvaluehedgeaccountingThis standard will not have an impact on thefinancial results or disclosure as it has beenremoved from the framework prescribed inDirective5forperiodsbeginningon1April2010.

Issued by the IASB in March 2009 but theeffective date was back dated to 01 January2009. As per confirmation with the ASB, thisstandard isnoteffective for theyearended31March2010.

AmendmenttoIAS39–Financial instruments:recognition and measurement

Clarifiestwohedgeaccountingissues:-Inflationinafinancialhedgeditem-Aone-sidedriskinahedgeditemThis standard will not have an impact on thefinancial results or disclosure as it has beenremoved from the framework prescribed inDirective5forperiodsbeginningon1April2010.

01July2009

Amendment to IAS 39 – Financial instruments:recognition and measurement

- Treating loan prepayment penalties as closelyrelatedembeddedderivatives- Scope exemption for business combinationcontracts-CashflowhedgeaccountingThis standard will not have an impact on thefinancial results or disclosure as it has beenremoved from the framework prescribed inDirective5forperiodsbeginningon1April2010.

01January2010

[*StandardsandinterpretationsaffectedbytheImprovementstoIFRS][**StandardsandinterpretationsaffectedbytheImprovementstoIFRSissuedinanexposuredraftasED272–ImprovementstoIFRSs:ProposedamendmentstoInternationalFinancialReportingStandards][***StandardsaffectedbytheImprovementsProjectoftheASBissuedinanexposuredraftasED63-ImprovementstotheStandardsofGRAP]

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28. Unspent donor funds

TheInternationalDevelopmentResearchCentre(IDRC)providedagranttotheCommissiontoenabletheCommissiontoundertaketheresearch

supportprojectentitled: ‘EvaluationofCompetition issues in theproduction,supplyandpricingofstaple foods”.The totalamount receivedwas

R435,995,atyearendR430,798wasutilised.TheremainingR5,197willbeusedafteryearend

29. Going concern

Theannualfinancialstatementshavebeenpreparedonthebasisofaccountingpoliciesapplicabletoagoingconcern.Thisbasispresumesthatfunds

willbeavailabletofinancefutureoperationsandthattherealisationofassetsandsettlementofliabilities,contingentobligationsandcommitmentswill

occurintheordinarycourseofbusiness.

Theabilityoftheentitytocontinueasagoingconcernisdependentonanumberoffactors.ThemostsignificantoftheseisthattheDepartmentof

EconomicDevelopmentcontinuetoprocurefundingfortheongoingoperationsfortheentityandTreasuryapprovestherolloveroftheaccumulated

surplus.

30. Reconciliation between budget and statement of financial performance

Reconciliationofbudgetdeficitwiththedeficitinthestatementoffinancialperformance

Net deficit per the statement of financial performance (15,381)

Adjusted for:

Decrease in mergers & acquisitions 3,696

Increaseinexemptionapplications (22)

Decreaseinadvisoryopinions 83

IncreaseinfacilityFees (108)

IncreaseinVotedFundsreceived (13,018)

IncreaseinInterestReceived:GeneralFunds (682)

Decrease in other income 211

Savingsonhumanresources (15,336)

Savingsonpremises&equipmentexpenditure (3,744)

Savingsonotheroperationalexpenses (1,465)

OverexpenditureonIT&systemdevelopment 114

Overexpenditureonresearch&information 56

Savingsoneducationalawarenessprogrammes (1,475)

Overexpenditureoncaserelatedcosts 14,877

Savingsonotherprogrammecosts (911)

Overexpenditureondepreciation 2,433

Net deficit per approved budget (0)

Performance against targets

Part 5

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No. Goal Key performance indicators Target Performance results Reason for variance

Core programme: Enforcement and Exemptions

1 EnsureefficientevaluationofexemptionapplicationsfiledunderSection10ofthe Competition Act (1999)

Turnaround time in relation to making and communicating a decision

To be completed within12monthsofbeingreceived

7ofthe9exemptionapplications carried forward havenotbeenfinalisedwithin12months.Thisisduetothenatureandcomplexityofthemattersandtodelaysinreceivinginputfromexternalstakeholders. Further, some exemptionsaresubjecttoongoingpolicyprocesses,suchas applications from medical practitionersandattorneys

Report with substantiated recommendation

3-4exemptionapplicationsexpected

11exemptionapplicationswereunderconsiderationforthefinancialyear:2receivedinthefinancialyearand9carriedforwardfromthepreviousyears.The2receivedinthefinancialyear(December2010)arefrom:theSouthAfricanPetroleumIndustryAssociation(SAPIA);andSpringLightGas.Ofthe11exemptionapplications,3werefinalisedasfollows:-SAPIAwasgrantedanexemptionuntil31August2010forcertaincategoriesofagreements and practices in the petroleum andrefineryindustries;theapplicationfromtheBoardofHealthcareFunderswasrejected;andtheAllensMeshcoapplicationrelating to wire and wire products was rejected

2 Conduct initiations inprioritysectors

Numberofinvestigationsinitiated

4initiationswithin12months

203complaintswerefiledintheyear(151werereceivedinthepreviousyear).Ofthese,172werereceivedfromthepublicand31wereinitiatedbytheCommissioner.Ofthe31complaints,19(61%)wereinprioritysectors:5ininfrastructureandconstruction,6inintermediateindustrialproducts,8infoodandagro-processing.12wereinothermarkets(tyremanufacturing,advertising,franchising,propertyretailing, transport, furniture retailing, skin products retailing, and windscreen glass manufacturing)

Thefloodofmattersforinitiationandcomplaintsreceivedfrom the public had not been anticipated

3 Ensureefficientandeffectivecomplaintinvestigationsinprioritised cases

All new complaints screened

Within7daysofreceipt of complaint to management meeting

140complaintswerescreenedwithinthe7daysatthemanagementmeeting.Theseincludes124complaintsoutofthe172totalcomplaintsreceivedfromthepublicinthefinancialyearand16complaintscarriedoverfromthepreviousfinancialyear.

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Casesfinalisedontime and substantiated recommendations made inreportstoExco

Within20daysofreceipt of complaint to Exco

47complaintsreceivedbetweenOctober2009andMarch2010werecarriedovertothenextfinancialyear

Ittakesanaverageof32daystoscreenacomplaintandpresentittoExco.Thisis due to the higher number ofcomplaintsreceivedthananticipated. In order to address this, a new dedicated screening unit has been formed.

