Standing Committee on Finance: Comments on

Transcript:Standing Committee on Finance: Comments on:
Standing Committee on Finance: Comments on Financial Sector Laws Amendment Bill [B15 – 2020] Odie Strydom 18 May 2021 Introduction Thank you for the opportunity Competition law and policy economist with 20 years experience (M Phil in Futures Studies, B Comm Honours Economics) Betweenity was established in 2020 and specialises in African competition law and policy foresight Betweenity controls the Betweenity App – an Africa competition law and policy news App providing users with daily updates in the field To accelerate coherent, collaborative and inclusive African economic growth across the Continent Introduces proactive (as opposed to reactive) regulation 2 Focus of comments: Section 19 of Bill dealing with amendment to section 18 of the Competition Act, 1998 (Act) 3 Section 18 of Act deals with instances where the competition authorities’ right to review mergers are “ousted”: by the Minister of Finance, where merger approval is required in terms of the: Banks Act; or Financial Markets Act. now also: by the Reserve Bank Governor, where the merger takes place in terms of section 166S of the Financial Sector Regulation Act, 2017 4 Proposal: To provide competition authorities with the opportunity to review the merger within six months, and to impose conditions (if required) 5 Proposal – to add wording to the effect: “Within six months after a merger has been implemented in accordance with section 166S of the Financial Sector Regulation Act, 2017, the Competition Commission shall commence with an investigation into the merger in accordance with section 12A of the Competition Act. Any conditions shall be imposed in consultation with the Governor of the Reserve Bank”. 6 Arguments 7 Brand value and client base may remain fairly well in tact Much effort is being expended to untie massive knots in African financial markets Financial markets are subject to digital disruption Evidence of banks having exploited consumer-centric regulation under Covid-19 Critical public interest issues may arise, which can be addressed via conditions In line with current approaches 8 1. Brand value and client base may remain fairly well in tact: Especially: if the regulatory process is well managed (which is the objective of the Bill); and if the critical mass of competitor is added to existing capacity So, the merger may indeed significantly lessen competition and reduce consumer welfare 9 2. Much effort is being expended to untie massive knots in African financial markets Financial markets are complicated They are a