Cartel enforcement: critical reflections from the South African experience

Cartels are typically referred to as the most egregious form of anticompetitive conduct. Identifying collusive arrangements requires a combination of analysis to identify the likely areas where coordination is taking place, with the powers to obtain evidence. In developing countries, such as South Africa, this is compounded by the probability that international firms reach their understandings outside of the country. The arrangements can include information exchange between competitors in different forms, which may also have procompetitive effects. At the same time, there are good reasons why firms may need to collaborate in order to facilitate joint investments and to take initiatives to improve production capabilities. In the South African context, there is also the particular concern with facilitating the entry and growth of smaller businesses, including black entrepreneurs, where cooperation can assist in increasing rivalry to the main incumbents but may fall foul of the cartel provisions. The South African Competition Commission was established in 1999 to enforce the then new Competition Act 1998. The Commission investigates alleged anticompetitive conduct and refers it to the Competition Tribunal for adjudication. This chapter considers what cartels are, using the South African experience to discuss the differing nature and extent of arrangements that have been considered collusive, as well as those that have not. The processes of screening and prioritization are explored. The South African experience in two typical sectors of cartel enforcement - cement and construction - is reviewed to provide insights into how cartel conduct has evolved, as well as enforcement strategies for relatively young authorities. The chapter then examines leniency and settlements before drawing some brief conclusions.