4 Encourage and facilitatevoluntaryassistance in cartel investigations

Informing stakeholders ofcorporateleniencywhere applicable. Informing process includes: feedback; progress report on applications; number of meetings regarding leniencyapplications;finalreports

Increase prosecutions forcartelactivity. 3 to 4 applications expected

79applicationsreceivedintermsoftheCompetitionCommission’scorporateleniencypolicy

Thefloodofapplicationsrelatesmainlytoonesectorwhereapplication is made for each project/contract

5 Monitor and evaluatecompliancewithexemptionconditions and undertakings

Report on compliance with conditions and undertakings monitored, evaluatedandreportedbypartiestoExco

Thorough monitoring of compliance with conditional exemptionapprovalsand undertakings. QuarterlyreportstoExco.Estimated2cases to be monitored

Monitoring occurs when there isreapplicationforexemptionconditions. This did not occur duringthefinancialyear

Deviationsfromconditions detected and addressed

6 Explainprocessof complaint investigationandexemptionevaluationtowider group of stakeholders

Relevantandinformativecontentoninvestigationof complaints and evaluationofexemptionapplications.1to2articles per issue.

4articlesperyear 7,500copiesoftheCommission’s3newsletters with a total of 31 articles were published and distributed. Ofthese,7relatetoinvestigationsofenforcementandexemptionmatters.

Core programme: Mergers and Acquisitions

7 FulfilltheCommission’smandate in relation totheinvestigationof mergers, as set out in Chapter 3 of the Act

InvestigationreportsareacceptedbyExcoandthe Competition Tribunal

Tofinalisecaseswithintheservicestandardcommitments

Allmergercaseswerefinalisedwithinthestatutorydeadlines.208mergercaseswerefinalised(54large,140intermediate,and14small).Ofthese,190wereunconditionallyapproved,8approvedwithconditions,1 prohibited, and 9 withdrawn. The internal servicestandardtimeframesare:20daysforphase1;25daysforphase2;and45daysforphase3mergers.40%ofphase1(non-complexmergers)werecompletedin20days,13%ofphase2mergerswithin25days,and14%ofphase3mergerswithin45days

Althoughaverageturnaroundtimeshaveexceededtheservicestandards,theyremainwithinthestatutorytimeframes.Thecomplexityandnatureofthe cases as well as timeous input from stakeholders, impact on turnaround times

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8 FulfilltheCommission’smandate in relation totheinvestigationof mergers, as set out in Chapter 3 of the Act (1999)

Thequalityofthemerger reports is in line with international best practice, and where necessary,thetheoryofharm is well set out

No reports sent backbyExcoortheTribunal for further investigationandanalysis,unlesstherehas been a material submission that was made after the recommendation was submitted

Appeared before the Tribunal in 48 large merger cases in which our recommendation ofunconditionalapprovalwasacceptedbythe Tribunal. 1 large merger was prohibited bytheCommission,butapprovedbytheTribunal

Thisisaninternalqualityassurance process and reports are therefore sent back to the divisionfortheincorporationofExco’scomments

9 Create procedures andsystemsto support the fulfillmentoftheCommission’smandate as set out in Chapter 3 of Act

Efficientandcorrectinvestigationandanalysisofcases

Internaldivisionprocedures that facilitate efficientmergerinvestigationsinlinewith international best practice and applicable deadlines

Division’sinternalprocedureswereupdatedandservicestandardswerereviewedbySeptember2009andpublishedontheCommission’swebsite

Staff compliance with procedures

Each staff member undergoes an orientation programme coveringtheinternalprocedureswithin10daysofjoiningthedivision

Staffmembersareorientatedwithin10daysofjoining.Compliancewithprocedures(monitoring) takes place on an ongoing basis through internal meetings

10 Ensure the developmentofstaff

Improvedqualityofwork At least 1 training seminar/workshopper month is held

18 workshops relating to mergers were conducted

Number of training sessions held. Skilled and trained staff deliveringqualityanalysisandreports.

2trainingsessions StaffattendedcapacitybuildingsessionsfacilitatedbythePolicyandResearchdivision,whichincludedtrainingsessionsbyexternalproviders.Therewere7trainingsessionswithinvitedeconomists

11 Create and maintain relations with mergerdivisionsofother competition authorities around the world

Investigationsconformwith international best practice. Ensure that mergeranalysisisinlinewith international best practice

Ongoing Submissions were made to the OECD on failingfirmdefence,genericpharmaceuticalsandthestandardformergerreview.Themanager of the Mergers & Acquisitions divisionparticipatedintheOECDconferencewherethestandardsformergerreviewwasdiscussed.

Useofinternationalprecedent in the Commission’scases

4 workshops The workshops of international guidelines took the form of participation in teleconferences of the ICN as well as a teleseminar

Coordination of investigationofinternational mergers with other agencies.

Ongoing International precedent is used on an ongoingbasiswhererelevant,interactedwiththeGermancompetitionauthorityandtheUnitedStatesDepartmentofJusticeonprior-implementation and merger issues.

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12 Monitor the conditions imposed onmergersbytheCommission and the Tribunal

Compliance with the conditions imposed. Number of conditions monitoredorfinalised.

Ongoing Thedivisioncontinuouslymonitorsallmergersthatareapprovedwithconditionsandensuresthatconditionsaretimeouslycompliedwith.Between20and24caseshavebeenmonitoredoverthe4quarters

13 Maintain sound relationswithkeystakeholders that contribute to the investigationofmergers

Cordial relations with practitioners, trade unions and sector regulators

Ongoing 1practitioner’sworkshopheld;5tradeunionworkshops,1publicsectorconsultativeforum

Number of complaints from stakeholders regardinginvestigatingissues during investigations

Followedupon19caseswithemploymentissues

Input of sector regulators intheinvestigationofmergers

Consulted with the Council for Medical SchemesandNationalTreasury

14 Promote public awareness of the division’swork

Public awareness of mergers and acquisitions

Ongoing Publications of mergers on websites, 12articlesonmergersinthenewsletter,2mediareleasesonmergers

15 Promote stakeholders’awareness of the Commission’sapproach to merger analysis

Ensure that stakeholders and practitioners are updated on the Commission’spositionsand policies

4 practice notes workshopped and published

Mergerservicestandardswere published in place of the practice notes

16 Ensure compliance with Chapter 3 of the Competition Act

Trackingofallnon-notifiedmergersandensure that small mergers raising competition concerns arenotified

