challenges facing the agricultural sector

23 Jul

Presenter’s name

Challenges Facing the Agricultural Sector

Agenda

Welcome

Carl Opperman – CEO Agri Wes-Cape:

Challenges and Realities in Agriculture Sector Today

Wage Determination SD 13

Background

Scope of Application

Wages and Deductions

Other terms and conditions

Who is an employee in terms of SD13?

2

Agenda

ESTA Developments

New Earnings Threshold

Wildcat Strikes – The Law

Wildcat Strikes and Recovering Damages

Intellectual Property

Competition Law and the Agricultural Section

Questions and Answers

3

Challenges and Realities in Agriculture Sector Today

4

Which other industry embraces life 24h / 365 days on going?

Who supplies Food & Fibre?

What economy foundation is not build on Agriculture?

5

Basic Facts about SA Agriculture

• Only 12% of South Africa’s landmass is considered arable and only 3% "truly fertile".

• Only 1.5% of the land is under irrigation, producing 30% of the country’s crops.

• Contribution to GDP dropped from 21% in 1910 to between 3‐5% over the last decade.

• Declining contribution frequently misinterpreted as agriculture’s declining role in the country’s economy.

6


• The physical performance of South African agriculture is heavily influenced by the climate.

• 20% of farmers generate 80% of agricultural output value.

• 60% of South Africans are urbanised and depend on the agri‐food chain and specifically the food processing, distribution and retailing system.

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• Transport and distribution a major cost and also contributor to carbon foot print.

• Agriculture has been a net earner of foreign exchange – exporting more in rand terms than importing.

• Agriculture has been challenged to produce more food in the next 50 years than it did in the past 500 years.

8

Land capacity of South Africa

9

Number of farming Units

Source: Stats SA 10

South African Farming Structure

Source: Stats SA11

Agriculture’s output and GDP contribution

1911 ‐ 2005

12

Contribution of agriculture to the GDP in SA,

1990 to 2012

13

The cost squeeze for SA farmers

2008 to 2012 (2005 = base year = 1)

14

Farm Income & Expenditure

15

Earner of Foreign Exchange

16

Export / Import Value (F.O.B)

17

Agriculture’s linkages with the rest of the economy

• Backward linkages− Purchases of goods such as fertilizers, chemicals and implements

• Forward linkages− Supply of raw materials to industry and the food supply chain in general

• Approximately 70 % of agricultural output is used as intermediary products in other sectors

18

Global agriculture in the 21st century faces multiple

challenges

• Resource depletion− It has to produce more food and fibre to feed a growing population with a smaller rural labour force

• More feedstocks for a potentially huge bio‐energy market

• Contribute to overall development in the many agriculture‐dependent developing countries

19

Global agriculture in the 21st century faces multiple

challenges

• Adopt more efficient and sustainable production methods

• Adapt to climate change

• Price volatility

• Diet changes

• Increased competition via globalisation, demographic transition and urbanization

20

PSE Definition

The producer support estimate (PSE) is an indicator of the annual monetary value of gross transfers from consumers and taxpayers to support agricultural producers, measured at farm gate level, arising from policy measures, regardless of their nature, objectives or impacts on farm production or income.

21

PSE

Producer Support Estimates, 201122

Affordability of food a global challenge What proportion of people’s household

expenditures goes to food?

23

Top most constraining factors

• Trust in the political system

• Competence of personnel in the public sector

• Public sector's ability for sufficient service delivery

• Electricity supply

• Cost of Crime

• Efficiency of national infrastructure

• Cost of transport

Source: ABC

24

Top most constraining factors

• Administrative regulation in SA

• Availability of professional labour

• Cost of using infrastructure

• SA's labour policy

• Cost of financing

• Labour administration costs

• Availability of skilled labour

• Current exchange rate

Source: ABC25

Challenges in the local agricultural sector

• Policy coherence in relation to agriculture

• Administered prices

• Agricultural research

• Labour in agriculture

• Trade dispensation

• Land reform

26

Challenges in the local agricultural sector

• Protection of natural resources (impact of mining on agriculture)

• African development

• Infrastructure (the lack of)

• Integrated Growth and Development Plan for agriculture

• Disaster management

27

Policy challenges

• Spatial challenges continues to marginalise the poor

• The ailing public health system confronts a massive disease burden

• The performance of the public service is uneven

• Corruption undermines state legitimacy and service delivery

• South Africa remains a divided society

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Dankie / Thank You

29

23 Jul

By Jacques van Wyk

New Wage Determination SD 13

A Sectoral Determination supplements and amends theprovisions of the Basic Conditions of Employment Act 75of 1997 (“BCEA”) in a particular sector.

