Their words were transcribed, but the general information attributed to them was given. This dissertation seeks to critically analyze the liability imposed on South African companies for the offense of bid-rigging and the rights of an offending company to hold its directors personally, criminally and civilly liable under specific statutory provisions.
INTRODUCTION
- Background
- Problem Statement
- Research Objectives
- Research Methodology
- Chapter breakdown
- Anticipated Limitations
The purpose of the Competition Act is to promote and maintain competition in the Republic in order. The third chapter of this dissertation will focus on the relationship between competition law and criminal law, the Competition Amendment Act and its purpose in terms of the codification of CLP and the development of section 73A.
THE HISTORICAL CONTEXT OF TENDER COLLUSION
- Overview
- What is a Cartel?
- What is Tender Collusion?
- The causes of tender collusion
- The consequences of tender collusion
- The development of Parliaments’ approach to regulating and dealing with
- The purpose of the Competition Act 89 of 1998 in the new constitutional
- The Introduction of Criminal Law Sanctions in Competition Law
- Are criminal sanctions necessary in Competiton Law?
- Arguments in favour of the introduction of Criminal Law sanctions in
- Arguments against the introduction of Criminal Law sanctions in
- What will be the impact of criminal sanctions?
Competition Law Review 28 in Letsike, T 'The criminalization of cartels - How effective will the new Section 73A of the Competition Amendment Act be?' (2013) available at. 135 Letsike, T 'The criminalization of cartels - How effective will the new Section 73A of the Competition Amendment Act be?' (2013) available at.
THE RELATIONSHIP BETWEEN COMPETITION LAW AND CRIMINAL LAW
Overview
The Competition Amendment Act
- The Corporate Leniency Policy
The Competition Commission issued the original CLP in 2005 to discourage and prevent cartel conduct and encourage its disclosure. 144 Lopes, N; Seth, J; Gauntlett, E 'Cartel enforcement, the CLP and criminal liability – are competition regulators prevented by the Competition Act from cooperating with the NPA, and is this a problem for competition law enforcement?' available at www.compcom.co.za/. ./Cartel-Enforcement-Paper-Final pdf, accessed on 24 March 2014. Provisions of the policy were therefore amended by way of the Competition Amendment Act which introduced section 8 and section 73A.
148 Lopes, N; Seth, J; Gauntlett, E 'Cartel enforcement, the CLP and criminal liability – are competition regulators prevented by the Competition Act from cooperating with the NPA, and is this a problem for competition law enforcement?' available at www.compcom.co.za/. ./Cartel-Enforcement-Paper-Final pdf, accessed 24 March 2014. 35 cases where a real threat of criminal prosecution arises from voluntary statements made to the competition authorities. 152 Lopes, N; Seth, J; Gauntlett, E 'Cartel enforcement, the CLP and criminal liability – are competition regulators prevented by the Competition Act from cooperating with the NPA, and is this a problem for competition law enforcement?' available at www.compcom.co.za/. ./Cartel-Enforcement-Paper-Final pdf, accessed 24 March 2014.
155 Lopes, N; Seth, J; Gauntlett, E 'Cartel enforcement, the CLP and criminal liability – are competition regulators prevented by the Competition Act from cooperating with the NPA, and is this a problem for competition law enforcement?' available at www.compcom.co.za/. ./Cartel-Enforcement-Paper-Final pdf, accessed 24 March 2014.
The Provisions of Section 73A
- Coordination issues arising from the introduction of Section 73A
- Constitutional issues arising from the introduction of Section 73A
- Evidentiary threshold issues arising from the introduction of
The NPA has the burden of proving that the director's conduct is also the legal reason for the firm engaging in this prohibited practice. Both the Competition Commission and the NPA thus play a decisive role in the criminal prosecutions initiated under section 73A. The Competition Commission is a single body tasked with implementing the CLP but is ultimately subject to the NPA in relation to the decision to prosecute under section 73A.
