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Wines of South Africa
Trade and Investment

Competition Law

The new Competition Act, 1998, which came into effect on 1 September 1999, fundamentally reformed South African competition law and has significant implications for conducting business in South Africa. The Act enables competition authorities to take into account both competitiveness and public interest issues, which include, inter alia, Black Economic Empowerment (BEE). The Act also substantially strengthens the powers of the competition authorities on similar lines to EU, Canadian and USA models by granting them, inter alia, powers of search and seizure.

The Act provides for:

• The establishment of a Competition Commission, Competition Tribunal and Competition Appeal Court. These bodies are independent of the government although, subject to certain requirements in the Act, the Commissioner is appointed by the Minister of Trade and Industry and the members of the Tribunal and Court are appointed by the President;
• Various prohibitions on anti-competitive conduct, restrictive practices (for example resale price maintenance, price fixing, predatory pricing and collusive tendering) and ‘abuses’ by ‘dominant’ firms (generally defined as firms with at least a 35% market share or, alternatively, market power);
• A notification and prior approval procedure for certain mergers and acquisitions (please refer to Part Five of the Act). A notifiable merger and acquisition may not be implemented without such approval; and Competition authorities to have jurisdiction outside South Africa with regard to economic activity in the country or with an effect on the country.

The significant penalties for contravention of the Act include:
• Divestiture of assets;
• Declaring agreements to be void in whole or in part;
• Ordering a party to supply goods and services to another party; and Fines of up to 10% of a firm’s annual turnover in and exports from South Africa.

The Competition Act also applies to agreements and arrangements involving intellectual property. This is a significant deviation from previous competition legislation, which specifically exempted intellectual property from the ambit of South African competition law.

Environmental Law

Environmental legislation is receiving increasing attention in South Africa. Since 1994, various pieces of legislation have been introduced to protect the environment and promote its sustainable use, including:
• The National Environment Management Act, No. 107 of 1998, which provides a legal framework for environmental developments;
• Obligatory environmental impact assessments (EIAs) at national and provincial level. At least 100 applications are processed each year. The Department of Environmental Affairs and Tourism is in the process of revising the regulation of EIAs to, inter alia, make them more streamlined and provide for more appropriate public participation;
• The National Environmental Management: Biodiversity Act, No. 10 of 2004, which provides a regulatory framework to protect South Africa’s valuable species, ecosystems and biological wealth; and The World Heritage Convention Act, No. 49 of 1999, which covers the management, protection and sustainability of the country’s world heritage sites.

Ms. TSD Nxumalo
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