- Doris Tshepe speaks about taking over leadership of South Africa’s competition agency, competition and labor, the digital economy, and the importance of international cooperation among small agencies.
Doris Tshepe was named Commissioner of the Competition Commission of South Africa on September 1, 2022. She has been a practicing attorney for more than 20 years specializing in constitutional and administrative law, legislative drafting, media and communication law, commercial law, competition law, and employment law with a wide range of public and private sector clients. Among other things, she served on an Advisory Panel on the major amendments to the Competition Act, which was signed into law in 2019. She holds a B Proc degree, an LLB degree, and an LLM degree in Tax Law. She was interviewed for the Antitrust Source by Eleanor Fox on March 30, 2023.
Antitrust Source: Doris Tshepe, the Competition Commissioner for South Africa, we are really happy to have you here today. Before you became Competition Commissioner, you were a practicing attorney for many years with a law firm known for its fight against apartheid. The firm is well known for its civil liberties and labor work, and you also did a lot of work on constitutional issues. How is it that you came to competition?
Doris Tshepe: As you rightly said, I started my practice as an attorney at a law firm called Cheadle Thompson and Haysom. Cheadle Thompson and Haysom was founded as a public-interest and human rights law firm. It was a remarkable place to work. I started my articles there and moved up the ranks. The work we did was very interesting and ranged from constitutional and administrative law, labor law, and commercial law.
Pre-democracy, the firm sought to use the law to assist in achieving liberation for our people and as a tool to achieve social justice. After the advent of democracy, the firm was well placed to assist government, trade unions, and non-governmental organizations in the development of policies and laws to achieve the transformative objectives of the Constitution. This was a natural progression from the role that the firm played during apartheid.
Some of the leading partners of the firm got involved in drafting various legislation including the Constitution, labor legislation, and the Competition Act. As you know, Norman Manoim, currently the Judge President of the Competition Appeal Court, was at that time a partner at Cheadle Thompson and Haysom. He was one of the drafters of the Competition Act. It was inevitable that the firm would get into the practice of competition law. The firm’s involvement in the drafting of the Competition Act drew my attention to this area of law. It was almost a natural progression from constitutional, labor, and commercial law into competition law, largely because of the public interest provisions in the Competition Act. At that time, our focus was on the impact of merger transactions on employment for our trade union clients who participated in merger proceedings,
One of my first cases was the Federal Mogul case. It was a matter that involved resale price maintenance. Federal Mogul sought to challenge the constitutionality of section 59 of the Competition Act, which deals with the levying of administrative penalties. I was instructed to act for the Competition Commission in the matter, probably because of my work in constitutional law. The matter went to the Competition Appeal Court. The Court confirmed that section 59 was constitutionally valid.
Antitrust Source: It is so interesting that so many of the antitrust enforcers and judges in South Africa came from the labor movement and were dedicated to helping with the transformation. So let’s turn to goals. In a number of jurisdictions, when you ask, “What are the goals of competition law?” their answer will be: “consumer welfare.” How do you react to that?
Doris Tshepe: From inception, South Africa also included public interest provisions in its Competition Act. Public interest provisions were first included in merger control and exemption provisions and recently in abuse of dominance and market inquiries provisions.
Competition law in many jurisdictions is context specific. In the South African context, you have to remember that we inherited an economy that was highly concentrated and especially exclusionary in nature. So it makes sense that our Competition Act would, amongst other things, have a transformative objective including a focus on the participation of small and medium enterprises and firms owned by historically disadvantaged persons, or HDPs, as these respond to the economic structure that has high levels of concentration and to the history of exclusion of these groups from the economy.
Antitrust Source: Is it correct that New South Africa hoped from the outset of enforcement of its Competition Act of 1998 that the Act would transform the society; that by the force of fair and open competition, the economy would become interracial rather than still white-controlled? That did not seem to happen. You played an important part in the study group to advise the Minister on amendments to facilitate the transformation, and those amendments have now been adopted. Could you say something about why the competition law had to be amended to facilitate the transformation, and about the amendments?
Doris Tshepe: As stated above, from inception the Act included a transformation agenda, and we saw that through the inclusion of a public-interest provision in the Act. At that time, the public-interest provision related only to mergers and to exemptions. In mergers, the public interest factors included a requirement to assess the impact of the merger on employment.
