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PRESS RELEASE: AMENDMENTS TO THE COMPETITION ACT AND THE LABOUR RELATIONS ACT – CONTRADICTING OBJECTIVES

The left hand does not know what the right hand is doing.
Or are there ulterior motives?

21 August 2018

The Competition Act empowers the Competition Commission to carry out its mandate of investigating restrictive business practices and the abuse of dominance by dominant players in a particular sector.

Business live recently reported on the proposed amendments to the Competition Act. The article states, among others, that the amendments aim to achieve an ‘inclusive economy’ and therefore tackles ‘high levels of market concentration and racially skewed patterns of ownership’. The author however argues, correctly so, that economic inclusion will not be achieved by the Competition Commission but that radically transformed, job creating labour laws, access to capital for entrepreneurs and less red tape for small business are required to attain economic inclusion and growth.

It is simply bizarre that the Legislator chose to amend the Competition Act in order to create an ‘inclusive economy’, while at the same time considers amending the Labour Relations Act (LRA) in such a way that the exclusion of SMMEs in certain sectors of the economy is guaranteed.

The National Assembly has already approved the amendment of Section 32 of the LRA so that, in future, it will be much easier for dominant firms in a sector, under the auspices of a bargaining council, to extend and impose their self-serving SMME destroying agreements to all smaller players in the market. This whole bargaining council scheme is exclusive and self-serving of nature.

The consequence of this amendment to the LRA, is that SMMEs will be completely excluded from the decision-making processes involved in the extension of collective agreements. This will enhance the strangle hold of monopoly capital on the economy and the slow expulsion of SMMEs from of the mainstream economy. These measures make it impossible for any new entrants to enter markets as the dominant players’ agreements act as an insurmountable barrier to entry.

It is completely counterintuitive for Government to, on the one hand, amend the Competition Act in order to eradicate abuse of dominance to create an inclusive economy, while, simultaneously, creating legislation which entrenches and ensures dominance – by means of amendments to the LRA.

It is interesting to note that bargaining councils, which is by its very nature anti-competitive and one of the biggest proponents for the protection of dominant positions, are specifically excluded from the jurisdiction of the Competition Act. This in itself is indicative of the fact that the collective bargaining arena, under the auspices of bargaining councils, are simply state approved monopolistic safehouses.

It is completely disingenuous for the Legislator to unleash the Competition Commission as a guardian against monopolistic practices, while, simultaneously, strengthening the hand of the serial abusers.

On multiple forums Government stresses the importance of SMMEs in poverty alleviation and consequently, in the eradication of inequality. Yet, nothing is done to enable SMMEs to play this role constructively. As a matter of urgency Government must adopt and execute a strategy aimed at loosening the hands of SMMEs in order for them to reach their full potential. Furthermore, and this can be done immediately, Government should at least coordinate its legislative agenda.

This is a press release by Gerhard Papenfus, Chief Executive of the National Employers’ Association of South Africa (NEASA). He writes this in his personal capacity.

 

For more information:
Marietha Thirion
marietha@neasa.co.za

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