Ongoing Thedivisioncontinuouslytracksmergeractivityintheeconomyandwhererequired,engagewiththepartiestonotifytoensurecompliance

Core programme: Policy and Research

17 Conduct economic research into specificsectors

Research reports produced and used for identifyingcomplaintsandspecificadvocacyactions

4prioritysectorsongoing: Infrastructure and construction, intermediate industrial products, food, and banking. Increased focus on tracking. Other majorareas:possiblemarketenquiryintosupermarkets;Policyand Research leading on interchange and ATMs

Reports for the Department of Economic Developmentonfood,infrastructureandtelecommunications; input to ICASA; analysisofEskom’spricehikes;inputto the Department of Communications onbroadbandpolicy.Trackingconductin the food sector is ongoing. Initiated supermarketenquiry.OngoingworkoninterchangeandATMswithNationalTreasuryand the steering committee that was set up aftertheBankingEnquiry

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18 Effectivelyidentifyeconomic questions on which cases hingeandidentifytheanalysisrequired

Betterinter-divisionalcoordination and work organisation

Inter-divisionalteam building with the Mergers & Acquisitionsdivision.Monthlyprogressmeetings with the Enforcement & Exemptionsdivision

Merger screening memos are now circulated Meetings with the Enforcement &Exemptionsdivisionareheldevery2monthsorasrequired

Agreementontypeofinputsfromthedivision:consultations;analysisofspecificcomponentofcases;in-depthanalysisofoverallcase.

Twicemonthlycase management committee meetings

Case management committee meetings held on an ongoing basis

19 Conduct rigorous economicanalysisof complaints cases

Rigorous economic analysisnecessaryforreferring and winning cases

Ongoing Economicanalysisprovidedon70complaints cases

20 Conduct rigorous economicanalysisin merger cases

Rigorous economic analysisnecessaryforreferring and winning cases

Ongoing Economicanalysisprovidedon30mergercases

21 Aimforeffectiveprosecution based on economic evidence,includingeffectivepresentation of economicevidenceat hearings

Bettercoordinationwithlegal team preparing and prosecuting cases. Economic arguments are supported and sustained in Tribunal hearings

Ongoing Bettercoordinationwiththeprosecutionof34complaint referrals

Economic arguments are supported and sustained in Tribunal hearings.

Assisted with Tribunal hearings including: Pioneer;Sasolfertilisercases;Chlor-AlkaliandBotash;MasscashandFinro;ImperialandMidas;andSenwes’appeal

22 Conductareviewofoutcomes following a merger or complaint decision

Morecompetitivebehavior

4reviews Outcomeswerereviewedinthefollowingmatters: Astral Foods and Natchicks, andMurray&RobertsandCementationCompany(Africa)

Thetargetof4reviewswasnotachievedduetoworkloadand lack of information from merging parties and other stakeholders

23 Reviewandgiveinputsintoadvisoryopinions

Morecompetitivebehaviour

Ongoing OngoinginputbychiefeconomistatCommission meetings

24 Reviewtheimpactof the Commission

BetterunderstandingofCommission’sworkandinternalandexternalimpact

ExpandasTenYearReviewofcompetitionauthorities

TenYearReviewbookpublishedandconference held

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25 Influencepolicyandlegislativeprocesses

Number of submissions made and considered bytherelevantdepartmentoragency.Reduced number of anticompetitiveclausesin new legislation and policy.Consistencyinapplication the Act.

Make submissions on allbillswithamajorcompetition impact

Commentedonconcurrentjurisdictionbetween ICASA and the Commission; ICASA’sdraftinterconnectionregulation;thebroadbandpolicy;analysisofEskom’sproposedpricehike;andtheIndustrialPolicyActionPlan2.PublicSectorConsultativeForum held

26 Explaineconomicprinciplesonkeyissues and cases to Commission staff

Economicandpolicybriefs completed and circulated

8 8 economic briefs were completed and circulated

27 Giveinputsatinternational forums –theICNandOECD

Presentation of papers 3(demanddriven) Papers submitted to the OECD on banking, procedural fairness, collusion in public procurement, techniques used to tackle bid-rigging,marginsqueeze,failingfirmdefence, generic pharmaceuticals, two sided markets, and the standards for merger review

28 Increase awareness oftheCommission’swork

Completed articles 8 31 articles published in total

29 Establish the Commission as leading centre of competition economics

Presentation of papers 4 Participated in 15 conferences during which submissionsofpresentations/papersweremade

Publications 4 6publishedarticlesinpeerreviewedjournals/newsletters/books

30 BuildcapacityinthePolicy&Researchdivision

Good understanding acrossthedivisionofkeyareasofcompetitioneconomics and application in cases

Monthlysessionsfacilitatedbythedivision’ssenorteam

31 Buildcapacityineconomicanalysis,understanding, and collecting and using information and data

Sessionsonkeyconcepts,keyjournalarticles

4 23externaltraininginterventionsintotalwereattendedbydifferentstafffromthedivision

3majortrainingsessionsof2to3dayseach

3 7sessionsheldbyinvitedeconomists

Appropriatelytargetedtrainingfordivisionstaff

6 Staffattendedcapacitybuildingfacilitatedbypolicyandresearch;12internaltrainingsessionsand22in-houseseminars

Good understanding ofkeycasessettingprecedents on economic analysis

Ongoing Ongoingdatabaseofkeycases/readingsismaintained and discussed

32 Create awareness andprovideinformation

Seminar attendance 6 40capacitybuildingseminarswerearrangedand attended

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Monthlyworkshopsonanalysisformajorcases

10 Participated in 15 conferences during which submissionsofpresentations/papersweremade

Onemajorevent,andad hoc presentations: Annual conference on South African competition law and economics

1 10yearreviewand3rdAnnualcompetitionlaw conference was held

Masters dissertations andresearchpapersbystudents and academics

Grants for 5 Masters dissertations and papers

1studentfromtheUniversityofKwaZulu-Natal was awarded a grant

Only1Mastersgrantwasawarded due to poor uptake

33 Ensureeffectiveknowledge management

Betterknowledgemanagement

95% user uptake ofnewsystem.Increased and more consistent user application of knowledge management practices

Allstaffusethesystemforcaseandnon-case related work

Betterknowledgemanagement

All users trained on newsystem.Ongoingsupport.