If a determination is silent the BCEA shall haveapplication (section 1(5) of Determination 13).

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SD 13 Background

Applies to all farm workers in all farming activitieswithin South Africa.

A farm worker is an employee who is employed mainlyor wholly in connection with farming activities.

Farming activities includes primary and secondaryagriculture, mixed farming, horticulture, aqua farmingand the farming of animal products or field cropsexcluding the forestry sector.

Includes domestic workers and security guards (if notemployed in the private security sector).

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SD 13 Scope of Application

Not defined.

Look at what the courts say and the definitions providedby AgriSETA and StatsSA and the DoL approach.

Look at the nature of the enterprise in which theemployees and their employer are associated for acommon purpose.

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SD 13 What is “Secondary Agriculture”?

It must be work conducted in furtherance of the primarypurpose of the employer which must be the productionof agricultural products.

What about processing and production? (question offact: if they are controlled by the same undertaking andare connected with the farm land then they will likelyfall within the definition of secondary agriculture).

34

SD 13 What is “Secondary Agriculture”? (continued)

Factors that may play a role in determining whether anactivity constitutes secondary agriculture:

The dimension of the activities of the secondary side of theundertaking.

Whether the operation need necessarily be part and parcelof the farming operation.

The commercialisation of the enterprise.

The location of the processing facility in an industrial area.

Examples: Abattoir on farm vs abattoir in industrial areaserving other suppliers.

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SD 13 What is “Secondary Agriculture” (continued)

The magnitude of the operations and the number of employees employed in the secondary industry.

Whether employees execute other farming tasks.

Whether production is industrialised.

Where the employees live: in an industrial area or on thefarm.

Whether the processing activity is dependent upon urbaninfrastructure.

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SD 13 What is “Secondary Agriculture”? (continued)

Distinction between “wage” and “remuneration”:

“remuneration” is “payment in money or in kind, or both in money and in kind”.

“wage” is “amount of money”.

Minimum wage is amount of R105 per day, irrespectiveof additional payment in kind such as housing, food,electricity, transport.

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SD 13 Wage Increases and Exemption Applications

New minimum wage (for a 9 hour day) as of 1 March2013 until 28 February 2014 [67% increase!].

Will be further increased from 1 March 2014 until 28February 2015 to [previous year’s minimum wage +minimum wage+ CPI + 1.5%].

Again from 1 March 2015 until 28 February 2016 to[previous year’s minimum wage + minimum wage+ CPI+ 1.5%].

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What are the consequences of non-compliance:

Fine (schedule 2 of the BCEA); and

Term of imprisonment? (section 93 of BCEA).

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Employer may make the following deductions from an employee’s wage:

Housing;

Food; and

Selected “others”.

Provided certain prescribed criteria are met.

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SD 13 Deductions

A 10% deduction for housing if it:

is provided as part of employment;

has a durable and waterproof roof;

has glass windows that can be opened;

is at least 30 square meters in size;

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SD 13 Deductions (continued) - housing

electricity is available inside the house (in so far as such infrastructure is on the farm);

safe water is available inside the house or within 100 meters from the house;

flush toilet or pit latrine is inside or near the house; and

no other deductions are made for housing (e.g. for electricity or water).

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Where more than two workers in collective housing (e.g. “hostels”):

Maximum deduction in total in respect of all resident workers = 25% in total of minimum wage (R105); and

Equal part to be deducted from each of the residents’ wages.

No deduction for housing from wages of a worker under 18 years of age.

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A 10% deduction for food if it is:

provided free of other charges;

provided on an ongoing and regular basis as part of the employee's conditions of employment;

The deduction may not exceed the actual cost to the employer for providing the food; and

No other deductions for food may be made of the worker's remuneration.

