South Africa: Complaints And Investigations

Last Updated: 22 February 2012
Article by Webber Wentzel's Competition Practice Group

A firm engaged in prohibited practices and cartel behaviour may be subject to investigation and complaint proceedings in terms of Chapter 5 of the Competition Act 98 of 1998 (Competition Act).

Who may initiate complaint proceedings

A complaint may be initiated by the Competition Commission (Commission) or a private party.

The Commission may initiate a complaint against an alleged prohibited practice of its own accord or after receiving information from another person.

A private party (which includes a firm, an individual or association of firms or individuals) alleging that a firm has committed a prohibited practice can either:

  • submit information concerning the alleged prohibited practice to the Commission; or
  • submit a complaint in respect of the alleged prohibited practice to the Commission.

When a complainant submits information to the Commission, it may request that its identity is kept confidential.

A complainant may apply to the Competition Tribunal (Tribunal) for an interim order interdicting an alleged prohibited practice before a hearing into the practice has commenced.

Investigation of the complaint

Once a complaint is initiated, the Commission appoints an inspector to investigate the complaint.

The Competition Act empowers the Commission and its investigators to:

  • enter and search a firm's premises, including any person found on the premises;
  • seize or make copies of documents and computer contents;
  • summon a person for questioning or to deliver a specified object; and
  • conduct unannounced dawn raids on a firm's premises for the purposes of search and seizure of documents relevant to the investigation.

The Commission has one year to investigate a complaint referred to it by a private party. This period may be extended in certain circumstances. There is no express limitation on the period of investigation of a complaint initiated by the Commission itself.

At the end of the investigation, the Commission must either refer the complaint for adjudication by the Tribunal or issue a notice of non-referral to the complainant. In the event of a non-referral, the complainant may refer the complaint directly to the Tribunal.

Consent order

If during, on or after completion of an investigation of a complaint, the Commission and the respondent agree on the terms of an appropriate order, the Tribunal, without hearing any evidence, may confirm that agreement as a consent order.

Commission's corporate leniency policy

The corporate leniency policy (CLP) was introduced by the Commission in February 2004 with the aim to stop, detect and prevent cartels. The CLP currently only provides guidance and is not binding.

In terms of the CLP, the Commission is prepared to grant immunity to a self-confessing cartel member, who is first to approach the Commission, for its participation in cartel activity as long as it fulfils the requirements of the CLP.

Leniency may be sought only in respect of the cartel activities set out in section 4(1)(b) of the Competition Act:

  • price fixing;
  • market allocation; and
  • collusive tendering.

The leniency applicant may be granted conditional immunity at the initial stage of the proceedings pending the finalisation of such proceedings. Total immunity is granted to an applicant once the Commission completed its investigation, referred the complaint to the Tribunal and a final determination is made by the competition authorities (either the Tribunal or the Competition Appeal Court).

Total immunity is granted to an applicant that meets all the requirements set out in the CLP. In terms of the CLP, an applicant must:

  • come forward before the Commission initiates an investigation;
  • come forward before any other cartel participant;
  • honestly provide the Commission with complete and truthful disclosure of all evidence, information and documents in its possession;
  • offer full, expeditious and continuous cooperation with the Commission's investigation;
  • cease its cartel activity;
  • not have been the instigator of the cartel activity, or coerced other firms to be part of the activity;
  • not alert former cartel members that it has applied for leniency;
  • not destroy, falsify or conceal relevant information and evidence; and
  • not make a misrepresentation or act dishonestly.

The immunity granted pursuant to the CLP shields an applicant from adjudication before the Tribunal and the imposition of a fine.

The immunity granted in terms of the CLP does not protect the applicant from criminal or civil liability resulting from its participation in cartel activities.

Competition law review and compliance programmes

In light of the rigorous competition law enforcement initiatives undertaken by the competition authorities, firms have come to recognise the value in instituting detection and prevention mechanisms within their organisation.

Competition law reviews conducted by law firms with specialist competition law departments serve to assess the practices of the firm in the context of its interaction with its customers, suppliers and competitors. This type of review seeks to identify any competition risks arising out of such practices and proposes methods of managing these risks. Risk management may take the form of an amendment of terms of trade, applying for a corporate leniency application in terms of the CLP and the implementation of a competition compliance programme.

A competition compliance programme is a bundle of policies and procedures designed to identify legal regulatory risk facing the particular firm, to correct the identified deficiencies and to prevent future transgressions.

More information

A more comprehensive discussion of competition law enforcement and the leniency policy in South Africa can be found in the chapter contained in the Global Legal Group's International Comparative Legal Guide to: Cartels and Leniency 2012 authored by Martin Versfeld and Robert Wilson, both partners at Webber Wentzel's Competition Practice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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