Trade, Industry and Competition Minister Ebrahim Patel has announced the publishing of a draft notice in the Government Gazette on August 31 which sets out proposed terms for a new block exemption for small, medium-sized and microenterprises (SMMEs) to be exempted from certain categories of prohibited agreement practices laid out in Competition Act.

Speaking at the sixteenth Annual Competition Law, Economics and Policy Conference in Sandton, Patel said the purpose of the exemption would be to enable greater collaboration between SMMEs that would otherwise contravene Sections 4.1 and 5.1 of the Competition Act.

The proposed exempted agreements cover a range of areas, including research and development agreements; production agreements for goods or for the provision of services; joint purchasing agreements which may include collective purchasing by a subset of firms; joint selling prices of goods or services to and through an intermediary; commercialisation agreements, which can include cooperation between firms related to selling, distribution or promotion of the products; standardisation agreements on technical or quality issues; as well as collective negotiations with large buyers or suppliers on the terms and conditions for purchasing or supplying goods and services.

Patel noted that the public would have 30 days to submit comments on the draft.

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He also recalled that a number of companies had previously requested that a facility be established whereby the Competition Commission could provide non-binding advisory opinions upon request.

Patel noted that these requests had been taken up in the amendments to the legislation and that a draft notice had been issued previously for public comment, following which some representations were made and taken into account.

“During September, we intend to publish a final notice providing for the issuing of non-binding advisory opinions, so that market participants may have a benefit of current thinking and interpretation available to guide their decisions,” he confirmed.

In addition, Patel said the DTIC would publish a series of revised forms, notices and rules for the commission by October, in the hope that it would contribute to reducing red tape, improve the working of authorities, achieve smarter regulation and remove ambiguity.

Patel also referred to the 2019 amendments to the Act, which he said “aimed to strengthen enforcement by removing the so-called yellow card warning for all contraventions of [prohibited practices laid out in] chapter two of the Act once greater certainty of the enforcement approach is provided through regulation.”

He said his Ministry aimed to complete this process by November by issuing draft regulations for public comment in respect of both horizontal and vertical agreements prohibited in the Act.

“The purpose of these draft regulations is to provide greater clarity on the types of agreements that may fall within these sections, as well as the parameters, the factors, and the benchmarks to be considered when undertaking the rule of reason assessment,” he explained.

Patel said it was hoped that the regulations would provide a framework for how potential efficiencies would be weighed against any potential harm, and that it may provide safe harbour where there is an appropriate presumption of unlikely harm.

“The regulation is intended to provide certainty for businesses when to proceed with agreements and promote growth and efficiency, while strongly deterring those agreements that would seek to harm competition through, among others, administrative penalties,” he explained.

These amendments would also ensure that enforcement furthers the objective of promoting more inclusive growth through the participation of SMMEs and historically disadvantaged persons in the economy, he added.

Finally, Patel said he would publish regulations by February next year, in terms of the Competition Act, that would set out a guide for how the DTIC would work with merging parties to craft an appropriate set of public interest commitments.

“These regulations will serve as helpful models for the market on how both our shared public interest and that of shareholders can be enhanced during a merger. With these regulations, we hope to address many of the questions which merging parties have on how the DTIC will participate in mergers and how a meaningful set of commitments can be shared,” Patel said.