Competition Commission Plans BEE Requirements for Fresh Produce Markets

The Competition Commission is on its own initiative creating BEE (Black Economic Empowerment) obligations for fresh produce market agents, farmers, and buyers.

Sakeliga launched an investigation into this matter this week, with extensive PAIA (Promotion of Access to Information Act) requests to the Competition Commission, the Minister of Agriculture, and the Agricultural Produce Agents Council (APAC).

According to draft orders of the Fresh Produce Market Investigation (FPMI), in Sakeliga’s possession, the Commission wants to compel market agents to establish and train black-owned competitors at their own expense. This is despite widespread black shareholding in various market agencies. An example of such a draft Remedial Order can be viewed here.

The draft orders stipulate that these agreements must be entered into for six years and implemented within 18 months. Market agents must additionally report under oath annually and be prepared to submit any further information requested by the Commission.

The Fresh Produce Market Investigation was launched in March 2023 under Section 43B(1)(a) of the Competition Act by the Competition Commission and was supposed to deliver its report by October 1st at the latest. After an extension by the Minister of Trade, Industry and Competition, Parks Tau, it is now supposed to be completed by January 15th.

Although the commission of inquiry grants itself ample time and extensions, regardless of the cost, it requires the opposite from market agents. Documents in our possession show that market agents were given only four working days in November to respond to the draft orders.

The Commission’s draft proposals also include several recommendations to the Agricultural Produce Agents Council (APAC), which the Council has no legal powers to carry out. The document is viewable here.

These include:

1. Collaborating with the AgriBEE Council and the Department of Agriculture to ensure black market agents trade certain proportions of the market for potatoes, onions, tomatoes, apples, bananas, and other heavily traded crops.

2. Creating a development program for black market agencies, giving preference to companies that are solely black-owned and thus have no cooperation at shareholder level with companies with mixed ownership or with individual white persons.

3. Approving, monitoring, and evaluating existing market agencies’ mandatory cooperation projects with black-owned market agencies.

4. Continuously reporting to the Commission for a period of six years.

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The Commission’s prescriptions to market agents and APAC essentially amount to making the implementation of political policy the responsibility of private businesses. It is also an example of the third wave of BEE, whereby politically aligned officials try to make participation in BEE mandatory for participation in the economy through unlawful regulation.

The Competition Commission’s investigation and draft orders testify to an agenda against market agents, especially since the Commission remains completely silent about the decay of fresh produce markets in state hands. Consumers and the entire value chain have suffered for years under the hopeless management and maintenance of fresh produce markets in Johannesburg, Pretoria, and elsewhere, where municipalities control them, and state agencies are supposed to provide quality control services but fail.

Ironically, the decay of state-controlled fresh produce markets is one of the major reasons why it is, in practice, difficult to become a fresh produce market agent, regardless of race. Although anyone is free to start such a business, market agents who want to achieve scale are nowadays forced to place their own cold rooms, forklifts, generators, and other capital-intensive facilities and equipment on their floor space at the markets.

For example, the Johannesburg Fresh Produce Market admitted to Sakeliga earlier this year that a third of their cold rooms don’t work, and we believe that at one point, it was closer to 60%.

Properly functioning markets could have borne the bulk of infrastructure overheads, but due to state failure, it is now necessary for market agents to establish their own infrastructure. To now additionally expect the agents to use the profits they make in spite of this state failure to finance failed political projects is beyond the pale.

Other draft recommendations to APAC, not directly related to race, are also intrusive. The proposals, which will severely hamper market agents’, farmers’, and buyers’ innovation and cooperation, include:

1. The establishment of maximum commission fees to farmers and agents regarding what they may contract.

2. A prohibition on market agents from using or offering:

   • a. Purchase cards
   • b. Credit extension to producers or buyers
   • c. All reservations of products, such as when a buyer calls a market agent and asks to set aside a certain quantity while arrangements are being made
   • d. After-hours trading

Although farmers and buyers are not yet directly obligated by the Competition Commission in the documents currently in Sakeliga’s possession, they are thoroughly affected.

The proposals that APAC ensures some minimum level of market share in crop trading for black market agents undermine farmers’ discretion to send as much product as they want to market agents of their choice and buyers’ discretion about where they buy. The attempt by the state to limit and control agent commissions, as well as prohibition of market agents’ purchase cards, credit extension, reservations of purchases, and after-hours trading is equally restrictive for farmers and buyers.

Sakeliga’s investigation into the Competition Commission’s actions and its liaison with the AgriBEE Council (which falls under the Department of Agriculture) and APAC should shed further light on the Commission’s activities and plans with BEE and other interference in the fresh produce value chain during 2025. In addition to the extensive PAIA requests to these state entities, we are also collecting information from businesses and other stakeholders in the value chain.

Persons or organisations that possess relevant information are welcome to contact us.