government gazette 111

8/12/2019 Government Gazette 111

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1. Preface

1.1 This Policy is prepared and issued by the Competition Commission (hereinafter theCommission) as a guideline1to clarify the Commissions policy approach on matters falling withinits urisdiction in terms of the Competition !ct" !ct #$ of 1$$# (hereinafter the !ct).

1.% This Policy is purely aimed at pro&iding guidance and is not binding on the Commission" theCompetition Tribunal%(hereinafter the Tribunal) or the Competition !ppeal Court' (hereinafterthe !ppeal Court) in the eercise of their respecti&e discretions" or their interpretation of the !ct.

1.' t must be noted that nothing in this Policy shall preclude the Commission from eercising its

discretion or powers granted to it in terms of the !ct on matters to which the adopted policy

approach may be applicable.

1.* This Policy becomes effecti&e on the date of publication in the +o&ernment +a,ette and may be

amended by the Commission as the need arises.

2. Introduction

%.1 The Commission was established in terms of the !ct to" inter alia" in&estigate" control and

e&aluate restricti&e practices and abuse of dominant position*. The o&erriding purpose of the !ct

is to promote and maintain competition in the economy" and to pre&ent any form of anti-

competiti&e conduct by a firm or a group of firms arising from agreements.

%.% The rele&ant section of the !ct for the purpose of this policy is section *(1)(b)" which reads as

follows

*. /estricti&e hori,ontal practices prohibited

(1) !n agreement between" or concerted practice by" firms" or a decision by an

association of firms" is prohibited if it is between parties in a horizontal relationship

and if-

(b) it in&ol&es any of the following restrictive horizontal practices

1Section 79 of the Act provides for the publishing of guidelines.

2Established in terms of section 26 of the Act

3Established in terms of section 36 of the Act

4See sections 4 ! " and 9 of the Act.

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Corporate Leniency Policy


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(i) directly or indirectly fiing a purchase or selling price or any other

trading condition0

(ii) di&iding marets by allocating customers" suppliers" territories" or

specific types of goods or services0 or

(iii) collusi&e tendering.

%.' The abo&e pro&ision of the !ct is particularly aimed at eradicating and pre&enting cartel acti&ity as

it harms the economy at large. Cartels are particularly a damaging form of anticompetiti&e

agreement often resulting in price increases that are harmful to consumers of goods or ser&ices

concerned. 2ot only does such acti&ity affect consumer welfare" but it also hinders de&elopment

and inno&ation in the industries within which this acti&ity occurs.

%.* Cartel operation is often collusi&e" decepti&e and secreti&e" and is conducted through a

conspiracy among a group of firms" with the result that it becomes difficult to detect or pro&ewithout the assistance of a member who is part of it.

%.3 n its endea&ours to detect" stop" and pre&ent cartel beha&iour" the Commission has" in line with

other international urisdictions" de&eloped this policy to facilitate the process through which firms

participating in a cartel are encouraged to disclose information on the cartel conduct in return for

immunity from prosecution.

%.4 The policy sets out the benefits" procedure and re5uirements for co-operation with theCommission in echange for immunity. The granting of immunity becomes an incenti&e for a firm

that participates in a cartel acti&ity to terminate its engagement" and inform the Commission

accordingly.

%.6 This policy shall be nown as the Corporate Leniency Policy(C7P).

3. What is the CLP?

'.1 The C7P outlines a process through which the Commission can grant a self-confessing cartel

member" who is first to approach the Commission" immunity or indemnity for its participation in

cartel acti&ity3upon fulfilling specific re5uirements and conditions by such cartel member.

!#he $ommission is empo%ered to inter alia investigate alleged contraventions of $hapter 2 &s.21&c'' refer matters to the $ompetition #ribunal &s. 21&g''

and appear before #ribunal as re(uired b) the Act. *) virtue of these provisions the $ommission has po%ers to prosecute cartel activities.

