Draft Guidelines on collaboration between competitors on localisation initiatives

03 September 2021
South African Accounting Academy

Although non-binding, the Guidelines aim to provide guidance to industry stakeholders (purchasers and/or suppliers) and Government on how to collaborate in identifying opportunities for localisation and implementing localisation initiatives in a manner that would not fall foul of the rules of engagement for competitors in terms of the Competition Act 89 of 1998, as amended.

Localisation aims to achieve greater levels of local procurement or production. Improved localisation can be a catalyst for economic growth by, for example, increasing economies of scale for local producers, enhancing local investment and boosting competitiveness in export markets over the long term. The need for greater localisation has been compounded by the COVID-19 pandemic and identified as one of the key policy objectives of Government’s Economic Reconstruction and Recovery Plan (“ERRP”).

Examples of localisation initiatives cited in the Guidelines include the Department of Trade, Industry and Competition’s Master Plan processes or other industry initiatives which aim to reinvigorate an industry or capitalise on opportunities to further local procurement.

In recognition that competitor collaboration may be required to help advance localisation initiatives, the Guidelines identify 4 types of likely collaboration and provide corresponding competition law compliance guidance:

The identification of opportunities for localisation initiatives at industry level
The process of setting industry local procurement targets
The process of setting individual firm local procurement targets
Demand forecasting

Collective discussions on localisation initiatives involving competitors must be minuted and notified to the Commission within a reasonable time. The Commission may request access to the recording or minutes of these meetings at any time.

Importantly, and in line with the Commission’s policy, where practical, the localisation initiatives must be inclusive of firms in the affected industry, particularly small-, micro- and medium-sized enterprises and firms owned by historically disadvantaged persons. Compliance with the Guidelines will help guard against inadvertent contraventions of the Competition Act.

The closing date for the submission of written representations on the Guidelines is 27 September 2021.

Click here to download the Draft Guideline:

https://www.gov.za/sites/default/files/gcis_document/202108/44981gon724.pdf

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