In this light, the Commission published its draft Guidelines for the Determination of Administrative Penalties for Prohibited Practices for public comment on 10 December 2014.
In general, administrative penalties serve to deter firms from engaging in anti-competitive behaviour. Therefore, the Guidelines outline the methodology to be implemented by the Commission in determining administrative penalties for the purpose of concluding consent orders, settlement agreements and recommending an administrative penalty in a complaint referral before the Competition Tribunal, the aim of which, promotes objectivity and transparency.
The Commission's methodology is based on a six-stage test developed in the case of Competition Commission v Aveng (Africa) Ltd t/a Steeledale, Reinforcing Mesh Solutions (Pty) Ltd, Vulcania Reinforcing (Pty) Ltd and BRC Mesh Reinforcing (Pty) Ltd, which was later confirmed by the Competition Appeal Court in Reinforcing Mesh Solutions (Pty) Ltd and Vulcania Reinforcing (Pty) Ltd v Competition Commission.
In essence, the six-stage test comprises of the following steps: the determination of the affected turnover; the calculation of the base amount; the duration of the contravention; the consideration of the statutory limit in s59(2) of the Act; a consideration of aggravating and mitigating factors; and a consideration of the statutory limit in s59(2) of the Act.
Some of the notable features of the Guidelines include:
As the Commission puts it, 'the imposition of administrative penalties is not a precise science' and the competition authorities will continue to apply discretion on a case-by-case basis implying that the Guidelines are in no way binding on the competition authorities.
In the spirit of natural justice, openness and transparency, the Commission is to be commended for taking steps to spell out its processes and techniques when setting administrative penalties. Lastly, all interested persons are invited to submit their written comments by Friday, 30 January 2015 to the Commission.