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SD 13 Deductions (continued) - food

Third parties (e.g. bank, union, medical aid) on written instructions from worker;

in terms of a law or court order (e.g. tax or child maintenance); and

no more than 10% of the wage for the repayment of an advance or loan made to the worker.

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SD 13 Deductions (continued) – “other”

Currently no provision for deduction for electricity.

Department of Labour (“DOL”): Contentious issue.

The DOL have requested a legal opinion and will issue guidelines for employers.

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SD 13 Deductions (continued) – electricity?

Thousands of Exemption applications were made.

Few granted.

The key factor: a real and pressing financial need forthe exemption (for example, the failure to obtain anexemption would necessitate significant retrenchmentsor result in the failure of the enterprise).

How? By way of an application to the DOL.

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SD 13 Exemption Applications

Exemption application: the procedure:

Determine whether there are trade unions representingaffected employees;

If yes, then approach them in order to obtain theirconsent to the application for exemption;

If the trade union consents a copy of the consent mustbe attached to the application (the consent should becontained on the union’s letterhead);

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SD 13 Exemption Applications (continued)

If no consent, the trade union must nonetheless beserved with a copy of the application and informed theycan made representations to the DOL.

If there are no trade unions the employer must try toobtain the employee’s consent. In addition an affidavitmust be completed which states that “none of theemployees affected by the application are unionised”;

If the employees do not consent proof must nonethelessbe attached to the affidavit indicating they have beeninformed of the process;

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Thereafter, submit a copy of the application (BCEA Form6) to the DOL. The form must be accompanied by thefollowing documentation:

Copies of the Employer’s financial statements (incomestatement, cash flow statement, balance sheet);

Motivational letter indicating why exemption is sought;

Project plan indicating projections of meeting theprescribed conditions;

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List of employees with their salaries reflected;

Farm Workers form;

Trade union consent (if applicable);

Alternatively employees consent and affidavit setting outsteps taken to notify employees (if applicable).

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There are a number of additional ‘unusual’ terms andconditions contained within SD13:

Extension of ordinary working hours of employees;

Overtime;

Remuneration for work on Sundays;

Termination of employment;

Accommodation, livestock and crops on termination;

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SD 13 Other Terms and Conditions

23 Jul


With effect from 1 July 2013:

Increase from R183 008 to 193 805;

Threshold calculated in accordance with employee’s earnings (what is included and excluded?);

“Earnings” is regular annual remuneration before deductions (income tax, medical, pension etc.).

Does not include subsistence and transport allowances.

54


Implications of threshold?

More employees entitled to the protections of the BCEA.

Ordinary hours of work, overtime, compressed working week, averaging hours of work, meal intervals, daily and weekly rest periods, pay for work on Sundays, night work and work on public holiday.

Administrative and financial consequences.

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New Earnings Threshold (continued)

23 Jul

ESTA

The purpose of the Extension of Security of Tenure Act 62 of 1997 (“ESTA”) is to:

Provide long-term security of occupancy, residency orpossession of land.

Provide for and put in place the conditions that must bemet and circumstances that allow for persons to beevicted from land.

It applies to occupiers of land other than landdesignated as a township.

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ESTA Overview and Recent Cases

Give two months’ written notice of intention to apply for eviction order to:

Occupier;Local municipality;Department of Land Affairs.

Obtain court order for eviction

Will only be granted if ‘just and equitable’ to evict taking into account a range of factors.

Once court order obtained, give notice to occupier that he/she is to be evicted

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ESTA Eviction Process

What constitutes ‘just and equitable’ circumstances? The following factors:

the period of time the person has occupied the land;

whether valid grounds exist for ending the right to occupy;

the land owner’s conduct;

potential hardship to be suffered by person evicted; and

availability of alternative accommodation.

Pivotal to show ‘meaningful engagement’ by land owner.

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ESTA Just and Equitable

May institute proceedings in the Magistrates Court or the Land Claims Court.

Each court has advantages and disadvantages.

Land Claims Court:

Is more inclined to issue injunctions.

Is more explicit in its disapproval should the department so ordered fail to comply with its injunctions.