You will recall that I was one of the members of the Ministerial Advisory Panel, which was chaired by Advocate Michelle Le Roux, a senior counsel at the Johannesburg Bar. The other panel members were Professor Imraan Valodia, and Professor Liberty Mncube, who was recently appointed the Deputy Chair of the Competition Tribunal.
The amendments were wide-ranging and included further public interest consideration in merger provisions including the promotion of greater spread of ownership, in particular, to increase the levels of ownership by historically disadvantaged persons and workers; and the ability of SME businesses and firms controlled by HDPs to effectively enter into, participate and expand within the markets.
The amendments also included strengthening sections dealing with abuse of dominance and price discrimination provisions. This included the introduction of public interest provisions by prohibiting a buyer that is a dominant firm in a designated sector to impose unfair prices or trading conditions on SMEs or firms controlled by HDPs, orthe buyer power provisions, and a new legal standard relating to price discrimination by prohibiting price discrimination by a dominant firm if it is likely to have the effect of impeding the ability of SMEs or firms controlled by HDPs to participate effectively.
Antitrust Source: Let me ask you separately about the buyer power amendments and then the spread of ownership amendments.
On the buyer power amendments—I am repeating basically what you said—there are certain “thumbs on the scale” if the person being exploited or excluded is a historically disadvantaged individual or a small enterprise. This would mean that conduct might be illegal only if the people exploited are HDIs or SMEs. The HDIs and SMEs typically have little bargaining power against big buyers. Would you say that the buyer power amendment forces you to look at contract bargaining positions, and the Commission will try to come in to equalize the bargaining position?
Doris Tshepe: The intention of the buyer power provision is to protect SMEs and firms owned by HDPs from unfair exploitation in supply arrangements by dominant firms in order to enhance their participation in the economy.
Antitrust Source: Have you had cases under the buyer power amendment?
Doris Tshepe: We have not had those cases yet.
The aim is to use advocacy and soft law to encourage firms to lodge complaints with the Commission. The Commission has issued guidelines on buyer power provisions. Through our advocacy division, we are working on some materials—including pamphlets and videos—for SMEs and firms owned by HDPs and separate ones for big businesses. The advocacy division will also be hosting workshops on the buyer provisions to encourage compliance and encourage reporting where such conduct exists.
Antitrust Source: Let’s go to the spread of ownership problem, especially since the amendments. There you did have a case, which was the Burger King case, when a private equity firm based in the United States wished to acquire and subsequently did acquire Burger King South Africa. Burger King South Africa was 68 percent owned by historically disadvantaged individuals, black South Africans, and after the acquisition, the firm had no black ownership.
The question is, if a white firm is acquiring a black firm, what is the obligation of the acquiring firm, even if the acquisition does not harm competition? What are the obligations under the spread-of-ownership clauses in the competition law?
Doris Tshepe: The section refers to the “promotion of a greater spread of ownership.” In my view, the section creates a positive obligation.
As I have mentioned, the Commission is in the process of drafting guidelines on this section in order to provide clarity to the market. We intend to publish the draft guidelines in the coming months for public comments.
Antitrust Source: If the private equity firm was creating many more jobs, which would be available (though not exclusively) to historically disadvantaged individuals, does that offset any need to spread ownership under the umbrella of greater inclusiveness? Can you combine the two different concepts of providing more job opportunities and providing more ownership?
Doris Tshepe: The courts have said that the assessment of the merger provision is a weighing-up or balancing exercise. However, even when we are weighing up, we still need to remedy the concern that has been identified. For example, the CAC in its decision in the Walmart/Massmart merger made orders regarding, amongst others, employment and establishment of a supplier development fund in response to concerns raised by the parties.
We need to be careful and ensure that in the balancing exercise, we ensure that positive obligation in section 12A(3)(e) i.e. the promotion spread of ownership is not always offset by other public-interest provisions. Were that to be the case, then the objective of transforming the economy would not be realised.
Antitrust Source: As you know, some of the business community fears that the spread-of-ownership provisions raise the cost of mergers that might be good for South Africa and would therefore deter some investments in South Africa. Is it possible that the requirements deter some good investments in South Africa?
