1
PUBLIC INTEREST PROVISIONS IN THE SOUTH AFRICAN COMPETITION ACTA CRITICAL REVIEW
Authors: James Hodge, Sha’ista Goga, Tshepiso Moahloli
Competition Policy, Law and Economics Conference 2009
Abstract
The South African Competition Act No 89 of 1998 was enacted ten years ago with the
specific purpose of promoting and maintaining competition in South Africa. One of the
ways in which the Act differed from those enacted in other jurisdictions was the
innovative inclusion of public interest objectives. These objectives are reflected in the
preamble and purpose of the Competition Act and are explicitly detailed in sections of
the Act dealing with the assessment of exemptions and the assessment of mergers.
This paper examines the motivation for the inclusion of public interest provisions and
the shape they took in the Act. It then discusses how the Competition Tribunal has
chosen to interpret these provisions through a series of cases over the ten year
period, and in so doing establishing the case precedent in relation to public interest.
The paper then critically assesses the manner in which public interest has been
interpreted. It finds that whilst public interest has not yet trumped competition
considerations, the approach adopted by the Tribunal has generally been both in line
with the original motivation and sound practice. Yet challenges remain in ensuring that
public interest does not gradually slip off the agenda of competition authorities and
that it is rigorously assessed in the event that a substantive public interest case does
emerge in future.
2
1
INTRODUCTION
The South African Competition Act No 89 of 1998 was enacted ten years ago with the
specific purpose of promoting and maintaining competition in South Africa. One of the
ways in which the Act differed from those enacted in other jurisdictions was the
innovative inclusion of public interest objectives as part of the assessment of
competition issues.
Given the potential for mergers to impact on government policy objectives, many other
jurisdictions including the UK, Germany and Canada provide a mechanism for
politicians to overturn otherwise anti-competitive mergers under particular
circumstances. One concern is that this leaves the competition process, which should
ideally be independent, open to some form of government interference. The South
African Competition Act is unusual in that it has provided mechanisms to resolve
conflicts between policy and competition, but has limited the discretionary component
by placing the responsibility for determining whether a merger is required for public
interest objectives in the hand of the independent competition authorities.
However, several problems nonetheless remain in contrasting and weighing up
competition effects on the one hand, and public interest on the other. This is
particularly evident where the units of analysis are quite different.
This paper seeks to discuss the public interest objectives of the Act and how they
have been brought to the fore, assessed and dealt with in South African precedent.
We conclude that while the competition authorities have dealt well with public interest
considerations in the past, we may face particular challenges going forward.
The paper is structured as follows:

The first section provides a background on the public interest provisions South
Africa by discussing some of the motivation behind the inclusion of public
interest in the Competition Act, and outlining the actual provisions.

The second section outlines the way in which the Tribunal has interpreted and
dealt with public interest provisions in the past 10 years.

The third section provides an assessment of the Tribunals approach, and
discusses some challenges that may occur with respect to the assessment of
public interest in the future.

The fourth section concludes.
3
2
A BACKGROUND ON PUBLIC INTEREST IN SOUTH AFRICA
The Competition Act of South Africa is written in a manner that explicitly
acknowledges the importance of public interest and therefore provides a role for the
consideration of factors that go beyond the boundaries of competition. This is at the
first instance reflected in the preamble and purpose of the Competition Act and is
furthermore stipulated as a consideration in the both the assessment of exemptions
and the assessment of mergers. We first discuss the motivation and context for the
introduction of public interest in the Competition Act before outlining the provisions
within the Act that relate to public interest.
2.1
Motivation and context for the public interest provisions in the South African
Competition Act
Discussions on an appropriate competition framework for South Africa began in the
late nineties at a time when the South African economy was being restructured in
numerous ways to redress the dual legacies of an uncompetitive, concentrated
economy and a country replete with socio-economic inequalities. The government at
the time was looking to create a comprehensive framework that would achieve a
competitive and fast-growing economy. Competition policy was seen as a core part of
this strategy.