Ongoingtrainingoccursonanindividualbasis. Support is ongoing

Highlevelofuseracceptanceofsystem

1formalpost-implementationreviewofthesystem

Thesystemimplementationreviewdidnottakeplaceduetodevelopmentdelaysbyanexternalserviceprovider,whichare being managed

Highlevelofuserapplication of knowledge management practices

2formalknowledgeculture assessments

Thereisavisibleincreaseindocumentretention,post-presentationsharing,systemfunctionalityusage,continuedincreaseinteam,divisionalandcross-divisionalsharingcapacitybuildingsessions

No formal independent knowledge culture assessments. However,knowledgeculturewasformallyreassessedatthestrategic planning session for 2010-2013,toinformplanning.Thereasonforthevarianceisthattheplannednewsystemis fundamental to supporting and growing the knowledge management culture, and the focus has been on maintaining the growth momentum of knowledge management anyway,andmanagingthedevelopmentprocess

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Increased knowledge management awareness and better knowledge management

Procedure manual on knowledge management and related training moduledevelopedand implemented foralldivisions/staff.Systemoverviewdevelopedand included in orientation for new staff.Knowledgemanagement training module included in induction

Userguideshavebeendevelopedandmadeavailableonthesharepointserver

Knowledgemanagement culture in the Commission strengthened

Ongoing Useoftheknowledgemanagementsystemhas been included in staff performance assessments

34 Providespecialisedbibliographic services

Requests for informationfulfilled,from newspapers, periodicals,journals,market research andindustrydata,on-linepublicationsand reference works including books, reports

To assist with more complexcasesandresearch undertaken bytheCommission

Trained68staffmembersontheuseofthedatabase.30newstaffmembersreceivedorientationoftheresourcecentre’sresources.1,048loansofpublicationsrecorded, with 18 new titles added and 398 requests for information

Core programme: Legal Services

35 Providetimeouslegaladvicetofacilitate informed decision making andefficientandeffectivecaseinvestigation

Well researched and substantiatedadviceand opinions accepted byExcoandtheCommission

Ongoing OngoinginputbychieflegalcounselatCommissionmeetings.InternalqualityassuranceprocessincorporatesExcoandCommission’scomments

The turnaround time tobe2weeksinnon-complexmattersand4 weeks in the case of advicesonevidenceandcomplexmatters

Monthlymanagementreport to track adherence to timeframes

Monthlymanagementdataisbeingmaintained to monitor compliance with timeframes

Complexityofmattersaswellasworkloadmayimpactontimelines. It has been decided that these internal timelines will berevised

36 Ensure the proper andeffectivepresentation of merger cases before the Tribunal

Properlypreparedandwell-presentedcases. Commission recommendations acceptedbytheTribunalandcommentarybytheTribunal

3complexmergerprohibitions

Appeared before the Tribunal in 48 large merger cases in which the recommendation ofunconditionalapprovalwasacceptedbythe Tribunal. 1 large merger was prohibited bytheCommission,butapprovedbytheTribunal

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Adherence to hearing timetable

Monthlymanagementreport to track adherence to timeframes as determinedbytheTribunal

Monthlymanagementdataareusedto monitor hearings and adherence to timeframes.

37 Ensure the expeditiousandeffectiveprosecutionoffirmsthatcontravenetheAct.The successful defence of legal challenges in the Tribunal and the courts

Casestrategymeetingto be held with the Enforcement & Exemptionsdivision

Casestrategymeetingwith the Enforcement &Exemptionsdivisionwithin2weeksoftheCommission’sdecision

Casestrategymeetingsheldonanongoingbasis as and when required as teams are involvedincasesfromtheoutset

Consent agreements to be concluded within2monthsoftheCommission’sdecision

Consent agreements to be concluded within 3 months of theCommission’sdecision

Consent agreements take longer to conclude depending on the negotiation itself, the cooperationoffirmsandtheprocess of litigation.

Consent agreements to be referred to the Tribunal

Consent orders to be referred to the Tribunal within 1 week of their conclusion with respondents

5 consent agreements concluded. Consent agreements are referred to the Tribunal within 1 week of their completion

Where there are no consent agreement negotiations complaints to be referred within 6weeksoftheCommission’sdecision

If there is no consent agreement, negotiations complaints to be referred to Tribunal within6weeksofCommission decision

13referralsfiledwiththeTribunal Complaints are not referred within6weeksoftheCommission’sdecisionasthisdependslargelyonexternalcounsel,theiravailabilityandadditional requirements such as additionalevidenceoranalysisrequired for pleadings.

Properlydrafteddocuments.Properlyprepared and well presented cases. Decisions in the Commission’sfavourandcommentarybytheTribunal

6reviewsandappeals ThisisdeterminedbyconsideringhowmanyjudgementswereintheCommission’sfavour.Appeared before the Competition Appeal Court5timeswithjudgmentsinfavouroftheCommission. Appeared before the Supreme CourtAppeal1timewithjudgmentinfavourof the Commission

Adherence to hearing timetable

Monthlymanagementreport to track adherence to timeframes

The hearing timetable was adhered to

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Contested cases to be finalisedwithin1yearoftheir referral

6complexcomplaintprosecutions. Contested complaint referrals to be finalisedwithin18months of referral

Contested cases are not finalisedwithin18monthsaslitigation has been protracted byinterlocutorychallengesandappealsraisedbyrespondentsasinthedairycartelcase,andinthecasesinvolvingTelkom,Pioneer and Senwes

38 Buildcapacityonlegal issues within the institution

Good understanding across institution of keylegalaspectsofcompetition law and application in cases

2trainingsessionsper month

Staffattendedcapacitybuildingfacilitatedbypolicyandresearch;12internaltrainingsessionsand22in-houseseminars

39 Promote stakeholders’awareness on Commission’spolicyapproachtospecifiedissues

Internal guidelines aimed at standardising theinstitution’sapproachtospecificprocedures

2internalguidelines Prioritisation framework published for internal use and internal memoranda circulated on dealingwithleniencyapplications.31articlespublishedrelatingtotheCommission’spolicyapproachtoprioritysectors

Externalguidelinesaimedatgivingguidance to practitioners and stakeholders on the Commission’sapproachto particular aspects of its work

2externalguidelines.Updateallexistingexternalguidelines

GuidelinestobedraftedbytheLegalServicesdivisiondeferredtothenextfinancialyear

Guidelines not drafted due to workloadwithinthedivision

Core programme: Compliance

40 Developariskmanagement strategy

Well managed risk on a daytodaybasis

Workshops and training sessions with managers and divisions.Completedby30September2009

Workshop and training sessions completed timeously

41 Developafraudpreventionplan

Fraud free institution. Fraud is detected and reportedtimeously

Fraudpreventionplanadoptedby30July2009.Planworkshopped at staff meeting of August 2009

FraudpreventionplanwasadoptedinSeptember2009

Comments were incorporated inJulyandAugust2009,whichresultedintheslightvariance

42 Conduct a forensic ITreview

SecureITsystems FinalisedbySeptember2009

Forensicinvestigationwascompletedtimeously.TheITdivisionisintheprocessofaddressing issues raised in the report

43 Reviewtheregistryprocess

Registryprocesscomplies with corporate governanceprinciplesand is linked to knowledge management system

CompliantregistrysystembyMarch2010

Thereviewprocesshasstartedandisbeingcoordinated with knowledge management systemsdevelopment

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44 Implement and monitor the functioning of governancestructures

Decision making is compliant with sound corporategovernanceprinciples. Decisions are madetimeously.