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'.% t is a compliance mechanism de&ised to encourage cartel participants to disclose to the

Commission a cartel acti&ity that the Commission is not aware of" to discourage or pre&ent the

formation of cartels and to eradicate this harmful conduct.

'.' mmunity or indemnity in this contet means that the Commission would not subect the

successful applicant4

to adudication6

before the Tribunal for its in&ol&ement in the cartel acti&ity"

which is part of the application under consideration. 8urthermore" the Commission would not

impose any fine to that successful applicant.

'.* t is a lenient process in that a cartel member that approaches the Commission of its own accord"

and pro&ides information that would result in the institution of proceedings against a cartel" will

not be subected to prosecution that it would ha&e otherwise been subected to had the

Commission unco&ered the cartel acti&ity on its own.

'.3 Thus" a firm in&ol&ed" implicated or suspecting that it is in&ol&ed in cartel acti&ity would be able to

come forward of its own accord and confess to the Commission in return for leniency. n other

words" if a cartel member realises that such conduct is a contra&ention of the !ct" it could of its

own free will without waiting for the Commission to in&estigate them" report the cartel acti&ity and

re5uest the Commission to deal with it under C7P.

'.4 The C7P therefore ser&es as an aid for the efficient detection and in&estigation of cartels" as well

as effecti&e prosecution of firms in&ol&ed in cartel operations. t en&isages not only a situation thatthe applicant alerts the Commission of the eistence of cartel acti&ity" but one that would o&er and

abo&e culminate to a successful referral of and adudication of such reported cartel acti&ity" with

the applicant co-operating as a witness against other members of the cartel where necessary.

'.6 The C7P is also adopted in recognition of the fact that not all firms engaging in anticompetiti&e

conduct are aware that such conduct is illegal. n some sectors some conduct may be so

pre&alent that maret players assume it is legal. 9&en those firms that become aware of the

illegal nature of their conduct may fear disclosing the conduct for fear of se&ere conse5uencesflowing from the !ct.

'.# n short" the C7P is designed in order to unco&er conspiracies that would otherwise go

undetected and to also mae the ensuing in&estigations more efficient. t is for this reason that

6Successful applicant means a firm that meets all the conditions and re(uirements under the $+,.

7Ad-udication means a referral of a contravention of chapter 2 to the #ribunal b) the $ommission %ith a vie% of getting a prescribed fine imposed on the

%rongdoer. ,rosecution has a similar import to ad-udication herein.

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the benefits of leniency are spelt out from the outset to ser&e as an incenti&e for the applicant to

come forward.

'.$ +ranting of immunity under the C7P is not based on the fact that the applicant is &iewed as less of

a cartelist than the other cartel members" but on the fact that the applicant is the first to approach

the Commission and pro&ide information that helps the Commission to uproot the harmful conduct

that it would otherwise not ha&e been able to detect.

'.1: The eistence of the C7P shall" howe&er" not preclude the Commission from deciding to eercise

its powers to in&estigate a cartel in terms of the !ct without considering the matter under the C7P"

if the Commission deems it appropriate to do so in certain instances.

4. How should the CLP be interpreted?

*.1 ;nless otherwise indicated in the C7P" the definitions and interpretation of words or phases usedin this entire document will be those gi&en in section 1 of the !ct.

*.% The terms leniency" immunity and indemnity are used interchangeably as bearing the same

meaning in the C7P.

*.' !ny reference to a number of days in the C7P refers to business days.

. Where is the CLP applicable?

3.1 The C7P is applicable only in respect of cartels.! cartel refers to an association by agreement

among competing firms to engage in price fiing" di&ision or allocation of marets" and


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impartial manner. 8urthermore" no cross-boarder agreements eist between the Commission and

other competition authorities on leniency matters.

3.* mmunity would be granted in respect of separate and &arious cartel acti&ities pro&ided the

applicant meets the re5uirements on each contra&ention reported. Thus" there will be no blanet

immunity. 8or instance" if an applicant is granted immunity in respect of one contra&ention out of

the three that were committed at a certain gi&en time" such does not automatically indemnify the

applicant in respect of the other two contra&entions. The only eception would be in respect of

contra&entions that cannot be se&ered" such may be considered as one.