Improved competitiveness would assist in furthering the government’s public interest
objectives on two levels. Firstly, it would support the national macro-economic strategy
and secondly, it would support microeconomic restructuring in that it would promote
efficient firms and industries. According to the DTI, this would occur through the
optimisation of ‘production and distribution efficiencies – including appropriate
production processes and technological innovation- through effective economic and
commercial interactions including supply and demand, unhindered by anti-competitive
conduct’,1
A well-structured competition policy was therefore seen by the DTI as something that
would lead to a more competitive and efficient economy with the following benefits.
(a) It would lower costs along the value chain.
(b) It would enhance the attractiveness of South Africa to foreign investors.
(c) It would allow for a more balanced regional economy.
1
Department of Trade and Industry, Proposed Guidelines for Competition Policy, A Framework for
Competition and Development , 27 November 1997, para 1.3.2
4
(d) It would stimulate entrepreneurial activity.
(e) It would promote international competitiveness of South African firms.
(f) Through its influence on production processes it would assist in furthering the
government’s socio-economic aims.
In addition, competition policy was also seen to directly assist in the promoting
particular socio-economic objectives. For example with relation to small and medium
enterprises the DTI noted that ‘the policy will ensure that participation of efficient
small- and medium-sized enterprises in the economy is not jeopardised by anticompetitive structures and conduct.’2
While taking cognisance of the standalone benefits of competition policy, the
government recognised that the competition policy that they wished to develop
needed to be aligned to the broader government policies and objectives of redress
and development. This is important because there are likely to be instances in which a
transaction would result in small private gain but extremely high social costs. Thus,
competition in this instance would be undesirable in that it conflicts with other
objectives.
The alignment of these policies was seen as achievable since the government
believed that ‘competitiveness and development are mutually-supporting rather than
contradictory objectives, if policies are properly aligned’3. The key challenge in
developing the legislation was therefore to design legislation that would ‘ensure policy
alignment between goals of competitiveness and development.’4
As such, alignment was required in two areas. Firstly, it was believed that competition
policy needed to be aligned with industrial and trade policy in order to synchronise
varying domestic and international development tools. This is something that is
particularly important for developing countries as these tools are often used in activist
government policies to nurture the economy5.
Secondly, competition law needed to be aligned with the policies that the government
needed to address the ‘challenges that follow from our legacy of economic
distortions.’6 As such, competition policy was also seen as something that should be
complementary to efforts to improve employment, support emerging entrepreneurs
(particularly those from historically disadvantaged backgrounds) and complement
consumer transparency.
2
Ibid, para 3.8.3
Ibid, para 2
4 Ibid, para 8
5 Lewis David, The Role of Public Interest in Merger Evaluation, International Competition Network,
Merger Working Group, Naples, 28-29 September 2002
3
6
Department of Trade and Industry, Proposed Guidelines for Competition Policy, A Framework for
Competition and Development , 27 November 1997, para 4
5
Aligning competition policy to these public interest objectives was crucial to the
success of the Competition Act and the envisioned Competition Authorities. A
disregard for major public interest issues would have led to a loss in credibility in the
eyes of the public and the government agencies which would have meant a reduction
in the stature of the Competition Act and the Competition Authorities enforcing it. The
DTI therefore attempted to create guidelines with features that would be attractive
both to those stakeholders who value market discipline and those who prefer direct
intervention and therefore combines competitiveness and development as its aims.
The DTI at the time of drafting its guidelines viewed public interest as a broad concept:
‘the public interest is far broader than the sectional interests of firms and their
workers within a particular industry. It also stretches beyond the interests of
consumers, of emerging black entrepreneurs or of labour and community
constituencies- although each must be satisfied that the end result fairly
addresses their concerns.’7
A key aspect of this was creating a role for public interest within the competition
framework in a manner that supports developmental aims via competition as well as
through other policies. The result was a Competition Act that explicitly required the
consideration of particular public interest objectives in merger evaluations. Its more
novel features include the following:
1. It placed the responsibility for public interest decisions at the hands of
independent competition authorities. This limited the scope for political
interference. In addition, this reduced the likelihood that processes could be
derailed through lobbying that might occur if political bodies had the discretion
to overturn rulings on the basis of public interest considerations. This is
especially true given the transparency and public nature of the competition
processes defined by the Act. By allowing the same body to assess the
competition and public interest aspects it allows for a weighing up of the
relative merits of both aspects of the case.
