00:00:09:02 - 00:00:37:06

Alec Hogg:
Rob Rose gets his teeth into very interesting subjects from time to time, and he's just done that now. He's the Editor-in-Chief of the FM Group, which includes Financial Mail and Currency News. And Rob has put a piece together on the Competition Tribunal that will send shivers down the spine of any rational South African businessperson. We'll tell you why.

00:00:37:08 - 00:00:58:01

Alec Hogg:
Rob, I suppose I should have said businessperson, of course, because the girls are really taking a leading role when it comes to South African business. But what a story. I can imagine there will be some young journalists, or students at Rhodes, saying: "Where does he get these amazing pieces from?"

00:00:58:01 - 00:01:01:16

Alec Hogg:
Where do they fall out of the sky?

00:01:01:18 - 00:01:16:00

Rob Rose:
Well, that's interesting. I think that once you've been around this business for long enough, as you and I have been, you have people who are involved in various parts of the economy who call you and say, "I've just seen this thing, and it's outrageous. I think the world should know about it."

00:01:16:00 - 00:01:32:09

Rob Rose:
And that's how this particular story, and many other stories, happen. As journalists, we often miss what's happening on the ground. That's why it's vital to have a community of people in the business sector who can call you up and say, "I think we need to give this some serious airtime."

00:01:32:09 - 00:01:35:01

Rob Rose:
And that's what happened in this particular case.

00:01:35:03 - 00:01:50:00

Alec Hogg:
Well, it is a sometimes-forgotten science of journalism, which is that it's all about connections. It's all about your contacts, isn't it? You work your contact book and, over the years, reap the fruits.

00:01:50:02 - 00:02:07:19

Rob Rose:
Yes. And as somebody who's been around for ages, I think a lot of contacts in various sectors of the economy and society want to trust that you'll do a good job. If they say to you, "There's a story that needs to be explored in depth..."

00:02:07:19 - 00:02:34:20

Rob Rose:
...something has happened and it's really outrageous or unfair to one particular part of society, they want to think you'll do a good job and be fair about it. If you just chase tabloid-style headlines and want a quick-hit story, people are going to think you're not going to do a justifiable job. You're not going to dig in depth into a specific issue.

Ultimately, those kinds of stories fail to land because you haven't treated them with the seriousness they demand.

00:02:34:20 - 00:02:49:05

Rob Rose:
I think that's what you see from the best journalists out there. The people who do really well will dig into a story and explore it in depth. That's what we need to do with so many of the huge faults in society that need to be remedied.

00:02:49:05 - 00:02:59:02

Rob Rose:
We can't just move from one scandal to the next and say, "Oh, this happened, too bad." You've got to really explore those fault lines and see how they can be fixed.

00:02:59:04 - 00:03:19:18

Alec Hogg:
Reading through this piece, I wondered what David Lewis would have made of all this. He was a highly regarded member of the Competition Tribunal for many years and served as chairman for a long time. He wrote that excellent book, Thieves at the Dinner Table, where he explained his time there.

00:03:19:20 - 00:03:29:13

Alec Hogg:
I wonder what he would have made of all of this. But I'm running ahead of myself. Give us the story in a nutshell so that we can then go into a little more depth.

00:03:29:15 - 00:03:57:07

Rob Rose:
Sure. The context is that the competition authorities were set up in the late 1990s to ensure that the market operated efficiently, that market failures were prevented, and that there was fair business taking place. That was the whole point of it.

If there were cartels where people were fixing prices and starving smaller companies out of the market, they would be dealt with through new rules and penalties.

00:03:57:09 - 00:04:20:06

Rob Rose:
But I think what has happened in recent times is that the competition authorities have introduced more sand into the system, blocking businesses from doing deals.

You may remember the case about 15 years ago involving Harmony Gold and Gold Fields. Harmony tried to buy Gold Fields, and ultimately that offer was never heard by shareholders because it got stuck at the Competition Tribunal.

00:04:20:06 - 00:04:43:19

Rob Rose:
So an offer was made to shareholders saying, "We know it's a hostile offer, but would you like to accept it and let Harmony control Gold Fields?" It never actually got to the shareholders because of the hold-up at the Tribunal.

