As of 1 May 2016, certain sections of the Competition Amendment Act – providing for criminal liability of individuals who act in contravention of the Act – will become effective.
Tamara Dini, partner in Bowman Gilfillan Africa Group’s Competition and Regulatory Practice, said that these new sections will allow for directors and managers to be held criminally liable for causing a company to engage in price-fixing, market division or collusive tendering.
“Individuals may face personal penalties of up to R500,000 or 10 years’ imprisonment,” Dini said.
“Criminal liability for cartel conduct applies in a number of jurisdictions – but the introduction of criminal liability in South Africa seems to be premature,” she said.
For example, Dini said that aspects of the Competition Act itself have not been fully interpreted by the Competition Tribunal or the Competition Appeal Court, and “to impose criminal liability on individuals in these circumstances raises questions”.
According to Dini, the original form of the laws were seen to be problematic when put against constitutional law – and needed more work – however these laws have now been passed as is.
“South Africa’s legislation providing for criminal liability has been widely criticized, including by the Competition Commission and the Competition Tribunal, who will be tasked with enforcing the new criminal liability provision,” Dini said.
“In particular, the sections of the Act prohibiting companies from directly or indirectly paying the fines, as well as the legal costs, of any employees who were convicted of cartel conduct were identified as possibly being unconstitutional.”
“As such, criminal cases pursued against individuals may be met by individuals raising constitutional law defences,” she said.