2. It limited the scope of public interest by defining in detail the grounds on which
public interest could be considered. By detailing the public interest the Act
creates structure and provides a filter for the public interest analysis.
2.2
Public interest in the Competition Act
We now outline some of the key provisions of the Competition Act that relate to the
public interest. This occurs in three parts, the preamble and purpose of the Act, the
consideration of mergers and exemptions.
The preamble of the Competition Act discusses the context and reasons for enacting
the Competition Act and is the first place in the Act that refers directly to public
7
Ibid, para 1.1.3
6
interest. It states that the Act will benefit all South Africans and is necessary in order
‘to regulate the transfer of economic ownership in keeping with the public interest’.
Section 2 of the Act outlines the purpose of the Act as the provision and maintenance
of competition in order to achieve six outcomes. This includes several that can be
seen as not directly related to competition, but rather to public interest. These include
the promotion of employment and advancement of the ‘social and economic welfare of
South Africans’, expanding opportunities for South African companies in world
markets, providing equitable opportunities for small and medium sized enterprises and
to promote a greater spread of ownership, particularly with respect to historically
disadvantaged individuals. These key themes are reiterated throughout the Act and
developed further with respect to mergers and exemptions.
The concept of public interest with respect to the consideration of mergers is more
fully developed in section 12(A) which states that in addition to competition and
efficiency considerations it is also necessary to assess whether a merger ‘can or
cannot be justified on substantial public interest grounds by assessing the factors set
out in subsection (3)’.8 This is to be done whether or not a merger is found to be
anticompetitive.
Subsection 12A(3) builds the understanding of public interest further by outlining the
factors that are seen as public interest grounds. These factors mirror those outlined in
the purpose of the Act:
‘When determining whether a merger can or cannot be justified on public interest
grounds, the Competition Commission or the Competition Tribunal must consider the
effect that the merger will have ona) a particular industrial sector or region
b) employment
c) the ability of small businesses or firms controlled or owned by historically
disadvantaged persons to become competitive;
d) the ability of national industries to compete in international markets’.
The Competition Act provides no scope for public interest arguments to be considered
once a prohibited practice investigation is under way (see sections 4, 5, 8 and 9 of the
Act). However, public interest considerations can enter the assessment of whether or
not to provide an exemption to a practice or agreement that may be considered
‘prohibited practices’. S10 which discusses exemptions notes that an exemption may
be granted for an agreement or practice (or category of agreements or practices) if it
8
Section 12A(1)(a)(ii).
7
contributes to one of the four objectives listed below. This allows a measure of
flexibility regarding practices that would be anti-competitive if they are necessary for
the public good. These are:
(i)
‘Maintenance and promotion of exports
(ii) Promotion of the ability of small businesses, or firms controlled or owned by
historically disadvantaged persons, to become competitive
(iii) Change in productive capacity necessary to stop decline in an industry; or
(iv) The economic stability of any industry designated by the Minister, after
consulting the Minister responsible for that industry.’
3
INTERPRETATION OF THE ACT BY THE COMPETITION TRIBUNAL
The interpretation of the Act with respect to public interest has centred on the
evaluation of mergers. Over the past 10 years the Tribunal has assessed numerous
mergers with a public interest component. While to our knowledge ‘no transaction has
been determined on grounds of public interest alone’9 (as David Lewis himself noted),
the Tribunal has built up a wealth of knowledge and tests related to the assessment of
public interest. We now consider how the Tribunal has interpreted the Act in various
cases by outlining some of the key points that have emerged from their rulings.
