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Cosatu congratulates Competion Commission 29-05-08 |
COSATU congratulates Competition Commission
The Congress of South African Trade Unions congratulates the Competition Commission for its decision to charge a company executive with perjury, after he allegedly lied to authorities during an investigation of cartel activity.
Arthur Barnett, the suspended managing executive of Adcock Ingram Critical Care (AICC), a subsidiary of Tiger Brands, stands accused of committing perjury during the Commission's probe into the company's participation in a bid-rigging cartel.
COSATU also welcomes the Department of Trade and Industry's amended draft Competition Amendment Bill, which provides for stiffer penalties, including jail time, for those convicted of contravening competition law. The Bill aims, in line with COSATU's demand, to hold company directors and managers, rather than just the company, personally liable and bring the country's competition laws into line with international law.
At present the competition authorities can only fine companies up to 10% of revenue. Individual directors can only be penalised for lying or misleading the Commission or the Competition Tribunal. If Barnett is proved guilty, he can be given a maximum penalty of a six-month jail sentence, a paltry fine of R2000, or both.
The amended bill makes provision for 10 years' jail time, a fine of R500 000 or both, if a director or manager in a position of authority is found guilty of price fixing, collusive lending or other form of cartel activity.
The federation agrees with Competition Commissioner Shan Ramburuth that current penalties for perjury under the Competition Act are "piddling", and that "We can't have people lying to us without consequences".
COSATU is continuing with its campaign of mass action against price-fixing, which is focussing on the scandal of price-fixing. The federation has also made the following submission to the Competition Tribunal on Adcock Ingram Critical Care (Pty) Ltd Collusive Tendering and Market Allocation today, 30 May 2008:
COSATU is extremely annoyed by the spate of restrictive practices by companies involved in the production and distribution of basic commodities in the country. However, we are in no way surprised because capitalism is a system characterised by insatiable greed for profits, corruption and insensitivity to the needs of the majority. On November 28, 2007 we were here at the case of bread price fixing involving Tiger Brands. The company was found guilty by the Competition Tribunal and fined R99 million, which was hailed by many as one of the highest penalties to be meted out by the Competition Authorities in the country. COSATU argued then that the punishment was too lenient, since Tiger Brands would easily transfer it to the poor consumers in higher prices. Hardly two months after a COSATU statement, Tiger Brands had increased the price of bread by 40 cents a loaf, vindicating our earlier assertion.
Six months down the line we are here again for the case involving Tiger Brands's subsidiary, Adcock Ingram Critical Care (Pty) Ltd (AICC). The charge is the same: involvement of the company in restrictive practices. AICC has been found to have been involved, for about 7 years (1999-2007), in collusive tendering and market allocation, in the hospital market. In the light of all this, we can only arrive at a conclusion that the company is a habitual criminal. We have lost any remaining thrash of hope that this tiger will ever change its stripes. The company has signed a consent agreement, in which it has agreed to pay an administrative penalty of R53,5 million. According to the Competition Commission, this amount constitutes 8% of the company's turnover, and it is said to be the highest percentage to have ever been proposed by the commission for collusive behaviour.
The question that must be asked is whether this is enough given the fact that the company has become a habitual law-breaker, and it got involved in this practice for about 7 years. We have argued in the past that the 10% administrative penalty is not a sufficient deterrent to stop this cancer of collusion. In other countries like Switzerland, companies found to be involved in restrictive practices are fined 10% of turnover, but this is increased according to the length of the violation of the law. Without any intention to see the company going under, we would argue for a full administrative penalty of 10% to send a strong message that restrictive practices must stop immediately.
It is clear that the company has been insensitive to the fact that its conduct was compromising the right to access to health by all, as enshrined in bill of rights the country's constitution. In this context, we would call on the company, in order to redeem its name and show that it can be a responsible corporate citizen, to repay the communities directly by perhaps building a community hospital.
COSATU demands a speedy comprehensive investigations into this matter and to know the extend of this problem in this company. This comprehensive investigation should be across all subsidiaries of all Tiger-Brands companies ascertain whether this was a deliberate act by the directors manipulate and fix prices.
COSATU will continue to argue that directors of companies must be held personally responsible for anti-competitive practices meant to rob the poor and enrich the few. It is in this context that we salute the Competition Commission for having laid perjury charges against AICC managing director. This is a step in the right direction. However, for as long as our justice system lock someone who steal a loaf of bread behind bars and leave law breakers like the directors of these companies not only free but more richer, the question from the poor and the working poor will always be: Are we really equal before the law when the rich get more richer with and escape jail after breaking the laws on continuous basis while poor people are send to jail for a loaf of break. Where is this equally? We will also campaign for the blacklisting of rogue companies providing services to the state. Such companies involved in breaking the laws of the country must not get tenders from the state.
Patrick Craven (National Spokesperson)
Congress of South African Trade Unions
1-5 Leyds Cnr Biccard Streets
Braamfontein, 2017
P.O. Box 1019
Johannesburg, 2000
SOUTH AFRICA
Tel: +27 11 339-4911/24
Fax: +27 11 339-5080/6940/ 086 603 9667
Cell: 0828217456
E-Mail: patrick@cosatu.org.za