Judges concern themselves solely with land claim issues and eviction applications.

Is a High Court and accordingly there is no automatic right to appeal.

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ESTA - Magistrate’s Court or Land Claims Court?

Magistrates Court:

More inclined to grant postponements until such time asthe relevant department acts as ordered, if at all.

This may lead to months or even years of delay.

Eviction order is sent to the Land Claims Court onautomatic review.

Upon conclusion of review proceedings if the eviction orderis granted the respondents have an automatic right ofappeal. This delays the proceedings even further.

61

ESTA Magistrate’s Court or Land Claims Court? (continued)

23 Jul

Wildcat Strikes – The Law

The strikes in Marikana and De Doorns have focused attention on wildcat strikes in South Africa.

De Doorns strikes:

Workers demanded a wage increase from R69 to R150/daybefore striking unlawfully.

The conduct of the strikers and persons amongst them led toapproximately R100 000 000* in damages to export table-grape farms.

The Food and Allied Workers Union (FAWU) now threatensfurther strike action. FAWU members number approximately2500 out of roughly 8000 permanent employees.

*http://www.bdlive.co.za/national/labour/2013/05/07/fawu-threatens-further-de-doorns-farm-strikes

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Wildcat Strikes – An overview of recent strikes

For a strike to be lawful, it must comply with chapter 4of the LRA.

The issue in dispute must be referred to a bargaining council or CCMA for conciliation;

A certificate stating the dispute is unresolved must beissued or a period of 30 days must elapse from the dateof referral; and

Notice of strike action must be given at least 48 hoursbefore the strike.

If procedure is not followed, the strike is regarded asunlawful.

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Wildcat Strikes – What does the law require?

Obtain an interdict from the Labour Court to bring theunlawful strike to a halt. Must prove:

A right has been infringed;

Irreparable harm will occur if the interdict is not granted;

Granting the interdict is more convenient than not; and

The applicant has no other satisfactory remedy.

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Wildcat Strikes – What are the Employer’s remedies?

The employer may also claim compensation ordamages.

The employer may dismiss the employees but thisshould be regarded as a mechanism of last resort.

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Wildcat Strikes – What are the Employer’s remedies?

23 Jul

By Nasheetah Smith

Wildcat Strikes –Recovering Damages

Rights in terms of Protected strikes:

If the strike is protected, then the LRA grants immunity tostriking employees and trade unions against the following:

Breach of contract claims;

Delictual and civil claims; and

Dismissals (other than for operational reasons)

Immunity does not protect strikers who commit unlawfulconduct during the strike.

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Wildcat Strikes – Damages Recovery

Section 67(6) of the LRA provides that:

“Civil legal proceedings may not be instituted against anyperson for participating in a protected strike or a protectedlock-out; or any conduct in contemplation or in furtheranceof a protected strike or a protected lock-out.”

The immunity granted under S67 is not absolute. Section67(8) expressly excludes “…any act in contemplation or infurtherance of a strike or lock- out, if that act is anoffence”

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Criminal conduct would therefore not be condoned.

Any damages suffered as a result of the unlawful conduct ofthe strikers will expose them, the organisers, protestorsand/or trade union to delictual liability.

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In recent cases, conduct such as intimidation, assaultand damage to property was found not be affordedimmunity under Section 67(2) and (6).

(Minister of Correctional Services and Another v Ngubo and others(2000); Fourways Mall v SA Commercial Catering and AlliedWorkers Union(1999))

Damages claims arising out of unlawful conduct whichconstitutes an offence would have to be instituted in theHigh Court.

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Wildcat Strikes – Damages Recovery (continued)

What about Unprotected Strikes:

The immunity granted in Section 67 is not granted at allin regard to unprotected strikes.

Section 68(1)(b) allows Employers to sue for lossessuffered as a result of any conduct in contemplation or infurtherance of an unprotected strike.

The remedy may be enforced against the strikers or theirtrade unions.

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What must Employers prove in such a case:

the strike was unprotected;

the employer suffered a loss as a result of unprotectedstrike (for example, loss arising from the blockading of theentrance of the employer’s premises, the refusal to work,the loss of productivity occasioned thereby etcetera) ;

where relief is sought against a trade union it must bedemonstrated that the trade union participated in theunprotected strike or committed acts in contemplation or infurtherance thereof.