A) PUBLIC INTEREST CAN SERVE TO SALVAGE AN ANTI-COMPETITIVE MERGER
OR CAN LEAD TO THE PROHIBITION OF A PROCOMPETITIVE MERGER
S12A(1)()(ii) of the Competition Act states that in assessing the impact of a
transaction on public interest it is also necessary to assess ‘whether it can or cannot
be justified on substantial public interest grounds by assessing the factors set out in
subsection (3)’. This has been interpreted by the Tribunal to mean that public interest
can work in two directions or ‘can have both adverse or benign effects.’10 On the one
hand it can be used as a basis for approving an anti-competitive merger and it can be
used to prohibit a pro-competitive merger. The Tribunal has stated that
‘a merger that has failed the competition test can still be passed on the public interest
test and hence be approved. Conversely, that a merger that has passed the
competition test could still fail the public interest test and hence be prohibited’.11
9 Lewis David, Competition Policy in South Africa – Where has it come from and where is it going ?
Speech to Investment Analysts’ Society of South Africa, Johannesburg, 16th May 2002, pg 6
10 Competition Tribunal, In a large merger between Harmony Gold Mining Company Limited and
Goldfields Limited, Case no: 93/LM/ Nov04, para 54
11
Ibid, para 45
8
B) PUBLIC INTEREST NEEDS TO BE CONSIDERED REGARDLESS OF THE
COMPETITION ANALYSIS
In s12A of the Act it is stated that the authorities should determine the competition
effects of the merger and if it is likely to impact on competition determine the efficiency
effects. According to s12A(1)(b) it should ‘otherwise, determine whether the merger
can or cannot be justified on substantial public interest grounds by assessing the
factors set out in subsection (3)’. The use of the word ‘otherwise’ has been interpreted
by Tribunal as meaning that an evaluation of public interest must be undertaken
whether the competition analysis has a positive or negative outcome.
The argument regarding the phrase surfaced in the large merger between Anglo
American and Kumba Resources12 in which the Tribunal found that ‘the use of the
word ‘otherwise’ in section 12A(1)(b) means that the public interest evaluation must
still be undertaken by the Tribunal, regardless of the outcome of the section 12A(2)
‘competition’ analysis. As we have previously stated the public interest can operate
either to sanitise an anticompetitive merger or to impugn a merger found not be
anticompetitive.’13
C) PUBLIC INTEREST NEEDS TO BE SUBSTANTIAL
The Act does not only require the Tribunal to assess public interest, but s12A(1)(b)
requires that the public interest grounds should be ‘substantial’. However, the Tribunal
argues that the Competition Act does not provide further guidance in determining what
constitutes ‘substantial’ public interest. In the merger between Distillers Corporation
and Stellenbosch Farmers Winery14 the Competition Tribunal noted that ‘the
legislation offers no criteria as a yardstick.’15 In addition, they note in para 38 of the
Shell-Tepco ruling16 that the Act ‘does not otherwise guide us in balancing the
competition and public interest assessments except insofar as section 12A(1)(b)
requires that the public interest grounds should be substantial’.
This has at times proved to be problematic to interpret. For instance, in the Distillers
Corporation and Stellenbosch Winery case the Tribunal notes
‘How many jobs must be lost before one has grounds for substantial public interest?
The legislature wisely does not seek to answer that for us, nor can we assume that it
should be a uniform figure for all merger- it would depend on the context.’17
12
Competition Tribunal, Case no. 46/LM/Jun02
Ibid, para 138
14 Competition Tribunal, Case no 08/LM/FEB02
15
Ibid, para 236
16 Competition Tribunal, Case 66/LM/Oct01
17 Competition Tribunal, Case no 08/LM/FEB02, para 240
13
9
D) THE TRIBUNAL IS ONLY CONCERNED WITH THE RESIDUAL PUBLIC INTEREST
Given the lack of guidance as to what constitutes substantial public interest, the
Tribunal’s approach is therefore to focus on ‘residual public interest or that part that is
not susceptible to or better able to be dealt with under another law, is substantial’.18 In
practice the Tribunal has applied this to both HDI and employment.
