This presentation by Nomfundo Maseti (Full-Time Regulator Member, NERSA South Africa) was made during a discussion on the Interactions between competition authorities and sector regulators at the 21st meeting of the OECD Global Forum on Competition on 2 December 2022. More papers and presentations on the topic can be found out at https://oe.cd/icar. This presentation was uploaded with the author’s consent.

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OECD 21st MEETING OF THE GLOBAL FORUM ON
COMPETITION
INTERACTIONS BETWEEN COMPETITION AUTHORITIES AND SECTOR
REGULATORS
Ms Nomfundo Maseti, FTRM: Piped Gas
2 December 2022

2.  Introduction
 Legal framework for cooperation between competition authorities and sector
regulators in South Africa
 Experiences of formal vs informal notification and consultation
 Information exchange on time sensitive matters
 Pro-active information and knowledge sharing through sector-specific research
 Lessons learnt from market inquiries
 Training and capacity building
 Key messages
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Overview

3.  South African economy exhibits high levels of concentration and unfair
competition practices – requiring a “whole-of-Government” approach to address
 “Whole-of-Government approach supported by existing statutory mandates – both
competition authorities and sector regulators have pro-competitive policy
imperatives translated into laws and acts governing them
 Public bodies cannot operate in silos in the standards followed to promote
competition – necessitates harmonized approach to the implementation and
application of policies and standards followed
 E.g. – standard for assessment of excessive pricing conduct by competition
authorities where the sector regulator regulates or sets the maximum price
 Hence the need for meaningful and constructive co-operation between sector
regulators and competition authorities
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Introduction

4.  Legal mechanisms for concurrent jurisdiction between the Competition
Commission of South Africa (CCSA) and other sector regulators: MoU - sections
3(1A), 21(1)(h), 82(1) and (2) of the Competition Act
 MoUs do not affect the independence and exercising of statutory powers by the
authorities in terms of their enabling legislation – but establishes the manner in which
the CCSA and the sector regulators interact with each other
 In terms of the rules of conduct of proceedings in the Competition Tribunal
(adjudicative body and the “court of first instance” in relation to the review /
appeals of decisions of the CCSA), sector regulators formally notified of
proceedings when they have material interest in a matter
 The sector regulator may elect to join the proceedings as an intervener, or to provide
formal responses to the Tribunal, even if the sector regulator chooses not to physically
make submissions before the Competition Tribunal.
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Legal framework for co-operation

5.  Methods for co-operation depend on institutional arrangements
 E.g., cooperation with the Tribunal (court of first instance) more formal – Tribunal
Rules require formal processes and notification on matters before it
 MoU between CCSA and sector regulators allow for formal cooperation, but in
NERSA’s experience, informal cooperation is often more effective (although it may
be relationship dependent):
 Officials more inclined to voice views, participate in cases on an informal basis – if too
formal, focus is on being procedurally correct, may delay and limit cooperation, sharing
of information
 Assists in uncovering information or activities relevant to the sector regulator/CCSA, e.g.
forum shopping by complainants/incumbents
 Can assist with timely exchange of information, knowledge and expertise on time
sensitive matters
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Formal vs informal cooperation

6.  CCSA has limited time to assess cases, especially complex time-sensitive mergers
 Coordination with sector regulators on cases in regulated sectors crucial to obtain
in-depth insights on industry structure, market players, barriers, market definition,
and other industry-specific nuances
 Ability to obtain information timeously a challenge – internal sector regulator
processes generally necessitate approval through various structures to share
formal written responses to information requests – recent examples at NERSA:
 Avedia Energy / Strategic Fuel Fund (SFF) merger
 Complaint alleging abuse of dominance by importer of LPG, Vita Gas (Pty) Ltd
 Measures that could assist improved coordination on time sensitive matters:
 Involving the sector regulator from the inception stage of the investigation
 Informal consultation (followed by formal written confirmation)
 Pro-active, rather than reactive exchange of information and knowledge through
collaborative sector specific research
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Information exchange on time
sensitive matters