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In Mangaung Local Municipality v SA Municipal WorkersUnion (2003) the court held:

“…where a trade union has a collective bargaining relationship with anemployer, and its members embark on unprotected strike action andthe trade union becomes aware of such unprotected strike and isrequested to intervene but fails to do so without just cause, such tradeunion is liable in terms of S68(1)(b) of the Act to compensate theemployer who suffers losses due to such an unprotected strike.”

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What can be recovered?

limited under Section 68(1)(b) to “…just andequitable compensation…”;

Therefore unlikely that an Employer will be able torecover all its damages under the LRA.

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What is just and equitable?

the courts have held that the compensation granted must befair and is aimed at compensating the aggrieved party and notto penalise the wrongdoer (Algoa Bus Company v SATAWU[2010]).

the courts have a wide discretion to award a lesser amountthan the full extent of the damages claimed and 68(1)(b)requires them to take a number of factors into account whendoing so.

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Factors to be taken into account will include whether-

attempts were made to comply with the provisions of theLRA and the extent of those attempts;

the strike or conduct was premeditated;

the strike or conduct was in response to unjustified conductby another party to the dispute;

there was compliance with an interdict granted by theLabour Court;

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the interests of orderly collective bargaining;

the duration of the strike or lock-out; and

the financial position of the employer, trade union or employees respectively.

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68 (1) provides exclusive jurisdiction to the Labour Courtto grant orders for payment of losses incurred as a resultof the unprotected strike or conduct in furtherancethereof however excludes the following:

Non-striking employees and third party delictual claims;

Civil claims arising out of criminal offences

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Delictual claims arising out of unlawfulbehaviour/conduct during protected andunprotected strikes

All delictual claims arising out of criminal offencescommitted during protected strikes will be dealt with by theHigh Court;

The law is unclear whether delictual claims arising out ofcriminal offences committed during unprotected strikesshould be dealt exclusively by the Labour Court or whethersuch claims can also be dealt with by the High Court giventhat same are common law offences;

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In Coin Security Group (Pty) Ltd v SA National Unionfor Security Officers & Other Workers & Others theCourt held that:

the Labour Court has exclusive jurisdiction to considerconduct such as intimidating, assaulting, vandalising andthreatening and verbally abusing co-workers for purposesof interdictory relief in terms of S68(1)(a) when defining“conduct in furtherance of the strike”

The court however did not confirm whether the LabourCourt would also have exclusive jurisdiction to deal withdelictual claims arising out of the criminal conduct.

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What damages can be claimed?

Patrimonial losses - actual damages and not potentialdamages;

Damages that are easily quantifiable and can be proven byevidentiary proof

82


List of necessary information for instituting claims:

Date of incident(s);

Details of parties involved (individuals; union members;union);

Evidence proving involvement of parties (photo, video,sound recordings etcetera);

Estimation of damages suffered and proof thereof;

CAS numbers (in the event of criminal charges being laid);

List of witnesses and witness statements;

Any and all relevant correspondence between parties.

83


Would arise in the instance where employees or theirtrade unions failed to adhere to a court order.

When? If an interdict has been granted preventingemployees from engaging in unlawful strike action and /or committing acts of misconduct during such strikes andthe fail to comply with that order.

The law has recently been clarified on whether a tradeunion can also be held in contempt for failing to restrainthe actions of its members.

84

Wildcat Strikes – Contempt of Court proceedings

In2Food (Pty) Ltd v FAWU and others J350/13 (decidedon 1 March 2013)

Relevant facts

Interim order granted restraining FAWU and its membersfrom embarking upon an unlawful strike;

FAWU and its members failed to adhere to order, causingsubstantial loss and damage to the employer;

Contempt of court order then obtained. It called uponFAWU and its members to show cause why they should notbe held in contempt in a final order;

FAWU found to have been in contempt and received a R500000 fine.

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Wildcat Strikes – Contempt of Court proceedings (continued)

Important points to be aware of:

The damages occasioned to the employer was in excess ofR16 000 000. The contempt fine is therefore not aimed atrecouping damages.

