The Return of the Advisory Opinion

After a long period of uncertainty relating to advisory opinions by the Competition Commission, a new regulation has been published by the Department of Trade and Industry which reintroduces non-binding Advisory Opinions.

An advisory opinion is a written opinion by the Commission that provides the Commission’s interpretation of the Competition Act, 89 of 1998, applied to a certain set of facts or agreements. An advisory opinion intends to assist parties to interpret the Competition Act, and to provide stakeholders with a better understanding of compliance requirements. The Commission’s advisory opinions, however, are non-binding and therefore do not offer legal protection against enforcement action if the conduct is later found to contravene the Competition Act.

Although advisory opinions can deal with a variety of aspects, they typically focus on transactions, agreements or practices. For example, the Commission could be approached with the terms of an agreement and be asked to advise whether it constitutes a notifiable merger or not. Stakeholders may also approach the Commission regarding whether a certain practice contravenes the Competition Act. Parties, however, should be mindful that they do not enjoy the same potential protections as they would under the Commission’s whistleblowing policy (the Corporate Leniency Policy). It is therefore recommended that parties seek legal advice prior to making disclosures to the Commission regarding potential contraventions of the Competition Act.

Previously, the cost of an advisory opinion was R2 500. The fee to now request an advisory opinion has increased significantly. The cost of requesting an advisory opinion is R24 000 for medium enterprises and R60 000 for other firms. The fee may be waived (at the Commission’s discretion) for certain entities, such as constitutional institutions, municipalities, trade unions, political parties etc.

Whilst advisory opinions can be of assistance to parties, the fact that they are non-binding means that they provide only limited comfort, especially in relation to complicated questions of law. The risk of non-compliance with the prescripts of the Competition Act (which attracts significant administrative penalties and potential criminal liability) will remain with the parties, notwithstanding a positive advisory opinion. Parties are therefore encouraged to seek legal advice to pro-actively ensure compliance with the Competition Act.