7.  Sharing of information and knowledge between CCSA and sector regulators usually
done on a reactive basis - in context of cases considered by the CCSA
 Pro-active approach needed, whereby the CCSA and sector regulators engage in
collaborative efforts to conduct sector-specific research in form of inter alia sector
studies and market inquiries
 Collaborative research typically assists in:
 facilitating transfer of knowledge of salient characteristics of sector to the CCSA – thus
CCSA already has information and knowledge of sector prior to engaging on time
sensitive cases
 aligning approach in sector specific research and the standards of assessment applied,
such as the approach to market definition, assessment of abuse of dominance conduct,
etc.
 uncovering the reasons for market failures / detrimental outcomes to consumers in the
sector
 shaping the regulatory policy approach in the sector
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Pro-active information sharing -
sector specific research

8.  General investigation into the state and nature of competition in an industry - important
tool to uncover reasons why markets not working to the benefit of consumers
 CCSA has conducted market inquiries in a number of regulated sectors, including in the
banking, transport, telecoms, healthcare and energy sectors (LPG inquiry) – resulting in
recommendations designed to deal with issues harming the industry, including new /
amended policy, legislation, or regulations
 Key challenge – failure / delay in implementation of inquiry recommendations –
delaying envisaged reforms, perpetuating harm to consumers (e.g. - LPG inquiry)
 Reasons for the failure / delays may include:
 Lack of legal mandate to implement recommendations (legislative changes required)
 Lack of will and/or capacity – both sector regulator and policy maker
 Solutions that have worked in practice:
 Targeted joint working groups to implement the recommendations – may jointly engage
policy maker on legislative changes required
 Training and capacity building on competition matters - sector regulator and policy maker
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Market inquiries

9.  Not all staff at sector regulators and policy makers knowledgeable on competition
matters - creates resistance / inability to:
 implement recommendations on market inquiries
 conduct own competition related analysis
 identify and assess anticompetitive conduct within the sector
 assess and respond to stakeholder submissions regarding abuse of dominance conduct
 Sector regulators’ statutory obligations to promote competition within their regulated
sectors confer obligation to consider competition matters in decision making processes -
cannot be deferred to another organ of state such as the CCSA (confirmed by high court
in a matter involving telecoms regulator ICASA)
 Thus necessary to capacitate sector regulators and policy makers on matters such as the
importance of competition, the competitive harm of certain conduct, how to approach
competitive analysis, including inter alia the definition of markets and assessment of
anticompetitive conduct, etc.
Need for training and capacity building
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10.  Joint training initiatives with the CCSA - can provide valuable platform to share
knowledge, keep abreast of key developments, and build networks for collaboration
(e.g. NERSA, CCSA and CCRED co-hosted the 4th ACER Week in Southern Africa in 2018)
 Staff exchanges – critical for exposure and transfer of skills
 CCSA’s staff exchanges with competition authorities internationally and within the SADC
region a clear acknowledgement of the value add of such initiatives
 Currently no formal agreement about how staff exchanges between sector regulators and the
CCSA would apply in practice – important to put in place to allow for critical exposure and
transfer of skills to take place
 Some sector specific regulations allow for establishment of a competition department -
 Has worked for NERSA - combines competition expertise with in-depth sector knowledge,
ensures that competition issues are appropriately canvassed in decision making processes
 Does not replace need for co-operation with the CCSA – but enhances co-operation due to
improved understanding and appreciation of competition matters
 Critical that authorities to consider how to deal with issues of staff turnover, retention
of the capacity and knowledge gained through capacity building initiatives
Training and capacity building
in practice
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KEY MESSAGES
 Harmonized approach to implementation and application of policies, standards of
competition enforcement necessitate need for meaningful, constructive co-
operation between sector regulators and competition authorities
 Informal co-operation may improve collaboration, assist with time sensitive
matters, but is relationship dependent
 Pro-active approach to information and knowledge sharing through collaborative
research key to identify problems in regulated sectors, facilitate co-operation
between authorities, standardise approach to competition assessments, and assist
with time sensitive matters
 Implementation of market inquiry recommendations by sector regulators often
delayed due limitations in regulatory mandate, and lack of sector regulator buy-in
– targeted joint working groups and capacity building initiatives required
 Joint training initiatives, staff exchanges, establishing a small competition
department within the sector regulator are effective ways to enhance capacity –
but must be accompanied by measures to retain institutional knowledge when
staff turnover occurs

12. Thank you
Website: www.nersa.org.za
Tel: 012 401 4600
Fax: 012 401 4700
Email: info@nersa.org.za
@NERSAZA
@NERSA_ZA
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