3.3 The C7P is aimed at cartel acti&ity that is unnown to the Commission. >owe&er" there is an

eception in respect of the following circumstances

3.3.1 where the Commission is aware of the conduct but has insufficient information" and noin&estigation has been initiated yet" the applicant that has sufficient information or

e&idence to enable the Commission to institute proceedings may be considered under the

C7P.

3.3.% in respect of pending in&estigations and in&estigations already initiated in the Commission

if the Commission" ha&ing assessed the matter" is of the &iew that it has insufficient

e&idence to prosecute and one of the firms under in&estigation could be used as a ey

witness in the prosecution of other firms in&ol&ed in cartel acti&ity.

3.4 ?nly a firm that is first to the doorto confess and pro&ide information to the Commission in

respect of cartel acti&ity would 5ualify for immunity under the C7P. f other members of the cartel

wish to come clean on their in&ol&ement in a cartel to which the applicant has already confessed"

the Commission may eplore other processes outside the C7P" which may result in the reduction

of a fine" a settlement agreement or a consent order. n the e&ent that the matter is referred for

adudication in the Tribunal" the Commission may consider asing the Tribunal for fa&ourable

treatment

#

of the applicants who were not first to come..

3.6 The C7P applies to a firm" which includes a person" partnership or a trust. ! person refers to both

a natural and a uristic person. The C7P will apply to a natural person to an etent that such

person is in&ol&ed in an economic acti&ity" for instance" a sole trader or a partner in a business

"avourable treatment implies substantial or minimum reduced fine from the one prescribed %hich %ill be dictated b) the nature and circumstances of each

case as %ell as the level of cooperation given

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partnership. 8urthermore" it is important that a person maing the application be the person

authorised to act for a firm in 5uestion.

3.# /eporting of cartel acti&ity by indi&idual employees of a firm or by a person not authorised to act

for such firm will only amount to whistle blowing and not application for leniency under the C7P.

The Commission also encourages whistle blowing" as such would also assist the Commission in

detecting anticompetiti&e beha&iour.

3.$ t must be noted that the !ct does not attach criminal sanctions to competition law &iolations"

therefore" the C7P would only indemnify the applicant from prosecution for contra&ening section

*(1)(b) of the !ct and the administrati&e fine that may be imposed by the Tribunal. t would not

absol&e the applicant from criminal liability under any pro&ision of the !ct.

!. What is the nature of the CLP process?

4.1 The C7P is a compliance tool that ser&es as an aid in the in&estigation of cartels. t is therefore

not in itself an administrati&e action that is subect to re&iew by or appeal at the Tribunal or any

other court of law$.

4.% t is a process that is undertaen on a confidential basis. @isclosure of any information submitted

by the applicant prior to immunity being granted during this process would be made with the

consent of the applicant" pro&ided such consent will not be unreasonably withheld by theapplicant.

4.' t is applied on a case-by-case basis. The Commission will eercise its discretion whether or not

to consider granting immunity but will endea&our to consistently apply the C7P in all deser&ing

cases.

4.* 8air and proper administration of the !ct underlies it" not prosecution of selfAconfessed cartel

members. t is for this reason that honesty and cooperation are paramount for the effecti&eimplementation of the C7P.

4.3 2othing in the C7P shall limit the rights of any person who has been inured by cartel acti&ity in

respect of which the Commission has granted immunity. +ranting of immunity under the C7P

9See /orvatis SA &,t)' +td 0 thers vs #he $ompetition $ommission 0 thers &22$*un51$#' and eni Simelane 0 thers vs Seven Eleven

$orporation &,t)' +td 0 thers &4"52551S$A'. Also see e8clusions provided in terms of section 1&i'&a'&ff' of the ,romotion of ustice Act 2555 &Act 3 of

2555'

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does not shield the applicant from any ci&il action 1:that may arise from the cartel conduct in

respect of which the Commission has granted immunity.

". When would the CLP not apply?