You see the Tribunal and the competition authorities acting like molasses in the system, slowing things down, which means genuine economic opportunities are missed because they are never properly heard.

00:04:43:19 - 00:05:05:03

Rob Rose:
This particular case related to a cartel hearing involving scrap metal, dating back to the early 2000s. A couple of members of the steel industry, including ArcelorMittal, Columbus Steel and Scaw, essentially said: "Okay, we were part of a buyers' cartel. We created this cartel to fix the price of scrap metal."

00:05:05:04 - 00:05:25:05

Rob Rose:
Another company, which is the subject of this appeal, Cape Gate, said: "Actually, we weren't part of a cartel. We don't think this is fair and we're not going to plead guilty."

The competition authorities investigated the matter and referred it to the Tribunal more than a decade ago. Eventually, in 2019, the case was heard against Cape Gate.

00:05:25:07 - 00:05:48:10

Rob Rose:
The case was heard in 2019, and then it took six years for a decision to be issued. Eventually, after six years, the Competition Tribunal came back and said that Cape Gate was guilty of prohibited conduct.

Cape Gate then said: "We can't wait six years for this. This must go to the Competition Appeal Court."

00:05:48:11 - 00:06:06:15

Rob Rose:
"We can't have a situation where you're preventing us from finalising deals and doing business for six years, and this ruling should be overturned."

What happened last week is that the Competition Appeal Court came back and said this delay was completely unacceptable. It was egregious. The Tribunal was effectively holding up the system.

00:06:06:16 - 00:06:25:04

Rob Rose:
The court said this kind of thing cannot be allowed to happen. More than that, it raised ethical questions because, when asked about the delay, the chair of the Tribunal said it was because of Covid and various other factors.

But the actual Tribunal panel members said it was because they thought settlement discussions were under way.

00:06:25:04 - 00:06:54:04

Rob Rose:
So the Appeal Court said that not only had there been an egregious and unconstitutional delay, but there were now ethical questions as well.

I think it casts a cloud over the functioning of our competition authorities. It's the kind of thing the minister should already be looking at. There needs to be a complete overhaul if these institutions are to bolster our economy rather than hold it back.

00:06:54:06 - 00:07:20:13

Alec Hogg:
It's interesting when you look at comparisons globally. In the United States, you have a president who wants to remove anything to do with competition restraints or antitrust measures that stop large companies from potentially preying on consumers.

South Africa has gone completely the other way.

00:07:20:14 - 00:07:34:13

Alec Hogg:
So you have these two sides of the spectrum.

But getting back to David Lewis: I know you were around when he was chairman. Did you share the view that he actually did a good job?

00:07:34:15 - 00:07:53:16

Rob Rose:
Yes, he was fantastic. I thought David Lewis was great when he was at the Tribunal, and I knew him quite well when he was at Corruption Watch afterwards.

I think David had a strong ethical sense of the role that business could play. He was an economist at the outset, so he approached it from a pragmatic economic point of view, which was very useful.

00:07:53:18 - 00:08:10:04

Rob Rose:
Having said that, he was at the Tribunal when the Harmony Gold–Gold Fields matter unfolded, and there are certain structural issues that I don't think have ever been resolved.

But David Lewis was practical and pragmatic. I don't think cases like this would have happened under his watch.

00:08:10:06 - 00:08:17:23

Alec Hogg:
It certainly wouldn't have taken as long as it did. And the wording from the judges seems unusual.

00:08:18:01 - 00:08:37:10

Rob Rose:
In this particular case, it was very clear they wanted to send a strong message.

They said this was completely unconscionable. They described it as offensive to the Constitution, which is not the kind of language you normally hear from judges in an appeal court like this.

00:08:37:11 - 00:08:55:00

Rob Rose:
They said the delay was so egregious that it could not be deprecated strongly enough. It is incontestable that a delay of six years amounts to a serious dereliction of duty warranting censure.

And I think, Alec, what was important as well is that they said these administrative bodies, which form part of our broader administrative system, cannot spend this long on anything.

00:08:55:00 - 00:09:18:21

Rob Rose:
And I think it's not just the competition authorities that should take note of this. It's all our administrative bodies that tend to take far too long to make decisions.

