Home » Latest » Competition & Antitrust Law » Possible fines and imprisonment against banks for cartel behaviour
Possible fines and imprisonment against banks for cartel behaviour
Provided by KISCH IP
With an entrenched history in Africa, KISCH IP has, for the last 147 years, assisted clients from small to large businesses in all sectors, in safeguarding their intellectual property rights. While acknowledging our establish... more
By Anola Naidoo
Topics Banking & Finance Law | Competition & Antitrust Law
11 May 2017
The recent investigations into the construction and banking industry regarding collusion and cartel behaviour, has highlighted the consequences thereof in terms of the Competition Act. As of 1 May 2016, competitors involved in price fixing, market division or tender collusion could, in addition to being fined 10% of such competitor’s annual turnover, now also face criminal sanctions.
Section 73A as amended by section 12 of the Competition Amendment Act 1 of 2009 applies to directors or persons in a position of having management authority, engaged in cartel activity or knowingly acquiesced in participation thereof, to be held liable in their personal capacity to a fine and/or imprisonment. Whilst the criminal sanctions do not have retrospective effect and the current investigation with the banks is for conduct prior to the Amendment, any future collusion amongst competitors could see directors facing criminal sanctions.
While the new Amendment comes into effect with the aim of preventing cartel behaviour, the lack of cohesion in implementation is somewhat of a concern. The National Prosecution Authority (NPA) is in charge of investigating and deciding whether to impose criminal sanctions against directors. The independence of the NPA and the Competition Commission has to some extent made the Corporate Leniency Policy redundant. The Corporate Leniency Policy is a policy created by the Competition Commission that allows a competitor involved in cartel behaviour to come forth and assist the Competition Commission with its investigation in exchange for immunity. This policy has been in place since 2008 and has assisted the Competition Commission in its high success rate of lessening cartel behaviour and imposing high monetary penalties on multi-million Rand firms within the construction, bread and banking industries.
The issue is that while the Corporate Leniency Policy can provide immunity to a firm, its directors and management, the sole discretion of criminal prosecution rests with the NPA. Thus, a firm that applies for leniency could expose its directors and management authority to criminal sanctions. To date, the NPA and Competition Commission have failed to address this loophole, which begs the question going forward, will directors and management come forth on a firm’s cartel behaviour in terms the Corporate Leniency Policy knowing that such director or management authority will not be protected in terms of such Policy? Could this be the start of an increase in cartel behaviour without consequence?
Should you require any clarity in the above, please do not hesitate to contact our Commercial Department at [email protected] or [email protected].
(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)Anola Naidoo
Anola Naidoo is an attorney at KISCH IP's commercial department. Anola specialises in the drafting of commercial agreements, consumer law compliance, company registrations, business enterprise management, commercial law and litigation. Read more about Anola Naidoo
Contact Author
Competition & Antitrust Law articles by KISCH IP
Competition & Antitrust Law articles on GoLegal
- The Competition Commission taking steps to level the playing field for Online Platforms
- Final report on Online Intermediation Platforms Market Inquiry released
- Competition Tribunal approves Heineken-Distell merger
- Final Guidelines on the Exchange of Competitively Sensitive Information has been published