6.1 There are &arious instances in which the C7P clearly would not be applicable" which include" but

not limited to" the following

6.1.1 where the cartel conduct in respect of which immunity is sought falls outside the ambit of

the !ct0

6.1.% where the matter relates to an attempted unsuccessful cartel conduct0

6.1.' where another member within the cartel has already made an application for leniency

under the C7P0

6.1.* where there is lac of the re5uired cooperation from the applicant0 or

6.1.3 where the applicant fails to meet the re5uirements and conditions set out in the C7P.

6.% t is the approach of the Commission that unsuccessful applicants" if they so wish" be

encouraged to cooperate with the Commission and attempt negotiations to settle the matter with

the Commission through a settlement agreement or a consent order" which may result in a

reduced fine.

6.' The Commission may" on its own initiation in deser&ing cases" eplore other lenient approaches

outside the C7P in respect of unsuccessful applicants.

#. How to ascertain if the CLP will be applicable?

#.1 Bhere a firm is unsure whether or not the C7P would apply to a particular conduct" it may

approach the Commission on a hypothetical basis to get clarity. This may be done telephonically

or in writing. ! firm concerned may choose to remain anonymous if it wishes to.

#.% ! firm that chooses to disclose its identity or any rele&ant information at this stage does so at itsown ris because it would not be protected by the C7P at this stage. >owe&er" the Commission

will protect information submitted by applicants and treat it with utmost confidentiality.

15A right to bring a civil claim for damages arising from a prohibited practice comes into e8istence on the date that the #ribunal made a determination in

respect of a matter that affects that person or in case of an appeal on the date that the appeal process in respect of that matter is concluded &see s. 6!&9''. #hus

granting of immunit) per se does not give rise to such right.

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#.' !ny clarification issued in this regard will not ha&e a binding effect on the Commission" the

Tribunal or the !ppeal Court. t is merely issued to guide the would-be applicant as to whether a

conduct would be considered for leniency under the C7P.

$. What for%s of leniency are applicable in the CLP?

$.1 !pplicants for leniency may epect the following result(s) to their applications

$.1.1 Conditional i%%unity

$.1.1.1 This is normally gi&en to an applicant at the initial stage of the application so as to create

a good atmosphere and trust between the applicant and the Commission pending the

finalisation of the leniency process. This is done in writing between the applicant and the

Commission signalling that leniency has been pro&isionally granted.

$.1.1.% Conditional immunity would therefore precede total immunity or no immunity. ?nce the

Commission finalises all the preliminary in&estigations and is of the &iew that it has

sufficient e&idence to institute proceedings in respect of the reported cartel conduct" it will

gi&e the co-operating applicant total immunity.

$.1.1.' The Commission reser&es the right to re&oe the conditional immunity if the applicant

does not co-operate.

$.1.2 &otal I%%unity

$.1.%.1 Total immunity is granted to a successful applicant who

a. has fully met all the conditions and the re5uirements0

b. has not been found guilty of engaging in cartel acti&ity before in terms of the !ct0

andc. in respect of the current application has not been the instigator or the leader of the

cartel.

$.1.%.% n situations where the applicant has failed to meet any one of the abo&e conditions" and

the applicant is the only one that has come forward in respect of that particular cartel

acti&ity with the result that no successful adudication can be achie&ed without the

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applicant being used as a witness against other cartel members" the Commission may

consider granting leniency.

$.1.%.' The situation described in $.1.%.% abo&e will not be applied lightly. 9treme caution will be

eercised as this eception may be open to abuse.

$.1.3 'o i%%unity

$.1.'.1 This applies in those cases where the applicant fails to meet the conditions andre5uirements. t also applies to applicants who ha&e been found to be dishonest in theirapplications with the result that the process does not achie&e the intended purpose.

$.1.'.% ?nce immunity is not granted" the Commission would be at liberty to deal with theapplicant as pro&ided for in the !ct. n the same breath the Commission may consider asettlement agreement or a consent order" or where a matter is referred" asing theTribunal for a reduction of fine in respect of the unsuccessful applicant.