Furthermore, the fine is payable to the court and not theemployer;

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Important points to be aware of:

However, these proceedings still serve a valuable function:

Acts as a deterrent;

Seeks to add an additional financial burden on tradeunions;

Imposes a duty upon unions to take positive steps

87


“The time has come in our labour relations history thattrade unions should be held accountable for the actions oftheir members. For too long trade unions have gliblywashed their hands of the violent actions of their members”

“Alarmingly, on the evidence before me, the union and itsofficials have not taken sufficient steps to dissuade andprevent their members from continuing their violent andunlawful actions”

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23 Jul

By Janine Hollesen


Product of the intellect

Commercial value

Sold

Licensed

Objective : Identify the IP for protection / licensing

90

What is Intellectual Property and the Relevance in the Agricultural Sector?

Patents

Trade Marks

Copyright

Trade Secrets and Know-how

Plant Breeder’s rights

91


Territorial

Limited duration

Any invention registered if it involves an inventivestep capable of being used or applied in trade orindustry or agriculture

Absolute novelty requirement : invention must benew in South Africa or elsewhere

92

Patents

SHELTER FOR FRUIT TREES FRUIT PRESERVATION BAG

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Examples

Shape / appearance of articles

Manufactured in an industrial process

Territorial

Limited duration

New = design does not from part of theState of the Art

94

Designs

ELONGATED FRUIT BOX FRUIT PICKING APPARATUS

95

Examples

Registered = certainty with regard to protection

Territorial

Distinguishing function

Search

Process

Duration

96

Trade Marks

45 classes Class 29 – preserved, dried and cooked fruits and vegetables; eggs; milk; processed olives; olive oilClass 30 – staple foods including flour and preparations made from flourClass 31 –fresh fruit and vegetablesClass 32 – non-alcoholic beveragesClass 33 – alcoholic beverages including wineClass 35 – marketing, retail and wholesale services; export services; forest managementClass 39 – transport, packaging and warehousing services;Class 42 – scientific and research services;Class 44 – agricultural services; afforestation services

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Trade marks

98

Examples

Copyright Act

Types of works protected

Literary works

Artistic works

Sound recordings

Musical works

Cinematograph films

Computer programmes

50 years

99

Copyright

Trade secret = information not generally available / competitive advantage

Examples : chemical formula, manufacturing process, a machine design, business method

Know-how = body of information, the compilation of which has competitive value

Examples = customer lists, supplier lists, parts specifications, quality assurance and testing procedures

Cannot convert general knowledge by labelling

100

Trade secrets and Know-how

Registered Right

DUS requirements

Territorial

Limited duration –

Trees and vines – 25 years

Other varieties – 20 years101


Patents

Trade Marks

Copyright

Trade Secrets and Know-how


102


Identify the IP right

Registered

Obtain advice and secure protection as soon a possible

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Intellectual Property Protection

NB = identify the IP that is being licensed

Is the right valid and enforceable in South Africa and in other territories to which the licence extends?

Searches

Obtain advice regarding terms of licensing agreement

Exclusive / Non-exclusive / Duration / Royalties / Termination

IN CONCLUSION :

Ensure that the subject matter of IP is capable of being licensed or whether you will be paying for non-existent rights.

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Licensing

Presenter’s name

Competition Law and the Agricultural Sector

By Irma Gouws

Commission’s focus on Agricultural Businesses

The Competition Commission has identified food andagro-processing as a priority investigation area (2009)

“The far reaching liberalisation has not yielded the desiredpolicy outcomes, in that the agricultural value chainappears to be still largely characterised by anti-competitive outcomes, including high concentration, highbarriers to entry, concentration of ownership, verticalintegration as well as anti-competitive behaviour in thepricing of food. These have serious consequences for thewelfare of the poorest households.”

There have been investigations in grain, diary, poultry,fertilizer, milling and baking industries

Section 4 – Restrictive horizontal practices

Section 4 of the Competition Act 89 of 1998 (“the Act”) prohibits agreements or concerted practices between organisations in a “horizontal relationship”.

“Horizontal relationship” refers to organisations which are competitors or potential competitors.

