|
|
|
|
|
|
| ||||
Catching on slowly to a growing ide... Selling the message of buying into priva... Public sector shies away from rivalry at... State finds its infrastructure by anothe... Battling to uphold the profit principl... |
Public sector shies away from rivalry at any priceONE of the results of privatisation is that it removes a company from the protection of the public sector into the competitive realm of the private sector. It is, therefore, not surprising that the government seldom cites greater competition as one of the aims of its privatisation programme. Pierre Brooks, chairman of the Competition Board, says that, to date, the board has had limited feedback from the Department of Public Enterprises about the role of competition in the privatisation process. The need to entrench and foster competition was a major contributor to the success of Britain's privatisation programme in the 80s. Brooks says it is vital that the impact on competitiveness is considered when selling off a parastatal. "We do not want to turn a public sector monopoly into one owned by the private sector. At least in the public sector the government still has a measure of influence which it loses once the company is in the private realm." He adds that the promotion of competition could, for example, force a company to sell off various operating divisions instead of putting itself on to the block as a going concern. While Brooks stresses that the form of sale will depend on the company involved - "Denel, for example, is easily broken up, while SAA is not" - splitting up a dominant public sector company is advantageous for competition, since it generally rules out vertical integration within one industry sector. Furthermore, says Brooks, a corporate shake-up would allow qualified black firms to establish smaller, but more feasible, joint ventures instead of simply installing them at board level as directors. The board is currently involved in three investigations concerning possible competition policy infringements by public sector corporations. The best-known case has been Telkom's attempt to nationalise the Internet. Brooks says there is nothing the board can do about Telkom's monopoly in the telecommunications sector. "That was a political decision," Brooks adds. "But we can intervene when that monopoly abuses its powers in an anti-competitive manner." Telkom is attempting to define the Internet as a basic service, thus including it in its five-year period of exclusivity, during which it does not have to face competition. During this period independent Internet service providers (ISPs) would have to rent lines from Telkom's Internet arm, SAIX, instead of a more direct and cheaper link. The Competition Board initially intervened after protests from the ISPs and asked Telkom to provide it with detailed accounts on SAIX in order to establish if it is unfairly cross-subsidised by its holding company. When Telkom subsequently snubbed the board, it sought the assistance of the SA Telecommunications Regulatory Authority (Satra). which has direct jurisdiction over the Telkom license. Indications are that Satra will rule against Telkom. The board is also debating the future of the SA Forestry Company (Safcol). In one of its widest and most lengthy investigations to date it has been deliberating for almost one and a half years on two crucial aspects of Safcol's operation - its status as the sole supplier of timber to most of the country's independent sawmillers and its expanding role as a sawmiller itself, thus competing with its customers. Brooks says a ruling on Safcol is imminent and could severely impact on the privatisation of the forestry company. Sources at Safcol says plans for its privatisation are proceeding regardless. It is understood that both management and labour at Safcol envisage an unchanged company when it is transferred to the private sector, with considerable value added to the downstream (sawmilling) part of the group. This proposal horrifies independent sawmillers, who for years have benefited from Safcol's public sector status in that the company supplied them with logs on favourable terms, with prices out of kilter in global terms. The board could rule that Safcol has to ring-fence its forestry and its sawmilling operations to avoid cross-subsidisation - similar to the ruling handed down to Telkom's Internet arm. On the other hand, Brooks could rule that the two arms have to be completely separated, with the forests owned by Safcol sold off as plantations to independent sawmillers. As regards Safcol's effective log supply monopoly Brooks said he would have to investigate whether a privatised Safcol would not offer meaningful opposition to the two private sector giants in the field - Sappi and Mondi. Finally, the Department of Transport has asked for advice on the current privatisation of Sun Air. With the recent withdrawal of Virgin Atlantic from the bidding race, a consortium led by Comair has emerged as the firm favourite to win control of 100% of Sun Air. If the two were to merge it would group South Africa's second and third largest airlines. Brooks says the Competition Board would favour as much competition as possible, but was unlikely to veto the deal. "At least we have two smaller airlines grouping together to compete with SA Airways. It is not ideal, but it appears to promote competition nevertheless," he says.
|