Ongoing Monthlymeetingsareheldandminuted.Decisions are timeous and implemented. Companysecretaryensuresthatdecisionsare implemented

45 Providestrategicdirection on Commission’sfunctions

Coherence in the functioning of the Commission as a whole. Commissioner is kept up to date. Decisions are madetimeously.

Monthlymeetingswithdivisionalmanagers

Monthlymeetingsareheld

46 Establishhighlevelrelations between the Commissioner and strategic stakeholders

Highlevelandbeneficialrelations established

Meetings with the Minister of Trade andIndustry,thedepartments of MineralsandEnergy,and Agriculture, and the National Agricultural Marketing Council

Meetings coordinated with the Minister ofTradeandIndustryandtheMinisterofEconomicDevelopment.MeetingsheldwiththedepartmentsofMineralsandEnergy,and Agriculture, as well as the National Agricultural Marketing Council

47 Review2009-2010business plan

Approvedamendedbusiness plan. Plan submitted to the Department of Trade and Industry

1workshopMay2009 ExcoworkshopheldinMay2009.Extensivereviewcompletedandreportfinalised

48 Evaluateexistingstrategy

Evaluationreportenabling us to plan forward

ReportfinalisedbyMay2009

ExcoworkshopheldinMay2009andreportfinalised

49 Planforthe:3yearstrategic plan, 1 yearbusinessplan,andthebudgetaryimplications for both.

Anapproved3yearstrategic plan and business plan

Workshop with senior management June 2009.Workshopwiththe Commission. Submit to the Department of Trade andIndustrybySeptember2009.

ManagementworkshopheldinJune2009.3yearstrategicplanandbudgetsdevelopedand submitted to the Department of Trade andIndustry

50 Monitor the implementation of the strategic plan

Timeousandfullyimplemented strategic plan

Ongoing Monitoringofimplementationviaquarterlyreportsandmonthlymanagementmeetings

51 Maintain international relations

Consistent application of competition law principles in the region. Commission is aware of and up to date on international competition developments

AttendFebruary/June/OctoberOECDmeetings, June ICN meetings as well as ICN working group meetings, Fordham, and SADC. Attend and facilitate annual South East African Competition Forum meeting

Written contributions submitted to the ICN workinggroupsonagencyeffectiveness,cartelsandadvocacy,participationinICNworkshops,UNCTAD,SADC,SEACFandSACUmeetings,presentedattheopeningof the Namibian Competition Commission, 3 secondmentsfromBotswana,participatedinJointFoodProjectmeetingswithEgyptandZambia

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52 Promote consistent application of competition principles

Promoted more consistent application of competition principles

Ad hoc, as and when requestsarereceived

Technical assistance to Mauritius Competition Commission, presenting at the CUTSInternationalworkshopinNigeria

53 Strengthen regional co-operationoncompetitionpolicy

Emergence of credible institutions in the region

Annual training course to be held in October 2009

The training programme for African competition authorities did not take place due to budgetaryconstraintsandthecapacityconstraintsofAfricancountries

54 ImproveinternalcommunicationKomPraat Saam (case discussion) sessions

Higher turnout for case discussion sessions. Staff more informed about important Commission matters. Improvedstaffmorale

1KomPraatSaamsession per month

22casediscussionsheld

55 Usetheintranetasa tool for internal communication

Staff are better informed about important Commission matters. Improvedstaffmorale.

Number of hits on websitereceived

Intranet is used on an ongoing basis to keep staffabreastofdevelopmentswithintheorganisation

56 Commemorate nationalevents

Staff awareness and participation in national events.Improvedstaffmorale

1eventperselected national commemorativeday

Awarenessinitiativestocelebratenationaleventswereimplemented(eg.candlelightingceremonytocommemorateNationalAidsDay)

57 Conduct internal events

Staff participation. Improvedstaffmorale

1awardceremonyand1staffeventpermonth

9internaleventswereheld

58 Improveinternalnewsletter Newsflashpublication

Feedbackreceivedfromstaff. Wide readership from staff

1Newsflashissuepermonth

12internalnewsletterswerecirculated

59 Enhance the Commission’sbrandinternally

Usefulandrelevanttemplates.Useofsettemplates

Templatesdevelopedand implemented duringthefinancialyear

60 Enhance and update the internal communication strategy

InternalstrategyalignedtotheCommission’sstrategy

Internal communication strategyreviewedandimplemented

Reviewoninternalcommunicationstrategycurrentlyunderway

It was decided that the internal communicationstrategymustbe aligned with the strategic prioritiesfor2010to2013

61 Maintain and produceexternalpublications to keepexternalstakeholders informed

Well managed and timeous publication of publications. Minimum stocklevelof1,000units is maintained. Feedbackreceivedfromreaders and users

1,500copiesofannualreportdistributedbySeptember2009.1 Newsletter per quarter.