In the Shell and Tepco merger, the Tribunal noted that its role is secondary in matters
where there is already legislation. In paragraph 58 the Tribunal stated that ‘the role
played by the competition authorities in defending even those aspects of the public
interest listed in the Act is, at most, secondary to other statutory and regulatory
instruments in this case the Employment Equity Act, the Skills Development Act.’
This point was further emphasized in the Distillers Corporation (SA) Limited and
Stellenbosch Farmers Winery group Limited merger, where the Tribunal argued that
the ‘parliament has in many instances enacted legislation that deals quite specifically
with the issues referred to in section 12A(3)’19. In this case they note that
‘employment is no exception’20. The Tribunal argued other legislation and institutions
they create are ‘better placed and resourced to deal directly and effectively with
issues’21 and that would only intervene in cases where merger-specific losses were ‘so
adverse that no other law or regulator can remedy them’. 22
4
ASSESSMENT OF THE INTERPRETATION OF PUBLIC INTEREST
In a speech to the Investment Analysts Society of South Africa in 2002, Tribunal chair
David Lewis noted that ‘to date, no transaction has been determined on grounds of
public interest alone’23 – to our knowledge this situation has not changed by 2009. The
fact that public interest has not been a decisive influence in any case to date has led
some analysts and practitioners to question whether the Tribunal has established such
a high bar – finding a residual yet substantial public interest – that de facto public
interest no longer plays a role in competition law in South Africa and our Act has been
reduced to purely one of the assessment of competition issues alone much like the US
despite the de jure inclusion of public interest in the Act.
Certainly a visible effect of the Tribunal’s approach has been for many legal
representatives of merging firms to advise their clients that public interest
considerations will never be decisive before the Tribunal and that they will only
succeed in gaining approval by demonstrating no substantial prevention or lessening
of competition. Reflective of this is that we simply do not see merger filings where an
18
Ibid, para 237
Ibid, para 232
20 Ibid, para 232
21 Ibid, para 232
22 Competition Tribunal, Case no: 08/LM/Feb02, Par 238
23
Lewis David, Competition Policy in South Africa – Where has it come from and where is it going ?
Speech to Investment Analysts’ Society of South Africa, Johannesburg, 16th May 2002, pg 6
19
10
anti-competitive effect is conceded but a substantive public interest is argued to
outweigh it. This is despite numerous merging firms firmly believing that their
transaction has real and substantial positive spin-offs for the development of the
economy regardless of the competition merits.
Despite these criticisms, we are of the view that the Tribunal has broadly acted in a
manner that is both consistent with the original motivation for including public interest
in the Act, and achieving the correct balance between competition and public interest
concerns. We take this position for a number of reasons:
24

First, is the astute observation by former Tribunal chair David Lewis that
emerging competition authorities in developing countries need to first establish
credibility if they are to ultimately serve the purpose of competition
enforcement. As Lewis noted in a speech at the International Competition
Network, ‘[w]hile credibility will certainly not be achieved by bending to the
whim of every interest group, nor will it be secured by a competition authority
that refuses to take direct account of major national economic problems and
aspirations.’24 The point is that credibility is lost either if public interest
dominates most decisions or is ignored in its entirety. The public interest
override on competition assessment must therefore be preserved for that rare
beast where the public interest is truly at risk. This is well illustrated by the
credibility problems facing two other domestic agencies – the Reserve Bank for
a mandate that does not include public interest, and ICASA for bending to the
whims of interest groups.

Second, is the fact that public interest is primarily served by competition itself
and direct consideration in merger proceedings is secondary. Recall that one
of the original motivations for a competition law in South Africa was the
recognition that competition enforcement would in and of itself be in the public
interest simply by reducing prices to the poor and entry barriers to economic
participation by SMEs and historically disadvantaged persons. This benefit is
generated with every robust competitive assessment, but is even more visible
following the Commission’s decision to deliberately focus their efforts in
sectors of the economy that have more direct relevance to the poorer
members of society. The broad political and social support that the competition
authorities now benefit from reflects the fact that they are indeed serving the
public interest well in their actions. This focus should remain if the competition
authorities are to do justice to the purpose of the Act and the broader public
interest mandate.