Tribunal or the Competition Appeal Court that the firm was involved in a prohibited practice in terms of section 4(1)(b) is prima facie evidence of the fact that the firm was involved in it. It can also be concluded that the offense created under section 73A does not in itself amount to an infringement of the right to be presumed innocent. The director's right to remain silent becomes relevant because of the presumption created by section 73A.
Only after the state has established each element of the criminal offense beyond reasonable doubt does the burden of proof begin.
LIABILITY FOR CARTEL CONDUCT
Overview
Liability for Cartel Conduct
- Companies
- Directors
However, individuals are not yet held personally responsible for cartel conduct, as only companies can be held liable within the meaning of Article 59 of the Competition Act. The Competition Act currently does not provide for criminal sanctions for cartel conduct. 55 The CAC has ruled that an administrative fine must be considered after a prohibited practice within the meaning of Article 4 of the Competition Act has been established.
Under the CLP, applicants who voluntarily disclose information and agree to cooperate with the Competition Commission in its investigation 'may be granted immunity'. The CAC, in agreement with the Competition Court, concluded that Vulcania had breached Article 4(1)(b) of the Competition Act. In accordance with the Law on Amendments and Supplements to the Law on Competition, directors may be held criminally and/or civilly liable under certain circumstances.
Section 73A requires 'either that the company must have admitted an infringement of section 4(1)(b) of the Act in a consent order or that the Competition Tribunal.
Directors’ Responsibilities, Duties and Liabilities
- The Common Law duties
- The Companies Act 71 of 2008
- Criminal Law
It should be noted that the Companies Act partly codifies the common law and incorporates into its provisions some of the common law principles282. This means that directors, when acting as individuals and as a board, must act in good faith for the benefit and in the best interests of the company as a whole. 64 of the company, except to the extent that this law or the deed of incorporation of the company provides otherwise.' 287.
Article 77, as read in conjunction with Article 22 of the Act, punishes and holds directors personally liable for any losses they incur by knowingly carrying out the company's activities recklessly or with the intention of defrauding creditors and other interested parties. 'They are therefore prohibited from obtaining any personal gain or knowingly causing damage to the company.'296 It follows that a person who accepts his appointment as a director agrees in principle to act in accordance with certain standards set out in section 76 of the Companies Act which encourages directors, while acting in their capacity as directors, to be responsible and liable for their actions. Following the conviction of a director under section 73A of the Competition Amendment Act, section 78 of the Companies Act (yet to come into force) provides that a company is prohibited from paying, directly or indirectly, any fine imposed on a 'director of the company, or of an associated company, who has been convicted of an offense within the meaning of any national law.'299.
315 Persons convicted of offenses pursuant to sections 12 and 13 of the Corruption Act can risk both fines and prison sentences.
Recent Developments in South African Competition Law Regarding Tender
69 or executives who participated in construction cartels in fixing prices, dividing the market and colluding on bids.312. Although the private sector bears little responsibility for corruption, there is no doubt that tender-fixing is widespread not only in the public sector, but also in the private sector of the economy.313 The effects of cartel activity in both sectors are far-reaching and should be punished accordingly to deter future ones. violators.314 The Law on Corruption states that anyone who offers or accepts a gratification to improperly influence a public procurement will commit an offence. 70 cases of bid-rigging were discovered.320 Settlements showed that the construction cartel had been operating for some time and collusion in the construction market was widespread.
The construction cartels and quick settlement process generated intense public interest in South Africa as many of the construction projects associated with the cartel were publicly funded.321. Collective fines of R1.46 billion were imposed after an investigation into collusion on certain construction contracts, including those contracts involving the construction of the stadiums for the 2010 World Cup soccer tournament. The Competition Commission has '140 projects in both the private and public sectors that have investigated tenders between 2006 and 2011.'323 This investigation was reported to be the 'largest collective fine ever imposed on South African companies.' development of competition law enforcement mechanisms, the amount of administrative fines imposed on these companies has not impressed most observers who seek further punishment and criminal prosecution against the directors directly involved, as the fines imposed are 'financially insignificant for these multi- billion rand corporations. .'325 These public outcries emphasize the need to establish a precedent that such anti-competitive behavior will not be tolerated or simply passed on as a 'cost of trading' and that 'further punishment is a necessity'326.