“Agreements” as defined in the Act include:

“contract, arrangement or understanding, whether or not legally enforceable”;

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“Concerted Practices” as defined in the Act mean:

“co-operative, or co-ordinated conduct between organisations, achieved through direct or indirect contact, that replaces their independent action, but which does not amount to an agreement”.

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Section 4(1)(a) prohibits agreements or concerted practices amongst competitors if –

the agreement substantially prevents or lessens competition in a market (i.e. the conduct has an anti-competitive effect); and

if there are no technological, efficiency or other pro-competitive gains to outweigh the anti-competitive effect.

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These agreements require an assessment of their anti-competitive effect and a balancing between the anti-competitive effect and the efficiency or other pro-competitive benefits.

This is referred to as a “rule of reason” analysis.

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Section 4(1)(b) prohibits agreements or concerted practices amongst competitors which involve –

(i) directly or indirectly fixing a purchase orselling price or other trading condition;

(ii) dividing markets by allocating customers, suppliers, territories or specific types of goods or services; or

(iii) collusive tendering (i.e. bid-rigging)

This conduct is prohibited whether or not it gives rise to an anti-competitive effect

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Exchange of information between competitors

Section 4(1)(a)

the artificial removal of uncertainty can in itself remove rivalry.

Section 4(1)(b)

facilitating factor for collusion & monitoring of compliance with collusive arrangements.

112

Western Cape Citrus Producers Forum.

Banana Cartel: Del Monte and Dole engaged in “general market gossip”.

UK Diary “Hub and Spoke” cartel.

UK Agricultural Tractor Registration Exchange.

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Examples

How does information exchange take place?

Joint Ventures;

Benchmarking Studies;

License Agreements;

Supply Agreements;

Industry bodies/Trade Associations:

Facilitate information exchange.

Useful! They gather and disseminate information such as investments, employment figures, product standards.

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Sharing of information between competitors

There is increasing recognition that information exchange could result in large efficiency benefits:

improve investment decisions and organisational learning of firms, which could potentially result in better quality, more variety and better future ability to respond to demand changes;

more efficient production planning;

improved distribution and marketing strategies;

better product positioning (in the case of differentiated products), all of which could improve consumers welfare.

Sharing of information between competitors

The problem for Competition Law is to distinguish those exchanges of information which have a neutral or beneficial effect upon efficiency from those which seriously threaten the competitive process by facilitating collusive behaviour.

Anti-competitive effects…

Two crucial questions:What is the nature of the information exchanged?

What is the structure of the market?

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Nature of Information Exchanged

Pricing information

Capacities, costs, demand, prices, salesKeep an eye on compliance with agreement!

Customer information

Could result in shifts in pricing policies and erode vigour

of competition between firms

118

Nature of Information Exchanged

Specificity

Individual v Market/Industry as a whole;

Aggregated information;

Historic, current and future;

Confidential v Public.

119

Structure of the market

The level of concentration & structure of supply and demand must be considered.

One must consider:

the number of competitors;

the symmetry and stability of market shares;

barriers to entry;

the existence of any structural links between competitors;

the homogeneity of products;

market transparency.

120

Drawing the line – not to share…

Price, costs, investments, business strategy, rebates, discounts;

Sales and production targets;

Bidding and tender procedures;

Customer information;

Confidential information and information that create competitive advantage;

Current information;

Individual company data;

Implied direction or recommendations.

121

The neutral area…

Exchange with non-competitors.

“Process” type information that will result in industry efficiency.

Public domain.

Historic information.

Aggregated data – BUT avoid if disaggregation is simple.

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Your company and employees need to know the do’s and don’ts of competition law…

Compliance with the Competition Act is not negotiable – ignorance of the law is not a mitigating factor!

There is always a good commercial reason for anti-competitive behaviour and agreements

Presenter’s name

THANK YOU

Jacques van WykNasheetah Smith

Janine HollesenIrma Gouws

Thandi Lamprecht

Nothing in this presentation should be construed as formal legal advice from any lawyer or this firm. Readers are

advised to consult professional legal advisors for guidance

on legislation which may affect their businesses.

© 2013 Werksmans Incorporated trading as Werksmans Attorneys. All rights reserved.

challenges facing the agricultural sector

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