Lewis David, The Role of Public Interest in Merger Evaluation, International Competition Network,
Merger Working Group, Naples, 28-29 September 2002, pg 2
11

Third, despite the fact that the Tribunal has “never allowed an anti-competitive
transaction because of its positive impact on public interest; and [we] have
never prohibited a pro-competitive transaction because of its negative impact
on public interest”25, this is not necessarily the benchmark that determines
whether public interest is being considered seriously or not. Few mergers are
prohibited and yet there is broad agreement that a robust and fair competition
assessment occurs. In reality, public interest considerations do not loom large
in the vast majority of transactions. This is especially true in the context of ten
years of sustained economic growth following the enactment of our competition
law, and it is probably only in times of economic hardship that the true nature
of public interest assessment will be revealed. However, where public interest
has been raised during this period, it has been seriously and robustly
scrutinised by the Competition Tribunal as the case law reveals. Finally, public
interest has not been immune to the ‘remedies revolution’ in competition law.
The case law reveals that not only have substantive negative public interest
impacts often been remedied with a condition allowing a pro-competitive
merger to proceed26, but also that the competition authorities have made
serious efforts to provide workable remedies for anti-competitive mergers
where substantive positive public interests are at stake27. This is a very positive
development that permits us to achieve the benefits (of competition/public
interest) without necessarily incurring the costs (to public interest/competition).
Whilst we consider the broad approach adopted by the Tribunal sound, it is likely that
some of the real challenges around public interest provisions are maybe yet to come
as the economy lurches into recession and government objectives shift with time. We
foresee a number of potential challenges moving forward.
4.1
Residual public interest could become restrictively defined
The Tribunal interpretation of the public interest provisions is, for the most part, a
purely sound interpretation of the legislation. Section 12A(1) is relatively clear that a)
public interest should always be considered (and can trump either way), and b) that
the public interest grounds need to be substantive. However, the fact that considered
public interest should be residual to ‘the protection offered by other legislation
Lewis David, Competition Policy in South Africa – Where has it come from and where is it going ?
Speech to Investment Analysts’ Society of South Africa, Johannesburg, 16th May 2002, pg 6
26 These have generally been employment conditions in a large number of transactions.
27 See for instance the Competition Tribunal rulings in : Distillers Corporation/Stellenbosch Farmers
Winery, case no o8/LM/Feb02 and Nasionale Pers Ltd/Education Investment Corporation, case no.
45/LM/Apr00
25
12
specifically directed at protecting those elements of public interest’28 is an innovation
of the Tribunal.
Whilst there is certainly some merit in this approach - a policy tool is more effective in
achieving a stated aim if it is designed around the specific objective - there is also the
potential that a broad interpretation of what other legislation is presumed to protect
may permit public interest issues to fall between the cracks. One only has to be
reminded of the unintended consequences of the initial Act in relation to the exclusion
of sectors regulated by other institutions.
In addition, it is not apparent from the original motivation that competition law should
necessarily be secondary to other legislation. The placing of public interest within the
Act was also done on the basis of ensuring ‘mutually-supporting’ rather than
‘contradictory’ policies by ensuring policy alignment. From that perspective
competition policy should not undo the efforts of other government instruments.
4.2
Challenge of a careful weighing up of public interest
In most other jurisdictions that are strong reference points for South Africa’s own
competition law, there is either no public interest component or the public interest
decision lies outside of the Competition Authorities. It may either reside with another
regulator or a Minister. The result is that the public interest decision is less a process
of a careful weighing up competition and public interest effects, and rather a process
of determining whether a negative public interest is substantial or not (trumping the
competition assessment regardless29) or sometimes simply ignoring public interest in
the event that it is positive30.
