Competition Commission offers immunity for info on cartels

THE COMPETITION Commission has set a November 2 deadline for public comment on proposed changes to its existing Corporate Leniency Policy (CLP) with a view to making it a more effective tool in the fight against cartels, seen as one of the most serious contraventions of the Competition Act. The leniency programme offers total or partial immunity to cartel members assisting the competition authorities in identifying and prosecuting cartels. And because cartel activity directly affects the consumer by raising prices and limiting choice, authorities around the world are prepared to forsake a sanction against a member of a cartel who has applied for immunity in return for the firm’s assistance in prosecuting other members of the cartel. This comes in the wake of a high level investigation into price-fixing for fuel and other surcharges by a number of leading global freight forwarders which led to an October 10 raid by the South African Competition Authority on several companies suspected of being engaged in practices which might contravene the Competition Act. The raids were conducted in conjunction with the European Commission and the US Department of Justice, the first time that the three bodies have co-ordinated their operations. Thulani Kunene, manager for the SA Commission’s enforcements and exemptions division, said that concentrated markets like South Africa were particularly prone to cartel behaviour. Kunene told FTW at the time that if there was evidence of a contravention, the matter would be referred to the Competition Tribunal. When this issue went to press, there were no further developments to report, he said. Companies named in the probe include Kuehne + Nagel, Panalpina, Schenker and Expeditors International. In February 2004, the Commission published its Corporate Leniency Policy (CLP) in the Government Gazette. Three years on it is inviting public input on the CLP. Kunene points out that in overseas markets, cartel behaviour is a criminal offence where executives regularly go to jail for pricefixing and bid-rigging. “By their very nature cartels are highly secretive. W e need to have an effective leniency programme to detect cartel behaviour. This consultative process should ensure we can identify and prosecute more cartels.” Since the Commission formally introduced its CLP in 2004, it has only received 14 applications for leniency. Eight met the policy’s qualifying criteria; two (in the milk and bread industries) are being prosecuted and four did not qualify for leniency because they were not first through the door. Proposed amendments to the current leniency programme include tightening discretion to provide immunity guarantees and widening the leniency to all members of a cartel; making submissions orally rather than in writing; and adopting a ‘marker’ system whereby a firm can establish beforehand whether leniency would be available to it and reserve its place in the line. Kunene said the Commission had published a discussion paper which was available at www. compcom.co.za and welcomed any comment or input from members of the public and other interested stakeholders.