Doris Tshepe: We have not seen evidence of that yet. However, it may be necessary at some point to assess the impact of the Commission’s decisions in implementing the Act on the economy.
But I will say two things. First, we have had some big mergers in South Africa where these provisions were implemented, and the firms engaged fruitfully with the Commission and with the Minister of Trade Industry and Competition in line with the Act. This has been quite encouraging.
Second, we need to remember these provisions were introduced to ensure that we have an economy that grows and that includes everyone, in particular those that have been excluded from participating fully in the economy. Participation and expansion of SMEs and firms controlled by HDP in the economy are also about competition. Allowing as many people to participate in the economy results in greater choice for consumers, and it is good for the South African economy.
Antitrust Source: There was a happy ending to the Burger King situation. Why don’t you tell us about the happy ending to what was at first a problem with the spread of ownership?
Doris Tshepe: As you know, in the end, the parties agreed to a set of conditions including the establishment of an employee stock ownership program, which were further strengthened by the Competition Tribunal. I think in the end it played out well.
Antitrust Source: l I think it will be helpful when firms know they have these obligations and when they know with some particularity what they will be obliged to do.
Doris Tshepe: Absolutely.
Antitrust Source: When firms know that there is one more regulatory requirement in order to do the deal, they do it.
Doris Tshepe: You are absolutely right. We need to find a way of making it as clear as possible to ensure that we send a clearer message to the business community.
Antitrust Source: When can we expect your guidelines?
Doris Tshepe: We are working on them, and I think in a couple of months they should be published for public comment.
Antitrust Source: Let’s turn to another area. It is also an area in which you have been deeply involved: digital. Before you were appointed Commissioner, you were one of the co-heads of the task force to investigate the digital online intermediary platform market. Tell us a little bit about what was the work assigned to you, what was the work product and result, and where the matter stands now.
Doris Tshepe: The Commission initiated the Online Intermediation Platforms Market Inquiry, which is chaired by James Hodge, the Chief Economist and Acting Deputy Commissioner of the Competition Commission. At that time, I was appointed as a panel member alongside James Hodge.
The scope of the market inquiry is quite vast. It included travel and accommodation platforms, food delivery platforms, online classifieds - both auto and property, e-commerce, software application stores, and, lastly, Google Search which plays an important role in directing consumers to different platforms and in this way shaping platform competition.
Antitrust Source: Were there particular harms to the South African people from abuses by Big Tech platforms; particular kinds of harms that led to the inquiry?
Doris Tshepe: The Commission initiated the market inquiry because it had reason to believe that there exists features in these markets that may impede, distort or restrict platform competition and competition amongst business users and which undermine the purpose of the Competition Act. A market inquiry was also considered to be an effective tool to proactively act against entrenchment strategies to ensure that these markets are contestable and to prevent irreversible concentration.
Antitrust Source: Did people come to you with complaints about being excluded from platforms, or extra costs put on them in the competition on the platforms?
Doris Tshepe: It was a broad array of those. We had complaints about food delivery, for example. You would have had complaints in some of the digital platforms already. We thought, as opposed to dealing with this in a piecemeal way, we would rather understand the market in its entirety to be able to have a more coherent response to that market, which is what market inquiries are about. They are not about the particular conduct of a particular firm, but to look at the market in its totality and ask, “Are there features of this market that impede, distort, or restrict competition in the market?”
You will remember that this was at a time when we were in fact moving toward e-commerce more broadly because of the resultant lockdown during the COVID-19 pandemic.
As you know, the provisions of the Act require us to also look at the participation of SMEs and historically disadvantaged persons within the market inquiry. Interestingly we found that the digital market in South Africa is even more concentrated and untransformed than the traditional markets. From a South African point of view, if you look at the digital market as the market of the future, it is not developing in a way that is more competitive and inclusive. I think it was a timely intervention.
Antitrust Source: The Commission started that inquiry against the background of a number of other countries or jurisdictions, such as the European Union, that were already concerned about abuses by the biggest digital firms. Was it an inspiration to the South African Commission that the European Union was well on its way to getting its Digital Markets Act and the United Kingdom was well on its way to getting its Digital Markets Unit?