You see it even with cases involving the financial regulator, the FSCA. Some of those take a very long time. And, obviously, we don't even need to mention our courts and what happens with the NPA.

00:09:18:23 - 00:09:26:03

Alec Hogg:
Have you ever questioned anybody and asked, "Why is it taking you so long? What is the hold-up?"

00:09:26:05 - 00:09:48:17

Rob Rose:
When I have these interactions with various members of these bodies, and I think of the FSCA, and I've spoken extensively to prosecutors involved in white-collar crime, the answer is always that it's very complicated.

Businesses lawyer up. They have ten advocates in the room who introduce more sand into the system and make things last longer.

00:09:48:17 - 00:10:17:08

Rob Rose:
But I tend to think that's often an excuse.

If you look at the case of Steinhoff, which happened in 2017, there were things for which Markus Jooste could have been charged almost immediately. The SMS messages he sent, which were clear insider trading, telling his friends to sell shares.

The prosecutors had that information within a year of Steinhoff collapsing, and yet it took until 2023 or 2024 to actually charge Jooste on what was arguably the most blatant insider-trading case imaginable.

00:10:17:08 - 00:10:39:04

Rob Rose:
So I think it's unnecessary hesitancy.

Our government oversight bodies often lack confidence because they don't have the skills and they don't have the manpower. They're wary and approach these matters very cautiously because, as we've seen in cases involving the Guptas, prosecutions can fall apart and public officials are then castigated for it.

00:10:39:04 - 00:10:49:17

Rob Rose:
Which, in some respects, they should be.

But the reality is that these delays are preventing our economy from functioning in any meaningful way that benefits anyone.

00:11:04:14 - 00:11:11:11

Alec Hogg:
A competition authority is so central to the functioning of an economy.

00:11:11:11 - 00:11:32:11

Alec Hogg:
And in this case, one of the things that shook me was that there were members of the panel who effectively lied to the court.

They said the delay was because settlement negotiations were under way, which Cape Gate said was never the case.

00:11:32:13 - 00:11:51:03

Rob Rose:
Yes. That's the issue for which they were completely castigated.

The Competition Appeal Court judges described it as outrageous. They used the word "falsehoods" rather than outright lies, but the implication is essentially the same.

It's unbelievable that there could be two such contrasting explanations.

00:11:51:03 - 00:12:19:03

Rob Rose:
Either they genuinely didn't know what was going on, or they were misleading the court.

To have Appeal Court judges saying this is deeply alarming is extraordinary.

Even the minority judgment in the ruling reflected a way of looking at the matter that was deeply troubling for people who are effectively the final authority on competition matters.

00:12:19:05 - 00:12:28:05

Rob Rose:
So I think it illustrates the need for new capacity, certainly on this panel and more broadly within the authorities.

00:12:28:07 - 00:12:50:22

Alec Hogg:
That's very diplomatic - "new capacity".

I've been looking at the Johannesburg budgets that are now publicly available, and those people haven't got a clue what's going on. They have a maintenance shortfall of R220 billion and have budgeted only R8 billion.

I know you and your team have done a lot of work on this.

00:12:51:00 - 00:13:14:01

Alec Hogg:
It's like people who haven't got a clue have been promoted into these positions, are being paid very handsomely, and are causing chaos as they go along.

Reading through your story, I got the feeling that maybe some of the members - if not all of the members - of the Competition Tribunal panel are in the same position.

00:13:14:03 - 00:13:36:03

Rob Rose:
Yes. People have left the panel.

In one case, they effectively allowed the equivalent of an administrative clerk to drop the ruling and then blamed that person when things didn't happen.

There is a real lack of responsibility and accountability in this case.

And, as you say, this isn't an isolated incident.

00:13:36:03 - 00:13:55:22

Rob Rose:
Look at the case involving the banks.

The Competition Commission tried to investigate banks for allegedly rigging the rand and related conduct.

This wasn't a case initiated solely by the Competition Commission. It was based on investigations in the United States involving Barclays and several other large banks, and much of the evidence came from overseas.

Yet that case is still ongoing.

