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Commission calms fears of associations    

Business Day - 2009/08/31 - page 4 - Joffe, Hilary

COMPETITION commissioner Shan Ramburuth has moved to allay fears that industry associations could contravene the anticollusion provisions of competition legislation, saying the law on collusion is clear and the authorities have no problem if companies work together for legitimate industry association purposes. This comes after oil companies last week went to the commission for a letter of comfort before they were willing to work together to help sort out the jet fuel crisis at OR Tambo International Airport. The Department of Energy had asked the oil companies to assist but they were initially reluctant because they feared they might be accused of collusion by the competition authorities. There have also been concerns in the business community that industry associations — such as the Banking Association — run the risk of being accused of collusion if they continue to meet to discuss industry issues.

Ramburuth attended a meeting at Business Unity SA (Busa) last week, and the commission will do a series of seminars with Busa to address the issue. But Ramburuth doesn’t understand what the fuss is about, suggesting the fears may have been stoked by corporate lawyers. Section 4(1)(b) of the Competition Act specifies that companies may not collude to fix prices or divide up markets, nor may they exchange price sensitive information. “The law is crystal clear,” Ramburuth said. “Whether you have transgressed the law or not is a matter of fact.” It was perfectly legitimate for industry associations to meet on policy issues and monitor and interact with the government. But there were borderline issues, such as product specification, which might be anti- competitive.

Agendas and invitations were important and if industry associations were really concerned, it was worth taping their meetings in case any nasty allegations were ever made. Insofar as there were borderline issues, companies could get legal advice or could approach the commission, Ramburuth said. He was speaking ahead of a conference this week that celebrates 10 years of SA’s competition authorities, which were set up in 1999 after new competition legislation was enacted in 1998. The conference, hosted by the commission, the competition tribunal and the University of the Witwatersrand’s Mandela Institute, will be attended by prominent international and African competition regulators and competition lawyers and economists from around SA. “We have taken some good policies and turned them into good enforcement with good institutions in the middle,” Ramburuth said.

Reputation is the number one assets of any association. Reputation links closely to the trusted relationship that the association has with a particular group of member persons or companies.

If the association has a good reputation, members will pay money to be included into the membership group that the association represents. If the reputation of the association is poor, then the value of the relationship will also be little and members will not pay for the honour to belong.

The trust between member and association has to do with the fact that the member trusts the value and communications of the association and will pay good money to receive communications from the association. The member relies on the association not to misuse the trusted relationship for commercial or inappropriate purposes.

If the association is used as an antitrust platform by some, or if commercial adventure by the leadership is misusing the relationships with the members, then the association will normally do poorly.

Likewise if the association only protects the commercial exclusivity of some, then others will shun the organisation and will damage its reputation in other forums.

Organizational Development Professionals in South Africa seems be without any credible institutional home. If you are active in this field and are interested in the establishment of a new standalone institution, just for your needs, please contact me. Our track record in helping new associations to establish and grow to success, are well established. 

We can facilitate a strategic workshop to help you understand the needs of your profession, by plotting a strategy to professionalize the industry. 

A successful professionalization strategy will add handsomely to your take home pay, raise job satisfaction levels and increase your global mobility and value.