NATIONAL ASSEMBLY
FOR WRITTEN REPLY
QUESTION NO 2237
Ms M Smuts (DA) to ask the Minister of Trade and Industry:
(1) Whether the Competition Commission is engaging the Law Society of SA
and banks as a result of a complaint lodged against Absa Bank and law
firms, case number 2007NOV3370, in order to request (a) the Law
Society to intervene with law firms who have undertaken not to act
against a bank in any manner for as long as they remain on the bankâs
conveyancing panel and (b) banks to remove this or similar parts of
clauses from their agreements with law firms; if not, why not in each
case; if so, (i) what progress has been made in each case and (ii)
what is the position with regard to such practices;
(2) Whether he will make a statement on the matter? NW2946E
REPLY:
(1) (a) According to the Competition Commission, they wrote to the Law
Society of South Africa on 7 June 2008, requesting the Law Societyâs
intervention in this matter. Several e-mails have been sent, however
the Law Society has not reverted to the Competition Commission on the
matter.
(b) The Competition Commission has met with ABSA and raised its
concerns regarding the wording of the Letter of Engagement. However,
ABSA is adamant that no aspect of its arrangement with the panel of
law firms gives rise to competition concerns. Whilst ABSA is open to
removing the words âor notâ from the provision of the Letter of
Engagement, they would prefer to wait for the Law Society to complete
its review before implementing any amendments. It is for this reason
that the Competition Commission wrote to the Law Society.
(2) The matter in question falls squarely within the exclusive mandate of
the Competition Commission and in this regard, the Competition
Commission will be the one to make a statement upon finalization of
its investigation. The Competition Commission has indicated that it is
concerned about the impact this arrangement by ABSA has on the
availability of legal services, as ABSA seems to have tied up the
market. The Competition Commission is also concerned that the clause
in the Letter of Engagement may be too far reaching, given that it
covers all matters whether giving rise to conflict of interest or not.
Hence the need to discuss this matter further with the Law Society.