Advocates Michael Hellens SC, a criminal law expert and David Unterhalter SC who is a competition law expert, at a seminar on the criminalisation of cartel conduct.

By Nomfundo Manyathi-Jele

Webber Wentzel recently held a breakfast seminar on the criminalisation of cartel conduct. The seminar took place at its offices in Sandton on 17 May.

The seminar addressed the recent criminalisation of cartel conduct. With effect from 1 May, price fixing, market division and collusive tendering between actual and potential competitors can result in criminal liability for directors or managers.

The seminar was in the form of a panel discussion and issues discussed included –

• the implications of the criminalisation of cartel conduct for firms, directors and managers;
• the interplay between the Competition Commission and the National Prosecuting Authority (NPA) in investigating and enforcing criminal sanctions; and
• the role of leniency in the NPA’s investigation and prosecution of directors and managers.

The panel was made up of advocates David Unterhalter SC who is a competition law expert and Michael Hellens SC, a criminal law expert.  Martin Versfeld, one of the partners in Webber Wentzel’s competition law practice, gave the introduction and background. The panel was facilitated by Robert Wilson, another partner in the competition law practice.

According to Mr Versfeld, in 2007 the Department of Trade and Industry introduced the Competition Amendment Bill. The Competition Amendment Act 1 of 2009 was then assented to in August 2009 and in April this year, the president proclaimed that s 73A(1) to (4) would come into effect. This section states:

‘A person commits an offence if, while being a director of a firm or while engaged or purporting to be engaged by a firm in a position having management authority within the firm, such person –

(a) caused the firm to engage in a prohibited practice in terms of section 4(1)(b); or

(b) knowingly acquiesced in the firm engaging in a prohibited practice in terms of section 4(1)(b).

(2) For the purpose of subsection (1)(b), “knowingly acquiesced” means having acquiesced while having actual knowledge of the relevant conduct by the firm.

(3) Subject to subsection (4), a person may be prosecuted for an offence in terms of this section only if –

(a) the relevant firm has acknowledged, in a consent order contemplated in section 49D, that it engaged in a prohibited practice in terms of section 4(1)(b); or

(b) the Competition Tribunal or the Competition Appeal Court has made a finding that the relevant firm engaged in a prohibited practice in terms of section 4(1)(b).

(4) The Competition Commission –

(a) may not seek or request the prosecution of a person for an offence in terms of this section if the Competition Commission has certified that the person is deserving of leniency in the circumstances; and

(b) may make submissions to the National Prosecuting Authority in support of leniency for any person prosecuted for an offence in terms of this section, if the Competition Commission has certified that the person is deserving of leniency in the circumstances.’

Martin Versfeld, one of the partners in Webber Wentzel’s competition law practice, giving the introduction and background at a recent seminar on the criminilisation of cartel conduct.

According to Mr Versfeld, this means that from 1 May a director or person who has management authority may be held criminally liable for cartel conduct, which includes price fixing, market allocation and collusive tendering.

Mr Versfeld said that ‘director’ is not defined in the Competition Act and neither is ‘position having management authority’ within the firm.

Mr Versfeld said that according to subss 73A(1) and (2), a director or person who has management authority within a firm commits an offence if –

• he or she caused the firm to fix prices, allocate markets or collusively tender; or
• knowingly acquiesced in the firm engaging in a prohibited practice in terms of s 4(1)(b).

He added that ‘knowingly acquiesced’ means having acquiesced while having actual knowledge of the firm’s prohibited conduct.

Mr Versfeld said that s 73A(3) states that a person may be prosecuted for an offence in terms of s 73A only if –

• the firm has acknowledged in a consent order that it engaged in a prohibited practice in terms of s 4(1)(b); or
• the Competition Tribunal or the Competition Appeal Court has made a finding that the firm engaged in a prohibited practice in terms of s 4(1)(b).

Speaking on leniency, Mr Versfeld said that s 73A(4) states that the Competition Commission may not seek or request the prosecution of a person for an offence if the Commission has certified that the person is deserving of leniency. He added that the section goes on to say that the Commission may make submissions to the NPA in support of leniency in respect of any person certified as deserving of leniency in the circumstances. ‘Deserving of leniency in the context of section 73A means that the person has provided information to the Competition Commission, or otherwise co-operated with the Commission’s investigation of an alleged prohibited practice in terms of section 4(1)(b) to the satisfaction of the Commission (highly subjective and discretionary),’ Mr Versfeld said.

Mr Versfeld spoke of the other provisions of this Act, which have not yet been brought into effect. These include sections such as –

• ‘73A(5) which is an acknowledgement in a consent order by the firm or a finding by the Competition Tribunal or Competition Appeal Court that the firm engaged in a prohibited practice in terms of section 4(1)(b) is prima facie proof that the conduct occurred in the criminal proceedings. [This may] violate fair trial rights and have a chilling effect on the Competition Commission’s corporate leniency policy (CLP).
• ‘73A(6) which prevents a firm (directly or indirectly) from paying the fine of a person convicted of an offence or indemnify, reimburse, compensate or otherwise defray the expenses of a person incurred in defending the prosecution – unless the prosecution is abandoned or the person acquitted. [This may] violate fair trial rights and have a chilling effect on the CLP.
• ‘74 which states that a person convicted of an offence in the case of a contravention of section 73(1) is liable to a fine not exceeding R 500 000 or to imprisonment for a period not exceeding ten years, or to both a fine and imprisonment. Presumably the default sanction provided in section 74(1)(b) of a fine of R 2 000 or imprisonment for no more than six months or both, may be imposed.
• ‘50 which states that at any time after receiving or initiating a complaint, the Competition Commission may certify, with or without conditions, that any particular person contemplated in section 73A, is deserving of leniency in the circumstances. Nothing in this section directly or indirectly establishes any right of a person to be certified as deserving of leniency, in whole or in part or with or without any conditions or require or demand that the Competition Commission issue such a certificate or consider doing so.’

Nomfundo Manyathi-Jele NDip Journ (DUT) BTech Journ (TUT) is the news editor at De Rebus.

 This article was first published in De Rebus in 2016 (July) DR 10.