00:13:55:22 - 00:14:16:01

Rob Rose:
The Competition Commission tried to throw the book at virtually every bank operating in the country and, frankly, made a mess of it.

Some of the banks were later excluded, and findings suggested that certain institutions should never have been charged in the first place.

That demonstrates a complete disconnect from what the authorities are actually supposed to be doing.

00:14:16:01 - 00:14:35:22

Rob Rose:
This is an economic role intended to improve the economy, not simply hold things up.

The attempt to charge all the banks in that case and then fail to resolve it after many years is just as alarming as the Cape Gate matter.

There are simply too many examples where the system is not working.

00:14:36:00 - 00:14:41:22

Alec Hogg:
There are many things wrong with the South African economy and with its structure.

00:14:41:22 - 00:14:55:12

Alec Hogg:
But if you could change one thing with a magic wand - you mentioned capacity - would that be it?

Would it be putting the right people into these very powerful positions?

00:14:55:14 - 00:15:17:04

Rob Rose:
I absolutely think talent is critical, especially in municipalities and many of these institutions.

But more broadly, I think South Africans are a very polite people. We don't like confronting others.

Our inability to fire people when they get things wrong is a scourge.

00:15:17:04 - 00:15:37:18

Rob Rose:
You see it everywhere, from the smallest company all the way to Parliament and President Ramaphosa's Cabinet.

People get shuffled aside and somebody else is appointed to the same job.

The City of Johannesburg is a perfect example. The proposal is to hire more people - around 40,000 - to fix problems that 34,000 people couldn't fix.

The solution isn't to hire more people.

00:15:37:20 - 00:15:53:21

Rob Rose:
The solution is to get better results from the people you already have.

An appreciation of the need to confront these issues would make a huge difference in municipalities across the country.

The wrong people should simply be fired.

And the traditional response is that it's very difficult to fire someone in South Africa.

00:15:53:23 - 00:16:05:09

Rob Rose:
I don't think that's true.

If there is merit, you can absolutely fire people.

The problem is that many managers are utterly gutless and don't want to have that fight.

That's what gets us into this trouble.

00:16:05:11 - 00:16:21:18

Alec Hogg:
Let's go back to the Competition Tribunal and your takeaways from this very extended case.

Apart from the fact that lawyers have probably been very well fed over a lengthy period of time, what's your main takeaway?

00:16:23:00 - 00:16:39:19

Rob Rose:
You mentioned David Lewis, and that era was one in which I spent a lot of time at the Tribunal and the Competition Commission.

There were some very important cases, such as the bread-fixing case.

There were many important matters that needed to be heard.

But it was a different time at the Tribunal.

00:16:39:19 - 00:16:57:08

Rob Rose:
You tended to trust the rulings.

You believed there was validity to them.

Today, that sense that the authority is functioning in a solid manner and that its decisions will withstand scrutiny in the High Court or Constitutional Court simply isn't there anymore.

00:16:57:08 - 00:17:22:12

Rob Rose:
I think the lack of trust in this institution is adding to the cloud hanging over our corporate sector.

People already have many reasons not to invest in South Africa.

You don't want the Competition Commission unnecessarily holding things up to become another one.

We had a bizarre case a few years ago where black empowerment shareholders in Burger King wanted to sell their shareholding.

00:17:22:13 - 00:17:45:02

Rob Rose:
And they weren't allowed to.

The authorities effectively said, "You can't sell the shares."

Eventually that decision was overturned.

But imagine being a black empowerment shareholder and being told you can't sell your shares.

What does that achieve?

It's simply another blockage in the economy.

00:17:45:02 - 00:17:50:23

Rob Rose:
For me, the takeaway is that the competition authorities, as currently constituted, don't appreciate the broader social context or the need for genuine economic growth and job creation.

That's the overriding imperative.

And I don't feel the people there at the moment are connected to that imperative.

00:18:44:06 - 00:18:47:17

Alec Hogg:
Rob Rose is the Editor-in-Chief of the Financial Mail Group.

00:18:47:21 - 00:18:49:20

Alec Hogg:
I'm Alec Hogg for BizNews.

Rob Rose: The Competition Tribunal is holding South Africa back