Doris Tshepe: While those were happening, obviously because the digital market has a lot of global firms, we needed to understand what it meant for us as an economy. While it was helpful to know what others were doing, the impact of those firms on the South African economy was quite necessary for us to understand ourselves. It was helpful that others had done it—like Australia, the UK, and the EU. The market inquiry team engaged with some of the authorities that were already on this journey, and it was a helpful process for us.
Antitrust Source: Your group on online intermediation platforms wrote recommendations and a report. What are the recommendations that you made? Why has the time period been extended for comment to consider whether your existing tools are adequate to deal with the problems?
Doris Tshepe: We issued a preliminary report in July of 2022. As you know the amendments also gave the Competition Commission new powers, now it has the power to make findings and remedial actions that are binding on the parties.
From a process point of view, we published our preliminary report, which contained the preliminary findings, and then recommended adequate remedial actions to those findings that we made. And for some of those findings, we received submissions from market participants.
The Act requires us to conduct a market inquiry within eighteen months, which is a very strict timeline. As mentioned above the scope of the Market Inquiry was quite vast and included in some instances quite a number of firms. Although we were required in law to finalise our report by November 2022, the Minister granted the Commission an extension to provide our final report. There has been significant progress with a lot of the market participants in responding to some of the submissions we have made, and we are hoping to be able to release our report soon.
Some of the market participants have been engaging with the Commission constructively, I have to say, and you will see when the report comes out, that some of the outcomes are actually going to be meaningful outcomes and will have a positive impact on the market and on the economy.
Antitrust Source: Is it correct that the Commission is engaging with not just the usual GAFAs—Google, Apple, Facebook, and Amazon—but also some South African companies?
Doris Tshepe: That is correct.
Antitrust Source: Tell us about South African platforms that are in your inquiry.
Doris Tshepe: I think the bigger ones would be Takealot in e-commerce, Autotrader, Cars.co.za in Property24 and Private Property in online classified; Mr. Delivery and other food platforms in food delivery and in travel as well you have some smaller platforms that are operating in South Africa.
But obviously, the bigger international firms are the largest in South Africa. Booking.com constitutes the largest in travel and accommodation. South African travel platforms have had to find niche areas in order to compete.
Antitrust Source: Going to the harms that your group found, what are the biggest harms? For example, market players’ being excluded or demoted on the platform, and access to the platform and access to data, on the one hand; and, on the other hand, interbrand competition: interoperability and data portability?
Doris Tshepe: We did find a number of issues including self-preferencing conduct in e-commerce, for example, product gating, preferential placement by Google of its specialist units which distorts competition in Google’s favour; price parity clauses in travel and accommodation, food delivery and e-commerce; fee discrimination against SMEs in online classified and food delivery; no effective competition on fees charged by app stores to app developers with in-app payments resulting in high fees and app prices; and substantial eater promotion in food delivery with high restaurant commission fees can result in surcharge on menu items which is not transparent to consumers and distorts competition with local delivery platforms.
The market inquiry also found that some platforms sell top-ranking search positions to business users and do not identify the result as advertising.
Antitrust Source: Based on the work that you did, especially in your preliminary report, do you think that South Africa is going to come out with a list of rules, do’s and don’ts, maybe somewhat like the list of do’s and don’ts in the EU Digital Markets Act? or is it more likely to say, “These are various practices that we have found to be problematic and the Competition Act can reach them under Section 8 (abuse of dominance)?” This is, in a way, the question of whether we need ex ante rules or whether ex post enforcement is sufficient.
Doris Tshepe: I think you are going to find a combination of both, particularly in relation to what we call the leading platforms, which are platforms that are already entrenched or likely to become entrenched given the observed market dynamic.
As you know, the Minister is empowered by the Competition Act to publish regulations to give effect to some of the provisions of the Act. Those would be recommendations, but they may be later in the final report.
Antitrust Source: As you prepare your final product, are you looking to what is being done in the world, not just for input in terms of what you might want to prohibit or allow, but also in terms of more global consonance rather than more divergence?
