Cartel criminalisation in South Africa: assessment of cartels in the context of construction industry.

Abstract

The world's economies suffer greatly from cartels. Excessive cartel activity can have serious repercussions, especially in developing nations like South Africa, where resources are scarce. However, the consequences of cartels, such as deadweight losses, the redistribution of income from customers to cartel operators, and a resistance to change toward innovation, can significantly harm economies even in the industrialised world. Therefore, it should be a priority for every nation to prevent the formation of cartels and identify and punish those existing ones. Given that criminal law is the determining factor in a constitutional state, the inclusion of criminal law in competition law requires some rationale. According to the utilitarian view, criminal law in competition law is not intended to punish the perpetrator retroactively but rather to discourage people from engaging in cartel behaviour. Although administrative fines of up to 10 per cent of the company's annual revenue appear to be significant, the level is too low to effectively dissuade formation of cartels by solely enforcing these fines against businesses.