Spotlight falls on wrongdoing in big business

The Competition Commission will start a long-awaited market inquiry into pricing in the private healthcare sector in September, Economic Development Minister Ebrahim Patel announced, notes a report on the Fin24.com site. Speaking during debate on his budget vote in the National Assembly on Tuesday, Patel told MPs it would be an 'historic inquiry', because it would be the first time competition authorities would use new powers conferred on them under section six of the Competition Amendment Act of 2009. It will use these powers to examine pricing, cost, and the state of competition in the sector. The healthcare sector would be the first to come under this wider scrutiny in an inquiry expected to take up two years to complete. The inquiry would allow industry players and consumers to provide evidence of what was happening in health markets. The commission is expected to publish the terms of reference soon. Full report on the Fin24.com site

Discussing another competition matter, Patel said the total value of rigged construction industry projects being investigated by the Competition Commission was much higher than the expected R47bn. Patel told MPs 300 cases of collusion and price-fixing had been identified by the commission, notes a report on the Fin24.com site. 'Eighteen construction companies, including the top six firms, have now confessed and are in discussions on settlements with the competition authorities,' he said. The commission was looking into various projects, including the building of Soccer City in Johannesburg and the Cape Town Stadium in Cape Town. 'Private sector collusion and price-fixing cost the state many billions of rands in previous infrastructure projects, including the 2010 World Cup stadia,' Patel said. He added government was determined to eradicate cartels which used taxpayers' money to line their own pockets. Full report on the Fin24.com site See also a Legalbrief Policy Watch report

Staying with cartel activity, bread distributors in the Western Cape turned to the Constitutional Court this week in a bid to institute a class action case against three leading bread producers after suffering financial losses as a result of cartel activity in 2006, says a BDlive report. Counsel for bread distributor Imraahn Mukaddam, Paul Hoffman SC, reportedly told the Constitutional Court the distributors who would form part of the class on certification, all of whom had not been identified at this stage, were not experienced in legal matters, especially not in complex matters relating to price-fixing and the recovery of damages. Hoffman also argued that the saving of legal costs was a factor for class action claimants of modest means. 'Access to justice is a burning issue in this country,' he is quoted as saying. Tembeka Ngcukaitobi, for the Legal Resources Centre, which was admitted as a friend of the court, said that opt-in class actions should not be confined to 'exceptional circumstances', as the SCA held. However, Schalk Burger SC, for Pioneer Foods, said one of the prerequisites for a class action was that there should be common facts. 'They (distributors) sell at different prices to consumers. You have to quantify (the claim for damages) individually,' Burger is reported to have said. David Unterhalter SC, for Premier Foods, said an appropriate course of action to take was for the claimants to join the action individually, as opposed to a class action. Full BDlive report

Cosatu general secretary Zwelinzima Vavi joined the fray yesterday (Wednesday), saying executives guilty of collusion must be jailed, notes a report in The New Age. It states Vavi said collusive behaviour amounted to corruption and stealing from the poor. Vavi said something must be done to fight endemic corruption in the private sector, according to the report which quotes him as saying: 'We do not have a ''free market'' economy, in which every South African can compete on equal terms, but monopoly capitalism in which private companies corruptly collude to divide up contracts between them, inflate prices and keep out competitors.' SA Chamber of Commerce CEO Neran Rau said the law was sufficient to deal with collusion, states the report. Full report in The New Age

Hard-pressed company bosses across much of the world are under so much pressure to deliver on growth that many have resorted to cooking the books, Ernst & Young says in its latest Fraud Survey published this week, states a report on the Fin24.com site. It notes one in five of almost 3 500 staff quizzed in 36 countries in Europe, the Middle East, Africa and India said they had seen financial manipulation in their companies in the past 12 months, the accounting and consultancy firm said. In addition, notes the report, 42% of board directors and top managers surveyed said they were aware of 'some type of irregular financial reporting'. And despite scandals and regulatory failures in the wake of the credit crunch, notes the report, almost a quarter of top financial services staff surveyed said they were aware of manipulation and almost 10% of all staff said their companies had understated costs, overstated revenues or used unprincipled sales tactics. Meanwhile, almost half of the sales staff surveyed across all sectors did not consider anti-corruption policies to be relevant and more than a quarter thought it acceptable to offer personal gifts or services to win or retain business. Full report on the Fin24.com site