Thando Vilakazi
In May 2016, representatives of the competition authorities from nine Southern African Development Community (SADC) member states met in Gaborone, Botswana to sign a Memo-randum of Understanding (MoU) to cooperate on competition matters. The MoU deals with cooperation between authorities on competition law enforcement and policy, which is the first such agreement in SADC.
The MoU builds on commitments contained in the SADC Declaration on Competition and Consumer Policies signed by SADC member states in 2009. The declaration was intended at a high level to pave the way for cooperation between au-thorities including provisions on the sharing of information and establishment of competition laws in countries that did not have relevant legislation.
An important element of meaningful cooperation between countries is the ability to communicate with one another di-rectly about ongoing cases. In most cases, this is confounded by the obligations of authorities to treat as confidential infor-mation received from firms if it is deemed to be commercially sensitive. This typically takes place in cases involving firms in South Africa, where the Competition Commission of South Africa may have access to information from previous or ongo-ing cases that could be of benefit to authorities in neighbour-ing country authorities for their investigations. This follows from the large number of cases handled by the authority in South Africa, and the success achieved in uncovering cartels in particular.
Underlying the reluctance of authorities to share information is the threat that firms may respond with legal action if their information is shared to parties outside of those specified in confidentiality undertakings. This is an important part of fair-ness in the treatment of firms. However, it clearly constrains any meaningful cooperation between authorities especially when firms have an incentive to conceal information in some cases. For example, a firm involved in a cartel may come forward as a leniency applicant in South Africa, however they may perceive the probability of getting caught to be much lower in another jurisdiction and as such would not want to have their conduct exposed there through the sharing of in-formation between authorities. This is well within the rights of the firm, but it is completely against the objectives in the Dec-laration of enhancing enforcement in the region and enabling authorities to prosecute cases effectively.
Authorities themselves are rightfully self-preservationist in seeking to win their own cases and protecting their own inde-pendence and credibility. But this is somewhat shortsighted given the increased interdependence of economies in the region and the important role that competition policy plays in opening up markets for economic development. For example, South African firms are expanding their footprint in the region at an extremely rapid rate, and economies in the region have experienced levels of economic growth that are far higher than those experienced in South Africa. The future growth of firms in major production areas of Gauteng is inextricably tied to growth in the region given severe constraints to growth in the domestic market. The ability of firms to expand their oper-ations, extend their geographic market and reach scale in their operations will rely on taking advantage of opportunities to grow in a wider regional market which has been confirmed in recent CCRED surveys with firms.
Fostering an environment where markets in the region are open for business and not captured by firms with market power therefore has direct, mutual benefits for the countries in the region. The strategies of firms are increasingly region-al, and as such competition law enforcement needs to trans-cend the comforts of political borders.
Meaningful cooperation requires that authorities look beyond their own discomfort with sharing information or their suc-cesses, and consider wider benefits for economies in the re-gion not because it would be nice to have an integrated re-gional market, but because the future growth of our econo-mies depends on it. Implementing the provisions of the MoU will require authorities to take some bold steps and the MoU itself is definitely one in the right direction. Authorities throughout the world have been finding practical ways to co-operate for many years and often share information with au-thorities in this region on major investigations. There should be no constraint to making this happen between neighbours, and firms should not be allowed to hold competition authori-ties to ransom in this regard.
Notes
- Southern African Development Community (SADC). Declaration on Cooperation in Competition and Consumer Policies 2009.
- Odendaal, N. ‘Nine SADC countries enter new MoU for cooperation in competition matters’ (6 June 2016). Engineering News.
- Competition Authority of Botswana website. ‘SADC Competition Authorities to sign MoU’.