$.1.'.' !n applicant that does not meet all the re5uirements but wishes to be considered for

some form of fa&ourable treatment may also approach the Commission for a possible

settlement of the matter.

1(. What are the re)uire%ents and conditions for leniency under the CLP?

1:.1 The applicant for immunity under the C7P will 5ualify for leniency pro&ided it meets the following

re5uirements

(a) the applicant must honestly pro&ide the Commission with complete and truthful disclosure

of all e&idence" information and documents in its possession or under its control relating to

the cartel acti&ity0

(b) the applicant must thereafter offer full and epeditious co-operation to the Commission

concerning the reported cartel acti&ity. =uch co-operation should be continuously offered

until the Commissions in&estigations are finalised and the subse5uent proceedings in the

Tribunal are completed0

(c) the applicant must immediately stop the cartel acti&ity or act as directed by the

Commission0

(d) the applicant must not ha&e been the instigator of" or coerced other firm(s) to be part of the

cartel acti&ity0 and

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(e) the applicant must not alert former cartel members that it has applied for leniency

1:.% The Commission will eercise its discretion on whether or not to consider an application for

leniency under the C7P whene&er the abo&e situations eist. The Commission will" howe&er"

endea&our to grant immunity to all deser&ing applicants.

1:.' t is a standing condition in any application for leniency to the Commission that any applicant who

maes a misrepresentation concerning the material facts shall not get immunity. !lso if an

applicant is dishonest" the Commission reser&es the right to stop the leniency process and deal

with the party as pro&ided for by the !ct.

1:.* f the applicant fails to meet the re5uirements and conditions through no fault of its own" the

Commission may in deser&ing appropriate cases still grant leniency. This could be the case wherefor eample a firm applying for leniency is unable to pro&ide re5uired documentary e&idence

which is in possession of a third person and cannot ha&e access to it.

11. What is the procedure to be followed in the CLP?

11.1 The procedure outlined herein is aimed at ensuring efficient facilitation of the C7P" and the

Commission may eercise some fleibility where necessary to achie&e the desired outcome. 8or

instance" where the process refers to a meeting" the Commission may in certain circumstanceschoose to use other forms of communicating with the applicant without ha&ing a meeting. The

procedure is as follows

11.1.1 *irst Contact with the Co%%ission

11.1.1.1The applicant must mae an application for leniency in writing to the Commission by

facsimile or e-mail11. The application must contain information substantial enough to

enable the Commission to identify the cartel conduct and its participants in order todetermine whether or not an application for leniency has been made in respect of the

same conduct. t is not necessary for the applicant to disclose its identity at this stage.

11Applications ma) also be hand delivered to the $ommissions offices.

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11.1.1.%f another firm has already made an application in respect of the same conduct" the

Commission must ad&ise the applicant accordingly inwriting or by telephonewithin fi&e

(3) days" or within a reasonable period after receipt of the application.

11.1.1.'f no firm has made an application already" the Commission must ad&ise the applicant

accordingly in writing or by telephone. The applicant must thereafter within fi&e (3) days"

or within a reasonable period after receipt of such ad&ice from the Commission mae an

arrangement for the first meeting with the Commission. !t this stage the Commission

would re5uire the full identity of the applicant.

11.1.2 *irst +eetin, with the Co%%ission

11.1.%.1The applicant must bring all the rele&ant information" e&idence and documents at its

disposal relating to the cartel acti&ity for consideration by the Commission. The applicantmust answer all the 5uestions that the Commission may as in relation to conduct being

reported or matters relating thereto.

11.1.%.%The purpose of this meeting would be to find out whether the applicants case would

5ualify for consideration under the C7P. !t this stage the Commission may only ha&e sight

of and peruse all the documents brought by the applicant but may not mae copies. The

Commission must within fi&e (3) days" or within a reasonable time after the date of the first

meeting mae a decision on whether or not the applicants case 5ualifies for considerationand inform the applicant accordingly in writing.