Doris Tshepe: We are looking at what is happening elsewhere. We are engaging with other authorities on how they are implementing some of the remedies. We also have to find that which works in South Africa and that will enable South African platforms to also thrive, expand, and participate. It is not a wholesale look at what is happening elsewhere and just coming to do that, but that there will be some remedies that are happening elsewhere that would make it easier for us to implement because they do exist, but obviously those will be to the extent that they work in the South African market.
Antitrust Source: I would like to move to a more global picture. I would like to introduce the fascinating problem that Africa is on the verge of adopting a Competition Law for Africa, which will be contained in the African Free Trade Agreement. What are your views of a Competition Law for all of Africa?
Does Africa need a Competition Law and is the draft Competition Protocol going in the right direction? South Africa is a very important player, probably the most important player, in Africa right now in the competition space. Where does South Africa fit into this picture?
Doris Tshepe: I think we need one—and I think everyone will agree with this—trade, cross-border trade, and economic growth on the continent are critical. The establishment of the African Continental Free Trade Area is actually good progress for the continent in order to achieve cross-border trade and economic growth across the continent.
In order to achieve that, we do need to have a harmonious competition policy across the continent. That should assist us to have a developmental approach that benefits the continent.
As you are aware, there is already cooperation among African competition authorities, and that has taken a number of forms, one being the African Competition Forum which consists of over 30 competition authorities on the continent including some of the big and small competition authorities. Currently, ACF is chaired by South Africa and will be going to a conference in October 2023.
Precious Mathibe, who performs the role of the Secretariat for the ACF, reminds us that one of the key goals that we sought to achieve with ACF was to conduct research on the markets on the continent, which we have done. The research projects conducted range from pharmaceuticals to data roaming to various industries like cement and agriculture, and we continue to do that. The current research projects also include agriculture and agro-processing value chain.
I also want to mention that the heads of competition authorities have created a working group on digital markets as well in order to ensure a coherent approach in dealing with enforcement in the digital market, but also that Africa is not just a consumer of digital products but also a participant and that as this big market grows Africa is not left behind in the development that occurs in this market.
Antitrust Source: You have made some really important points about the successes of the African Competition Forum. How do you see the relationship and the continued existence and progress of the African Competition Forum to “the center”—which will be the African Competition Commission? Will the African Competition Forum continue doing everything it is doing or will the African Commission absorb some of the responsibilities?
Doris Tshepe: Those are some of the discussions that are still happening, whether the African Competition Forum will be recognized as a reference group within the Authority or whether it will be subsumed within.
I think for us at the moment, we will continue to progress the work with do with other authorities on the continent either through ACF or through bilateral agreements, to ensure collaboration and cooperation on enforcement, research projects, and capacity building.
Antitrust Source: We have so far left out of the picture the regional competition authorities within Africa. Would you say a word about the relationship between the nationals, the regionals, and what will be the pinnacle?
Doris Tshepe: They are an important component of the structure of competition authorities because there are some countries that do not have competition authorities and the regional competition authorities play a critical role. Some regional authorities participate in the African Competition Forum, and we regard them as very important stakeholders.
I think the current draft of the competition protocol recognises the role of regional authorities.
Antitrust Source: For a final word, would you like to add something about the future of competition law within South Africa and maybe in Africa?
Doris Tshepe: I think it is an exciting and challenging time from a South African point of view. As you know, we are going through an energy crisis, and we need to be responsive to the needs of the country and the economy while looking ahead to laying a good foundation for competitiveness and competitive outcomes of the economy. On the energy front, as an immediate priority, we are looking at block exemptions from certain provisions of the Act for suppliers and users of energy. We are also investigating and have referred cases of abuse of dominance to the Competition Tribunal in the energy sector as well. We are also responding to current needs. In this regard, we are starting a fresh produce market inquiry, that will look at the whole value chain of certain fresh produce and its impact, especially on low-income consumers.
In the long term, we want to fully implement the amendments to the Act and we want to create precedent and provide certainty to business on some of the new provisions.
On the continent and as mentioned above, we will continue to cooperate more with other authorities to ensure some coherence in competition policy and enforcement that brings about economic development on the African continent for the benefit of its people.
Antitrust Source: Thank you, Doris Tshepe.