BBC wants members to sue cartels

Collusion is severely detrimental to economic transformation, says chief

THE BLACK Business Council (BBC) has encouraged its members to proceed with legal action against companies found guilty of cartel activity or collusive behaviour. This opens the likelihood of construction firms, which were recently fined about R1.5 billion, facing legal action from downstream stakeholders. Procedurally, once a company enters a guilty plea, its customers are entitled to claim damages from it by asking the Competition Tribunal to issue a certificate for the high court, which could then be approached by the litigants.

BBC chief executive Xolani Qubeka said that the black business umbrella body would also oversee the establishment of a dedicated desk to focus on cartel collusion and other anticompetitive practices. He made the announcement yesterday at a seminar of the BBC on the impact of cartel collusion on the transformation of the economy The seminar was organised in conjunction with Cape Town-based law firm Abrahams Kiewitz and Washingtonbased law firm Hausfeld, whose chairman, Michael Hausfeld, is a US authority in the antitrust field.

An extensive overview will be conducted by the two firms of all recent collusive findings in South Africa, to the extent they have caused harm or damages to businesses, and black businesses in particular. The seminar was prompted by the latest collusion and anticompetitive behaviour in the construction industry where Collusion in tendering processes and other collusive practices have been also found in the bread industry. firms admitted guilt and paid penalties in settlements with the Competition Commission. Collusion in the tendering process and other collusive practices have been found in the bread, fishing, airline and communication industries, which the BBC says have had a severely negative impact on black industrialists.

Qubeka said: "The sheer scale and number of market participants involved in cartels directly and substantially impact on the economy of South Africa and also impedes transformation of the economy "Cartel collusion and other anti-competitive activities represent a stranglehold at both the structural and entrepreneurial level of the economy" He added that the BBC would work with various organisations and stakeholders, such as the commission and Cosatu, to pursue immediate private enforcement in line with policy and legislation. The Black Sash is claiming damages on behalf of poor consumers from those corporations that were involved in the bread cartel. Makgela Mohlana, the principal investigator at the cartel division of the Competition Commission, said it was disappointing that only a few were prepared to claim damages. "Very few have indicated they will take the matter forward," he said.

The Constitutional Court has ruled small bread distributors can launch a class action against bread manufacturing giants for losses related to uncompetitive behaviour. Hausfeld, who currently represents Khulumani and other NGOs in a class action involving the abuses under apartheid law in South Africa, commented: 'A cartel is a disease in the economy It is a cancer in the markets. Collusion creates havoc throughout the economy" He said cartels denied other businesses the right to compete fairly in the market. In the case of the construction cartel, the owner of a stadium paid more to build it and had to recover that money from tickets. BBC chief executive Xolani Qubeka says the council has encouraged its members to proceed with legal action against firms found guilty of cartel activity or collusive behaviour.