Whether the NPA will be successful in prosecuting individuals involved in cartel conduct under the relevant provisions of the Corruption Act is yet to be determined.
CONCLUSION AND RECOMMENDATIONS
Conclusion
There are various constitutional concerns about the criminalization provisions of the Competition Amendment Act as currently drafted, in relation to the burden of proof placed on any defendant in relation to subsequent criminal proceedings.334 It remains to be seen. whether the constitutionality of the new article 73A of the law will be sent to the Constitutional Court for review a posteriori.335 However, it is submitted that article 73A does not constitute a violation of the right to be presumed innocent, the right to remain silent, the right not to testify during the proceedings and the broader right to a fair trial of an accused person. It is further submitted that even if Section 73A is viewed as a prima facie violation of the aforesaid constitutional rights, such violation would be reasonable and justifiable in the circumstances, having regard to the pivotal role played by directors in the affairs of their company and the need urgent social to eradicate the cartel and other anti-competitive practices in our society.336. 335 Letsike, T 'Criminalizing cartels – How effective will new section 73A of the Competition Amendment Act be?' (2013) available at http://www.compcom.co.za/assets/Uploads/events/Seventh- Annual-Conference-on-Competition-Law-Economics-Policy/Paralle l-2B/THE-NEW-SECTION -73A.pdf, accessed 21 October 2014.
These practical difficulties will place a heavy burden on the resources, skills and expertise not only of the NPA, but also of the courts. Unlike other anti-competitive conduct, given the secretive nature of a cartel and the incentive of cartel members to increase their profits at the expense of the overall economy, cartels have similarities to purely criminal conduct. However, with the entry into force of these criminal sanctions, it must be taken into account that the detection, investigation and prosecution of such schemes becomes a more challenging task.
Strict judicial control in relation to legal procedures and efficient business management thereafter is considered essential to ensure that these objectives of the Competition Act are achieved.
Recommendations
- Is there still a need for Section 73A given the constitutional and
- Directors’ liability for cartel conduct
- Coordination issues
- Alternative sanctions for construction cartels
343 Lopes, N; Seth, J; Gauntlett, E 'Antitrust enforcement, CLP and criminal liability – are competition regulators inhibited by competition law from cooperating with the NPA and is this an issue for competition law enforcement?' available at www.compcom.co.za/ ../Cartel-Enforcement-Paper-Final pdf, accessed 24 March 2014. 348 Lopes, N; Seth, J; Gauntlett, E 'Antitrust enforcement, CLP and criminal liability – are competition regulators inhibited by competition law from cooperating with the NPA and is this an issue for competition law enforcement?' available at www.compcom.co.za/ ../Cartel-Enforcement-Paper-Final pdf, accessed 24 March 2014. It is submitted that even if the Competition Commission were hypothetically required to cooperate with the NPA, it would damage to the economy, as it would give rise to extremely unequal results and would likely have a negative impact on the submission of applications for immunity.
It is clear that this is not in the public interest nor does it further the objectives of the Competition Act. It would be preferable to give the Competition Commission a greater role in the implementation of section 73A to save on state resources, rather than placing the entire burden on the PAK. Letsike, T 'Criminalizing cartels - How effective will new section 73A of the Competition Amendment Act be?' (2013) available at.
Lopes, N; Seth, J; Gauntlett, E 'Cartel enforcement, CLP and criminal liability - are competition regulators prevented by the Competition Act from cooperating with the NPA and is this a problem for competition law enforcement?' available at