As our Act requires the deliberate balancing of the two, there is very little assistance
from other jurisdictions on how precisely this careful balancing should be done. The
case history suggests we may have been spared this taxing question because public
interest considerations were either a) not merger-specific, b) in the same direction as
the competition considerations, c) not substantive or d) could be resolved through
remedies. However, at some point that rare beast which does not fall into these
categories may rear its head and a robust approach to a careful weighing up process
may need to occur.
28
Lewis David, The Role of Public Interest in Merger Evaluation, International Competition Network,
Merger Working Group, Naples, 28-29 September 2002, pg 3
29
For instance where media diversity is harmed and the merger fails at a communications regulator, or as
Lewis David, The Role of Public Interest in Merger Evaluation, International Competition Network, Merger
Working Group, Naples, 28-29 September 2002, pg 2
30
For instance where media diversity is not harmed but may be greatly enhanced.
13
We suggest that economics probably remains a useful tool to assist in such a process.
Specifically, whilst merger analysis forces the competition economist to focus squarely
on whether a transaction is likely to substantially prevent or lessen competition in the
relevant market only, economists are quite accustomed to dealing with and quantifying
both economy-wide effects and socio-economic variables other then price effects.
4.3

A few of the public interest considerations have regard to potential effects
beyond the individual relevant market such as those concerned with impacts
on a region or broader sector. ‘General equilibrium’ analysis in other contexts
considers how the impact of a policy on a single sector (partial equilibrium)
may have ripple effects through the economy based on linkages that clearly
exist with both factor and product markets in order to determine the general
welfare effect, including any feedback effects on the market in question. These
range from complex computer models to more simple socio-economic impact
assessments that map the forward and backward linkages of individual
investments. Arguably, competition analysis is somewhat unique in the world
of economic analysis by remaining narrowly focused on the direct effects on a
single market and not considering the broader general equilibrium effects31.

Whilst other public interest considerations have units of analysis (like jobs) that
may be difficult to compare with potential price and output changes, the ability
for economists to both quantify and determine the incidence of different effects
may still prove useful in reaching a decision. For instance, if faced with a
substantial employment gain from a potentially anti-competitive transaction, it
would be useful to understand both the magnitude of the price effect and the
incidence on different groups of consumers who may themselves hold different
weight in public interest.
Shifts in public interest.
The Competition Act defines the range of public interest considerations quick
specifically both in terms of merger control and exemptions. This certainly has its
virtues insofar as it offers clear guidance to the competition authorities on what should
be considered, and not placing the competition authorities in the difficult position of
determining public objectives themselves which itself may bring them into conflict with
the legislature. However, specificity can present its own difficulties. In particular,
government objectives and priorities will naturally shift over time as economic
development circumstances change. This might result in some objectives becoming
less important, and others moving to the fore. Competition authorities acting within the
guidelines of the Act may then still be placed in a position of conflict with the revised
31
Competition analysis does of course extend beyond purely static effects and does consider the
dynamic implications of a transaction. However, this remains confined to the relevant market only.
14
public interest, impacting their credibility and political standing. A case in point is the
difficulties that have faced our energy regulator – Nersa – whose mandate was to
consider nurturing competition in the energy sector, only to find government objectives
had shifted strongly towards energy security and away from competition.
Of course it may be that the public interest objectives specified are sufficiently broadly
defined to accommodate subtle shifts in objectives – for instance the focus within
economic empowerment from individuals to broad-based empowerment – or the likely
path of future public interest. However, there is an interesting innovation in the UK
Competition Act whereby public interest is defined outside the legislation itself and
rather done through an act of parliament. This permits greater flexibility in determining
the public interest, which our Act does not permit, but may also permit greater
opportunistic behaviour by politicians.
5
CONCLUSIONS
The public interest provisions within the Competition Act are often lauded as a healthy
innovation that provides scope for ensuring the political credibility of the Competition
Authorities whilst retaining their credibility. This fine balance has certainly been
achieved in how the Tribunal has interpreted public interest over the first ten years.
This is despite the fact that public interest factors are yet to trump competition in the
manner originally envisaged. However, challenges remain in ensuring public interest is
robustly assessed and remains relevant.