11.1.%.'f the Commission decides that the applicant 5ualifies for consideration under the C7P"

arrangements for a second meeting will be made. !t this stage the applicant would

officially be considered as the first applicant in respect of the cartel acti&ity in 5uestion.

11.1.%.*f the Commission decides that the applicant does not 5ualify for leniency the applicant

would be ad&ised so in writing. This would be regarded as 2o mmunity.

11.1.3 -econd %eetin, with the Co%%ission

11.1.'.1The aim of this meeting would be to discuss and grant conditional immunity to the

applicant pending finalisation of any further in&estigations by the Commission in the

matter. !t this stage the applicant will be re5uired to bring forward any other rele&ant

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11.1.3.%Total immunity is characterised by an undertaing on the part of the applicant completely

agreeing to be the witness for the Commission" where necessary" in the proceedings

relating to the cartel acti&ity in respect of which it has been gi&en immunity. 8urther" total

immunity will" as a condition" re5uire the applicant to fully co-operate with the Commission

in all aspects concerning that cartel acti&ity. n turn the Commission will not prosecute or

fine the successful applicant.

11.1.3.'=hould the applicant wish to stop its participation in the process" it runs the ris of being

dealt with in terms of the !ct. !lthough the Commission will not use the e&idence obtained

from the applicant in subse5uent proceedings" there is nothing precluding it from getting

such e&idence from the applicant by the methods created by the !ct.

12. When can leniency be reoed?

1%.1 /e&ocation may occur at anytime in respect of either a conditional immunity or total immunity.

1%.% The Commission will re&oe a conditional or total immunity in writing.

1%.' /e&ocation may occur for &arious reasons" which include" lac of cooperation by the applicant"

misrepresentation of facts" dishonesty and failure by the applicant to meet conditions set for

either a conditional or total immunity"

1%.* t must be noted that" in terms of section 6'(%)(d) of the !ct" a person commits an offence when

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1'.1.1 The Commission would be at liberty to in&estigate the matter and refer it for adudication

in terms of the pro&isions of the !ct if it deems it necessary to do so.

1'.1.% The Commission may" depending on the matter" as for a lenient sanction when referring

a matter to the Tribunal in respect of a firm whose application has been unsuccessful.

1'.1.' The Commission and


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1*.6 t is en&isaged that a leniency of the nature adopted by the Commission in the C7P would lead to

detection and epeditious finalisation of cases that otherwise would ha&e been difficult" if not

impossible" to crac.

13. Bhom to contact at the Commission regarding the C7PE

13.1 8irms seeing to mae general en5uiries on the C7P or seeing clarification on whether or not

leniency would be considered may contact the Corporate Co%pliance Coordinator

Compliance @i&ision at

Telephone number F2" 12 4#2 $(!!

8acsimile number F2" 12 4#2 $12(

e-mail address ccsaco%pco%.co.a

13.% 8irms seeing to mae an application may forward them for the attention of the +ana,er

9emptions and 9nforcement @i&ision at

@edicated 7ine 52" 12 4#2 $(12

8acsimile number F2" 12 4#2 $11#

9-mail6 dianetco%pco%.co.aor

>and deli&er the application to cnr +lenwood /d and ?beron =tr. Gloc G" +lenfield

?ffice Par" 8aerie +len" Pretoria.

13.' 8irms may also &isit the Commissions Bebsite at www.compcom.co.,afor further information.

7eferences

1.Cartel /egulation +lobal Competition /e&iew" %::'

%. 8ighting >ard-Core Cartels >arm" 9ffecti&e =anctions and 7eniency Programmes" ?9C@" %::%

'. !CCC 7eniency Policy 8or Cartel Conduct Hune %::'

*. mmunity Program ;nder The Competition !ct Competition Gureau nformation Gulletin" %:::

3. Corporate 7eniency Policy @epartment ?f Hustice" !ugust 1$$'

1!
mailto:[email protected]://www.compcom.co.za/mailto:[email protected]://www.compcom.co.za/

government gazette 111

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