1,500copiesofannualreportsprintedanddistributed. 3 newsletters published

Publications remain up to date with latest developments

As required Publications are up to date

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62 ImprovetheCommission’swebsite

Numberofhitsreceived.Feedback from users. Moreeasilyaccessibleinformation.Timeouslyupdated website

New website launched andimplementedbyJune2009

Anewwebsitewaslaunchedearlyin2010andisregularlyupdated

Thedelayinthelaunchisduetoconstraintsexperiencedbytheexternalserviceprovider

63 Enhance the Commission’sbrandexternally

Useofsettemplates.Adherence to the Commission’scorporateidentity.TheCommissionisadequatelybrandedatallitsevents

Ongoing Documentversioncontroltemplatesarebeing implemented

64 Enhance and updatetheexternalcommunication strategy

ExternalstrategyalignedtoCommission’sstrategy

Reviewedexternalcommunication strategybyOctober2009

Reviewoftheexternalcommunicationstrategyiscurrentlyunderway

Itwasdecidedthatthereviewmust be aligned with the strategicprioritiesfor2010-2013

65 Proactivelyfocuseducation and advocacyonprioritysectors of the Commission

EducationandAdvocacystaff members able to educateandadvocateacross stakeholders intheprioritysectors.Improvedknowledgeofactivityinprioritysectors.Improvedknowledge of education andadvocacyneedsinprioritysectors

As and when areas of advocacyhasbeenidentified

31 articles published relating to the Commission’spolicyapproachtoprioritysectors.39stakeholdereventsheld

66 Promotevoluntarycompliance withtheActbyfirms,industryassociations and professional associations

Professions are able toclearlyunderstandandcomplywiththeCompetition Act. Firms clearlyunderstandtheirobligations in term s of the Competition Act

GuidelinesdevelopedbyNovember2009

GuidelinestobedraftedbytheLegalServicesDivisiondeferredtothenextfinancialyear.Complianceprogrammesarereviewedandpresentationsmadeonanadhoc basis

Guidelines not drafted due to workloadwithinthedivision

Businessclearlyunderstands the implications of the amendment bill and thecorporateleniencypolicy

6workshopswithbusiness

Workshops are attended when a request is made. Workshops to educate business on theamendmentbillandcorporateleniencypolicywereheld,includingpresentationstoBJMHoldings,theSouthAfricanInstituteofInternalAuditors,meetingswithco-directors,theBlackSash,SALGA,BUSA,NEDLACand FASA

67 Ensure that SMMEs: understand how the Act works for them;applyforexemption;lodgerelevantcomplaints;and participate in Commission and Tribunal processes

FASA is updated on current competition concerns and its expectedrole.Qualityofcomplaints,exemptionapplications and informationreceivedfromSMME’s

1franchiseexhibition;noticeupdatedbyJuly2009;1workshopand as requested

Workshops with SMMEs held with a focus onfranchisees.Updatedfranchisenoticepublished and seminar held with franchise association members

93

68 Ensure that consumers are aware how the Act works for them (damages, confidentiality,receiveinformation),lodgerelevantcomplaints and participate in the Commission and Tribunal processes

Consumer organisations increasinglyrequireCommission’sinputandparticipation

Presentations at nationaleventsoftargeted consumer organisations

Participated in the conference on national consumer law conference and the consumer protection forum

Consumer organisations participate in the processes of the Commission and the Tribunal,whererelevant

Maintain ongoing contact with consumer organisations

Ongoing contact with consumer organisations is maintained

69 Increase the participation of trade unions in theCommission’sactivities

Tradeunionsregularlyparticipate in Commission’sprocesses

4 training workshops 5 trade union workshops held

TradeunionsproviderelevantinputintoCommission’sprocesses

1 trade union consultativeforum

1 trade union forum held

70 Updatelegalpractitioners on theCommission’spolicyapproachandensuretheyunderstand their and theirclients’rightsand obligations under the Act

Legal practitioners are appraised of the Commission’spolicyapproach. Legal practitioners understand their rights and obligations in terms of the Act

1practitioner’sworkshop

1practitioner’sworkshopheld

71 AdvocateforParliament and governmentdepartments to developcompetitioncompliantpolicyand legislation

Governmentdepartments are aware of areas of mutual interest.Governmentdepartments participate intheCommission’sprocesses. Legislation needs to take competitionpolicyintoaccount when being drafted

1 public sector consultativeforummeeting

14stakeholdereventsheldincludingpublicsectorconsultativeforum,conferenceonconsumerprotectionlaw,andbid-riggingworkshopsforgovernmentprocurementandtreasuryofficials

Stateemployeesidentifyandreportbid-riggingpractices. Checklist thatgovernmentdepartmentscanclearlyunderstandandapplytobedeveloped

Ongoing Checklist circulated

94

72 Partner with governmentdepartments to ensurethatfirmscomplywiththeAct

Feedback from governmentdepartments

1bid-riggingworkshop per province.Updatedmanual distributed togovernmentdepartments

Bid-riggingworkshopsheldwithnationalandprovincialgovernmentofficialsandNationalTreasury,submissiontoTreasuryontheuseofacertificateforindependentbidding,workshop held with Eskom, presentation to miningprocurementmanagers.Bid-riggingbooklet drafted and distributed.

73 Partner with regulators to ensure thesmoothexerciseof concurrent jurisdiction

Clear areas of communication and areasofjurisdictionareestablished between the Commission and regulators

Allexistingmemoranda of understanding updatedbyDecember2009

Memorandum of understanding with NERSA approved

74 Partner with the National Prosecuting Authoritytoensurethesmoothexerciseofcivilandcriminaljurisdictioninamendment bill

Smoothexerciseofjurisdictioninrespectiveareas

Memorandum of understanding signed offbyAugust2009

Negotiations on the memorandum of understanding with the National Prosecutions Authorityareunderway

While substantial progress has been made with the memorandum of understanding with the National Prosecutions Authority,ithasnotbeenconcludedduetouncertaintyaround the Competition AmendmentBill

Support programme: Information technology services

75 Maintain integrated andhighlyeffectiveITsystems

Reliable,highqualityand performance based information and ITsupportsystems.Commissionstaffhaveaccesstoallavailablehardware and software

HighlyeffectiveITsystems.100%systemavailability.UsershaveaccesstoITsystemsatalltimes

Therewasonly1hourofdowntimeasaresultoftheCommission’sownITsystems

The 1 hour downtime was due to hardware failure and the Commission has since replaced the hardware. Problems in the Department of Trade and Industry’sserverwhichhoststheCommission’snetworkdisruptedtheCommission’soperations. The Commission has requested that it be allowed to host its own network.

Public access to the Commission’swebsitewithout downtime.

Regularlyupdatedandavailablewebsite

Thewebsiteisregularlyupdatedandavailable.

