Chairperson, I can assure you that I've never broken a camera before. So, please don't blame me, I wasn't even here.
Chair, I'm rather grateful that the Minister ran out of time because, in fact, he was making my speech. Thank you for leaving something for me.
Let me confess, Chair, that I face a little bit of a philosophical dilemma with respect to this small but very powerful piece of legislation. The philosophical dilemma I face is that, as I grew up intellectually, one was faced with the question of competition or co-operation, individualism vis-- vis the collective; which do I favour? On the whole, I certainly favoured the notions of co-operation and of collective. But, here, we have a Bill which talks about competition, which we support, and I have to explain why. The answer is that in the specific case of South Africa competition does promote efficiency; it forces firms to adopt new technology to go up the value chain to, generally, join the modern world with all its new technology and so on. So, obviously the economic case is the good one.
But there is also a social case which arises from the high concentration that we find in the South African economy. The South African economy is, actually, highly monopolised as it arose under apartheid. Something needs to be done about the high concentration of power in the economy and competition seems to be one of the ways forward. However, competition mustn't be done in a way which harms the employees. We are currently in the committee engaged in a long discussion about - in the Companies Bill - how employees can be safeguarded, even as you go about regulating the corporate sector.
Let me start my speech by talking about Mr Ismail Mukaddam, a gentleman who came to our portfolio committee hearings. He was an independent bread distributor last year whose major supplier was Premier Foods. Premier Foods imposed a new trade regime on people like him, which not only reduced the distributor discount but also insisted that the distributor pay the full invoice price upfront. Mr Mukaddam was so badly affected that he laid a complaint with the Competition Commission, whereupon Premier Foods suspended his total supply. The poor man went out of business and he came to the committee as a small businessman to report this. We were also told that Premier Foods had previously admitted to being guilty of a prohibited practice and, indeed, they were fined R99 million, upon which they reacted not by assisting Mr Mukaddam but by raising the prices by 40 cents and, thereby, apparently recovering the fine that was imposed on them.
There are two things facing us: Firstly, the question of victims of this kind of monopoly practice. Surely something has to be done about it. We did discuss - after Mr Mukaddam's intervention - that appropriate action must be taken to compensate victims of such discrimination. Small businesspeople are affected by monopoly pricing and we hope that something will come out of it. We did discuss it. Surely something must be done to support victims of this kind of behaviour.
It is obvious, Chair, that there is a great deal of price collusion and cartelisation in the South African economy. South Africa was boasted about as being a First World country, and in many respects we are. But one of the characteristics of the First World economy is that there is a strong corporate sector with a great deal of concentration. The only snag is that these concentrations lead to high prices, which bring high profits but affect the consumer. And so, we are in a funny situation, in which we are saying: Let us have competition and the private sector; let's have competition between the members of the corporate sector, partly to erode their power, to destabilise the cartels and to try and control the high prices which are now manifested very strongly in the South African economy.
While we were discussing these matters in the Bill, interesting debate ensued with the Law Society, Business Unity South Africa, and others. We asked them about what constitutes misconduct to undesirable practice. We were told that collusion is a bad thing. It is unacceptable and this is where the Competition Commission must come in. Rational commercial behaviour was acceptable. Now, rational commercial behaviour might, actually, cover a whole range of activities and pricing activities which could affect the consumer. I think we need, at some stage, in the committee - or maybe even in the House - to discuss the philosophical aspects of the free market, where you have corporate sectors which go their own way and raise prices in a particular way. I'm not suggesting that we move to a command economy - let me say it right away, there is no suggestion of that - but as long as we have the market and big corporate entities which are able to cartelise or to control prices, something needs to be done in South Africa to ensure that we have an economy which benefits not only big business but consumers as well.
We've also been informed about the excellent work done by the Competition Commission and the Competition Tribunal. They have done a great deal in many ways, in informal discussions, in asking people to report misconduct. But, surely, something more needs to be done, as the Minister has indicated. We need to have criminal liability. Now, the interesting thing is that internationally - because of corporate misconduct in the US, for example, Enron and world corporate companies like that, the world is now far more sensitive about corporate misconduct, cartelisation and the consequences of that for ordinary people.
There is an international trend which we are now following with this legislation that criminal liability by directors is an important issue. One question which, however, in my mind - and I've had discussions with very senior council on this matter - is that can we draw a distinction between director responsibility, namely the board, and management. What I'm told by people in the business, in fact, in the modern corporate world, is that management is the strongest and most effective in controlling the way in which a company operates; and the directors of antagonist companies pay lip service to the way the company is run, but it is management that is real.
In this piece of legislation there is a clause 73(a), which deals with the question of directors' responsibility and also mentions management. But I wonder whether we aren't being a bit soft on management who after all, have clout in the company. I am alerting you that the directors take the rap in our legislation and not management. I also mention this because in the days of black economic empowerment promotions - and with many new directors being on boards for various political and reasons of affirmative action - you also have directors who are not clued-up about the way in which a company is works. Some of them are members of too many boards and, therefore, are part-time directors and management is able to get away with murder. It seems to me that in this Bill, and in the next one, the Companies Bill, we ought to look at management, its role vis--vis the board, and whether we are not focusing too much, in an unbalanced way, on board responsibility and not on management.
We know that in many big companies, for example Enron and others, management diddles the books; management uses shares to enrich themselves; there are preference shares and all sorts of options that enable them to become very rich - some of them have gone to jail, and that's fine - but we need to look at the responsibilities of management vis--vis the board and get the relationship right.
Finally, I come to the processes which the Bill has undergone. There was a bit of conflict between agencies, but we've now got a situation where if there is a problem in the market concerning any particular set of goods there will be a market enquiry which will be conducted by the commission. If some solution or clarity does not emerge, it will be referred to the tribunal, which will try to work out a consensus or some process and will impose a fine, if there is a need. A very important clause we've put in is that the fine should not be paid by the firm; it must be paid by the director. So, the notion of individual accountability, responsibility and criminality is built into the Bill. I think all this is a major step forward in the way we regulate company behaviour and, therefore, the ANC will support the Bill wholeheartedly. Thank you.