THE ROLE OF COMPETITION LAW IN INDUSTRIAL POLICY

By Shakti Wood,Maryanne Angumuthoo Wednesday, March 18, 2015
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According to Maryanne Angumuthoo, a partner in the competition law department at Bowman Gilfillan: “One of the ways in which industrial policy objectives can be achieved is by putting in place appropriate structural conditions including efficient, functioning and competitive markets.  Competition law has a role to play in this by eliminating distortions that prevent the efficient allocation of resources and functioning of markets, especially strategic growth areas.”

Market distortions include abuse of dominance, cartel conduct, restrictive vertical practices, and barriers to entry and trade. The review of mergers by competition authorities also aims to prevent concentrations and the formation of market structures that restrict competition.

An important aspect of merger review in South Africa is public interest considerations. The South African Competition Act requires that a merger be assessed with reference to both competition and public interest issues – regardless of whether the merger is competitive or not. Employment has been one of the key public interest considerations considered by the Competition Commission in its assessment of the impact of certain mergers.

Ms Angumuthoo, who participated in the panel on the role of competition law in industrial policy commented on the public interest issue: “Since competition law can help create demand, stimulate growth and, in turn, generate more jobs, there is a fine balance to be struck between protecting the public interest and simultaneously creating an attractive business environment and encouraging investment”.

She warned that prioritising public interest issues can undermine competition considerations in mergers and so harm the broad public interest that competition policy aims to promote.
Shakti Wood, an associate at Bowman Gilfillan who assisted with the panel, added that competition authorities and other regulators could provide investors with greater certainty and clarity by issuing clear guidance relating to public interest considerations.

“The recent issuing of the draft Guidelines on the assessment of public interest provisions in merger regulation is an important step in providing greater clarity on how the South African authorities will go about assessing the public interest considerations set out in the Competition Act,” she said.