Page 7 - KZN Business Sense 10.3
P. 7
THE DYNAMICS OF INDUSTRY ASSOCIATIONS
AND ANTI-COMPETITIVE BEHAVIOUR
and trading conditions in The Competition ■ Training and Awareness:
contravention of section 4(1)(b) Commission’s investigation Conduct regular educational
(i) of the Act. revealed that CPHA and its events and mandatory
members allegedly engaged training sessions for all
The members of the CPHA in a concerted practice to fix members, focussing on
are alleged to have done this prices and trading conditions identifying and avoiding
by entering into agreements for plant hire equipment. This anti-competitive practices.
for the purpose of fixing included publishing of a Rates This can include industry
their prices and trading Guide which sets out minimum experts presenting on case
conditions, alternatively, hourly rental rates and terms studies and real-life examples
by engaging in concerted for all of its members, which to highlight potential pitfalls.
practice, i.e. co-operation undermined competition and
between the members without harmed consumers. The matter ■ Governance Structures:
an agreement, to fix their is currently before the Tribunal Form independent compliance
rental rates and/or trading who are required to determine committees within the
organisation to oversee
conditions. whether the CPHA and its adherence to competition
Richard Hoal, Khanya Mgebisa, On 12 June 2024, the members fixed prices, though laws and report any
Lead Partner Associate Competition Tribunal the publication of the Rates suspicious activities. This
confirmed that one of the Guide, in contravention of could include establishing
respondents, Hard Hat section 4(1)(b)(i) of the Act. a panel of competition law
Richard Hoal and Khanya Mgebisa, In 2017, the Competition Equipment Hire, had entered Price fixing is prohibited attorneys to review and
Cox Yeats Attorneys Commissioner (the into settlement with the under the Competition Act, approve any collective
Commissioner) initiated Competition Commission which aims to promote fair decisions or agreements
a complaint against the which included an order of a competition and prevent amongst members.
ndustry associations play CPHA and its members for R480 000.00 administrative practices that restrict market ■ Building a Relationship with
a vital role in fostering contravening Section 4(1)(b)(i) penalty. dynamics. Price fixing and the Competition Authorities:
Icollaboration and of the Competition Act, 89 of market allocation are among Engage in regular and robust
innovation, setting industry 1998 (the Act), which prohibits The Thin Line Between the most serious violations dialogue with competition
benchmarks and norms as price fixing. In its complaint, Collaboration and Collusion of competition law because authorities to seek guidance
well as championing the the Commissioner alleged that The recent case involving the they can lead to higher prices, on compliant practices
collective, the interests of the prohibited practice was CPHA highlights how industry reduced innovation, and and staying informed about
their members. Yet, within taking place in the broader associations can inadvertently decreased consumer choice. regulatory expectations.
this collaborative spirit lies market for the rental of plant or deliberately facilitate anti- These practices undermine the
a potential minefield for machinery. The Commissioner competitive behaviour. This competitive process, harming Conclusion
members of these associations has subsequently referred to the can happen inadvertently when both consumers and the The Hard Hat Equipment
where their cooperation can complaint to the Competition associations provide platforms overall economy. Hire case serves as a stark
cross into anti-competitive Tribunal for prosecution in for members to discuss pricing reminder of the potential
territory, raising legal issues. terms of section 50(2) of the Act. strategies or operational Preventative Measures pitfalls that industry
The recent settlement involving practices, which can lead To avoid crossing the line into associations face in
Hard Hat Equipment Hire In the matter before the to informal agreements or anti-competitive behaviour, maintaining fair competition.
and the Contractors Plant Competition Tribunal, the understandings that restrict industry associations can take By understanding the legal
Hire Association (CPHA) Competition Commission competition. Associations the following preventative boundaries and implementing
highlights how these dynamics contends that the CPHA, might also deliberately measures and practices: effective preventive measures,
can unfold and the importance which is an association of plant coordinate efforts among industry associations can
of associations implementing hire firms, and its members members to fix prices or divide ■ Develop Comprehensive fulfil their role of promoting
measures to prevent took decisions which fixed markets to stabilise or increase Compliance Programmes: industry interests without
anticompetitive practices. the members’ rental rates profits. Keep detailed compliance compromising the principles of
manuals outlining acceptable
and prohibited practices fair competition.
under the Competition Act. Ensuring compliance with
Regularly update the manuals competition law is not just
to reflect changes in a legal obligation but also a
legislation and industry crucial aspect of maintaining
standards. The manuals will the trust and integrity of
serve as a reference point the market. By adhering to
for the association in their these guidelines, industry
discussions relating to the organisations can navigate
various issues affecting their the complex landscape of
members and the potential collaboration and competition,
solutions. fostering an environment that
■ Independent Monitoring: benefits both their members
Implement regular and the broader economy.
audits to review association
policies, pricing strategies, Richard Hoal
agreements and T: +27 31 536 8508
memorandums of E: rhoal@coxyeats.co.za
understanding, and
communications among Khanya Mgebisa
T: +27 31 31 536 8553
members to ensure compliance E: kmgebisa@coxyeats.co.za
with competition laws. W: www.coxyeats.co.za
7
