Comment on CCSA Guidelines on collaboration

Comment on CCSA Guidelines on collaboration

The Competitions Commission of South Africa invited comments on collaboration between competitors on localisation initiatives. The South African Manufacturing Cluster submitted a comprehensive comment.

As published for comment by the Competitions Commission, the guidance document is, in our view, an excellent enabler for the development and growth efforts needed to revitalise the manufacturing sector.

Guidelines for collaboration – Comments

The Guideline document, as published for comment by the Competitions Commission, is

in our opinion, an excellent enabler for the development and growth efforts that will be

needed to support a revival in the manufacturing sector.

  1. By our understanding, the Competitions Act is about preventing parties from colluding to the exclusion and detriment of others. The guideline will help us collaborate with like-minded businesses and clusters to facilitate a more inclusive, growth-focused society.
  2. The Guideline provides an answer to the strategic question: “How does the industry go about identifying and implementing localisation initiatives in a manner that will not raise competition concerns?” It also makes it more feasible for the clustering of firms to build out the value chain horizontally (such as collective sourcing) instead of and in preference to traditional monopolistic, vertically integrated strongholds, controlling the traditional value chain.
  3. The list of defined definitions in the guideline refers to an independent facilitator as “not having direct or indirect commercial links or otherwise to a concerned firm”. This definition may be problematic for clusters to apply, should they want to facilitate localisation activities, which is often the main reason they exist.
  4. Assuming that a cluster charges a membership fee, they will (by definition) have a commercial link to the member firm concerned.
  5. Even if there is no fee involved, they would know the key players in the industry(s) they serve and would fail the “commercial or otherwise” test.

          iii.           Facilitation is expensive and would need to be funded. This joint funding of an independent facilitator can be equivalent to the same obligation as members would have to a cluster facilitator.

Regarding the framework for collaboration:

  1. Identification of opportunities for localisation (Para 6.2 – 6.6).
  2. On the understanding that there is a further discussion regarding “independent facilitator”, we agree with the balance of paragraphs on this topic in the guideline.

  1. The process for setting industry local procurement targets (Para. 6.7 – 6.11)
  2. On the understanding that there is a further discussion regarding “independent facilitator”, we agree with the balance of paragraphs on this topic in the guideline
  3. We also thank you for the clarification that the participation of firms in such discussions is not a contravention.
  4. The process for setting individual firm local procurement targets (Para 6.12 – 6.15).
  5. Para 6.14: To be edited, as the intended meaning is unclear: “…individual localisation targets, facilitated by the facilitator, ‘may’ not amount to a contravention…”.
  6. On the understanding that there is a further discussion regarding  “independent facilitator”, we agree with the balance of paragraphs on this topic in the guideline.
  7. Demand forecasting (Para 6.16 – 6.17)
  8. On the understanding that there is a further discussion regarding independent facilitator”, we agree with the balance of paragraphs on this topic in the guideline.

The guide is otherwise clear and will be an effective tool for industry and government to use in the future. In a constantly evolving environment, it is to be expected that interpretations and nuances will be tested, and updates may be required from time to time.

Members interested in participating in Manufacturing Cluster are welcome to contact Anna-Marth Ott at ceo@middelburginfo.com for more information.