76 Upgrade/replaceallold hardware

Faster access to programmes and less downtime

Updatetechnologyand faster user access

AnewSANsystemwasprocured.ThedatabasesarerunningontheSQLclusterservicesdatabase

77 UpgradeSANsystem

Data accessible to staff at all times

Fullyfunctionalemailsystemwithnodowntime

MajorinterruptionshavebeenduetotheCommission’sreliance on the Department ofTradeandIndustry’snetwork, which is out of the Commission’scontrol

95

78 Manage and monitor knowledge management systemsandautomated business processes

A knowledge managementsystemwith access to all research data and case information and automated processes

Efficientknowledgemanagementsystem

Otherthanimprovementstoonlinereporting,casemanagementandprojectmanagement,this did not occur

Thesystemimplementationhasbeendelayedduetotechnicaldifficultiesanddelaysonthepartoftheexternalserviceprovider.Thisistheprimarydriverforautomation

79 Improveremoteaccess across allzones(VPNconnections)

Efficientonlineandofflinemailaccess

Effectivecollaborationofsystems.24hrs,365daysofsystemaccessfromanywhere

VPNaccessgiventorelevantstaffandtrainingprovided

80 Provideefficientdisasterrecoveryfacilities

Backupsystemsupgraded to do online real time backup onto a disk.

Reviewandimplementnewsystemsandhardware

ForensicinvestigationintoITsystemscompleted. All changes on hardware duetoknowledgemanagement/contentmanagementsystemsdevelopmenthavebeenincorporatedintopoliciesandprocedures

Support programme: Financial management services

81 Ensureeffectiveandefficientfinancialmanagement and costefficiencies

Budgetvs.Actualvariances.Monthlyprojectionsbasedon assumptions from divisionsforzerobasedbudgeting

40%,35%,25%,10% Varianceshavebeenreduced.Zerobasedbudgeting is used.

Surplus funds deposited with the corporate public depository(CPD).Netbank balances not in overdraft

Optimal interest earned on surplus funds

Optimal interest earned on surplus as per financialstatements

82 Ensureaneffectiveprocurementsystem

Newsystemfullyappliedandimplementchanges/adjustmentsasrequired

Full implementation anduseofsystem

Ongoing population of database

Databaseinclusiveofexpertiseinavarietyoffields

Updatedatabasewithcurrentexpertiseknown.Expandprofessionalserviceexpertstoincludeniche market

Monthlyanalysisoftheuseofconsultantsisconducted

Quarterlyreportsonuseandservicedelivery

Report on use of experts/consultants.(costsnottoexceedbenefit)

Quarterlyreportsgeneratedtoensurethatcostsdonotexceedbenefits

Improveduseofsupplychain management policies and procedures. Compliancewithsupplychain management and procurementpolicy

Appointment of suppliers in line with work stream requirements and deadlines

7tendersissuedincompliancewithpoliciesand procedures. All appointments are in line with requirements and deadlines

96

83 Ensure regular financialreporting

improvedandtimeousfinancialreporting.Compliance with GAAP, PFMAandTreasuryregulationsUnqualifiedaudit reports

Regular and accurate financialreportsavailableonthe15thdayofthefollowingmonth. Principles of GAAP, GRAP and PFMA applied in line with best practice

Regularmonthlydiscussionsofexpenditureagainst the budget are held with managers fromtimeouslyproducedmanagementaccounts.Developmentofelectronicreportsfrom Pastel in line with best practice

84 Implement best practice policies

Revisedbestpracticefinancialpolicies

Revisethroughoutthefinancialyear

Thesupplychainmanagementpolicywasreviewedandapproved

85 Manage the Commission’sfixedassets

Monthlyreconciliation Reconciledfixedassets register to physicalandexistingassets.

Fixedassetsverificationhasbeencompleted

In compliance with Treasuryregulations

Donation to educational institutions

NoITequipmentwasavailablefordonation

Effective&trustworthyfixedassetsystem

Full implementation & Monitoring

TheHardcatITsystemwasimplementedand 4 staff were trained to use it

86 Implement the knowledge management system

Easyaccesstofinancialreports on the share pointservers,businessplans, management accounts,quarterlyreports

Utilisationbydivisionmanagers, personal assistants and divisionalassisitants

Templates were created and use is being monitored for access to reports.

Support programme: Human resources

87 Ensure compliance with legislation

Complete understanding andusebystaff,management and Human Resources division

Allemployeestofullyunderstand changes inpoliciesbythe2ndquarter

Thepolicymanualwasapprovedinsecondquarter.2workshopswereheldwithstafftoensure understanding.

88 Undertakeeffectivestaff recruitment and ensure staff retention

Bettermatchbetweenappointed candidate and organisation

Tosubjectshortlistedcandidates to acompetencyassessment centre for abetterperson-jobmatch

Competencyassessmentswerenotusedduetobudgetaryconstraints. Practical work examplestoassessskillsareusedintheinterviewprocess

89 Undertakeeffectivecapacitybuildinginthe organisation

Positionstobefilledwithin7weeksfromtheresignationofpreviousincumbent

Little or no gaps in performance ofdivisionduetodepartingemployeesand period to fillvacancy.Noperformance gap shouldbevisibleinadivisionduetosuddenresignations

AllpositionswithinHR’scontrolhavebeenfilledwithin7weekswiththeexceptionsofDivisionalManagersforEnforcementandExemptions,andStrategyandStakeholderRelationsdivision

Thepositionofdivisionalmanagertakeslongertofillduetotheseniorityofthepositionsandthesubjectmatterexpertiserequiredofsuitablecandidates

97

Availabilityofskilledconsultants to assist and transfer skills within division.Headhuntersto be able to assist with supplyingcandidatesatshort notice.

To reduce turnaround time for scarce skilled senior candidates and candidatesreadilyavailable

Allpositionswithinthedivision’scontrolhavebeenfilledwithin7weekswiththeexceptionof2divisionalmanagers

90 Manageemployeeperformance

Uniformapproachandmore standardised performancecontracts-refinebehavioralcompetencies

Subjectivityinassessments minimised and evendistributionofassessment scores

Implementation of performance management systemspolicywasreviewedandchangesarising therefrom were effected. Process document compiled and discussed prior to assessments to ensure a uniform approach. Infosessionsheldwithsomedivisions.Performance scores discussed and approvedbymoderationcommittee.Gooddistributionofscoresagainstnormalcurveisevident

91 Ensureeffectivelearning and development

Graduate curriculum followedbyallgraduatesfrom2009mentorship programme implemented

Graduates trained according to curriculum, which is structured and managed

Graduates completed training in computers, presentationskills,projectmanagement,business writing skills, time management and stakeholder relations

Complete database of currentskillsprofileofstaff members

Employeesandlearning and developmentcoordinator to know where skills gaps are and how to address them

Database compiled of suitable candidates. Candidates are also sourced from pool ofgraduatesintheCommission’straineeprogramme.Commissionalsovisitsuniversities

92 Deviseandimplement learning anddevelopmentstrategy

Updatedstrategywithbest-practiceprinciplesincorporated

Updatedandwellcommunicated L learning and developmentstrategyto support the culture of learning in the organisation

LearninganddevelopmentstrategywasapprovedinApril2009.Thestrategyhasbeen communicated and implemented. 20seniorstaffmembersattendedamanagementdevelopmentprogrammethatbeganinSeptember2009

93 Implement knowledge management system

Uploadalllearninganddevelopmentinfoandotherrelevanthumanresource documents on the knowledge managementsystem

Availabilityofupdated info on staff. Supporting the culture of knowledge sharing in the organisation.

Theknowledgemanagementsystemallows for the updating and uploading of all information

94 Carryoutgeneralhuman resources management

Ensure all documents onfileasperchecklistand other documents inthedivisionfiledasper allocated reference numbers

Allrelevantdocuments to be on fileforauditpurposes

Successful audit completed with outstanding documentsrequestedandfilesupdated.

98

Increase in staff morale andmotivationsincethe implementation of certain human resource initiatives

To know whether strategicobjectiveto staff morale and motivationshasbeenmet.Constantlyimprove.

TheCommissionusedtheDeloitte’s“BestCompanytoWorkFor”surveywithatotalof90questionnairesreturned.TheCommissionwontheawardinitscategory.

E-basedleaveapplication and access toinfo:payslips,IRP5’s,personalinfo

Allemployeestomakeuseoftheemployeeself-servicesystemelectronicallyandreduce the number of queriestothedivision

Theemployeeself-servicesystemisfullyfunctional

Updatedjobdescriptions in line with growth in positions in organisation

All positions to haveupdatedjobdescriptions and clear understanding from staff

Jobdescriptionreviewiscurrentlyunderway

Obtain staff input into developmentofcodeof conduct and ensure proper communication

Codeofconductwasdevelopedandincorporatedintothehumanresourcespolicymanual, which was workshopped with staff

Support programme: Security and facitilties

95 Provideeffectivesecurityandfacilitymanagement

Bestpracticesecuritypolicies and practices in line with legislation and the Department of Trade andIndustrycampusregulations

Effectivesafetyand management systems.Complywith legislation and Department of Trade andIndustrycampusrequirements

Thesesystemsareinplace.Furtherpoliciesareintheprocessofbeingupdated:securitymanual;emergencyresponseplan;smokingpolicy;andoccupationalhealthandsafetypolicy

Reducesecurityriskand breaches. Mitigate threats. Detect material weaknessofsecuritysystemsandcontrolsecurityriskanddeficiencies

Ongoing ScreeningconductedonemployeesviatheNationalIntelligenceAgency.Staffandmanagementadvisedonsecuritymattersand measures

96 Monitor and manage access control

Safe and secure environment.Nounauthorisedentry

Ongoing Access is controlled with signing in and out of staff after hours

Anamplifierwasreportedmissing and insurance compensated the Commission forthis.CCTVisnowusedtomonitoraccesstopreventsuchoccurrences

97 Implement and coordinate EmergencyResponse Plan

Improveresponsetimetoevacuationdrills.Improvedemergencyresponse to disaster

Ongoing Staff informed of processes. Staff trained on firstaid.Newstaffinducted,walkthroughdrillconducted,fireassessmentsconducted,monthlymeetingsheldwithemergencyresponse team

99

98 Occupational HealthandSafetylegislation (OHS)

Safeandhealthyenvironment,incompliance with legislation

Compliance with occupational health & safetylegislation.

OHSauditcurrentlybeingconducted.OHSrepresentativehasbeentrained.OHSincidentsareinvestigatedasandwhentheyarereported.Workshopincludedindiscussiononpolicymanual

99 Well maintained facilities

Well-maintainedfacilitiesandservices

Ongoing Ongoing building audits conducts to ensure conduciveworkingenvironment

Liaisewithexternalandinternal stakeholders in line with dti campus regulation

Ongoing Liaise with the Department of Trade and Industryonanongoingbasis

100 Effectiveandprofessional management of reception

Well managed reception area and internal meeting rooms.

Ongoing Ongoing monitoring of reception to maintain professional image

Support programme: Security and facitilties

101 Provideefficientrecords management

Timelyaccesstorecordsand information

Efficientinformationretrieval:Within2hours for electronic documents, and 8 hoursforhardcopies/originals

Retrievalismadetimeously

Compliancewithversioncontrol principles across the Commission

Implementation of versioncontrolinline with knowledge managementsystem

Documentversioncontroltemplatesarebeing implemented

Secureanddeliveryofrecords within stated turnaround times of servicelevelagreements

Retrievalofrecordsaccording to terms agreed with the Commission and serviceprovider

Retrievalismadetimeouslyandinlinewiththeservicelevelagreement

102 Manage public access to the Commission’sinformation

Complywithrelevantlegislation. (This includes the Competition Act (1999), the Public Access to InformationAct(2000)and the Promotion of AdministrativeJusticeAct(2000)

Improvedturnaroundon access to information from averageof5to6days

Relevantlegislationiscompliedwithandaccessisgiveninlinewithconfidentialityprovisions

103 Reviewandimplement records management policies

Complywithrelevantlegislation

100%compliancewithrelevantlegislation

100%compliancewithrelevantlegislation

100

104 Providepostalandcourierservices

Timeousdeliveryofmailand consignments to externalstakeholders.Internal mail distributed within2hours

Distribution of mail and consignments done within the required timeframe of the Competition Commission and stakeholders

Mailisdistributedtimeously

105 Alignexistinginformation and records management approach with knowledge management system

All departmental information processing aligned with knowledge managementsystem

As informed byknowledgemanagementsystemstrategy

Regular spot checks are conducted on the contentmanagementsystem,andwhererectificationisnecessary,divisionsareadvisedaccordingly

COMPETITIONCOMMISSION

Tel:+27(0)123943200|Fax:+27(0)123940166

PostalAddress:TheCompetitionCommission,PrivateBagx23,LynnwoodRidge,0040

PhysicalAddress:TheDTICampus,Mulayo(BlockC),77MeintjiesStreet,Sunnyside,Pretoria

email:[email protected]| www.compcom.co.za

RP217/2010 | ISBN:978‑0‑621‑39640‑9

our purpose and function - compcom sa€¦ · i the commission currently has six divisions that are...

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