Letter: SA public policy gone mad
The Competition Commission's decision to reject R500m of investment into SA is public policy gone mad. Grand Parade, a majority black-owned company, has taken a decision to sell one of its assets and been overruled by bureaucrats, who completely miss the point of the law they are meant to promote.
The commission ruled in terms of section 12A (3)(e) of the Competition Act, which states that on public interest grounds they must consider "the promotion of a greater spread of ownership, in particular to increase the levels of ownership by historically disadvantaged persons..." How exactly does this decision promote the spread of greater black ownership when it denies the right of a black company to sell its own assets and realise the value they have created?
Any sane reading of this act will recognise the clause is there to ensure minority black shareholders are not prejudiced by mergers or acquisitions, but this is not the case with Grand Parade, where 68% of the shareholders are deemed historically disadvantaged.
Where does this leave black shareholders in modern corporate SA? Are we to see the issue of "W" shares, owned by whites who are allowed to buy and sell to whom they like, while "B" shares come with restrictions on sales lest they reduce black ownership in a particular sector?
Warren Buffett is alleged to have said that "[o]ur flexibility in respect to capital allocation has accounted for much of our progress to date". Grand Parade shareholders would no doubt agree. Let's hope the Competition Tribunal bears this in mind and reverses the commission's decision.
A progressive SA must ensure historically disadvantaged shareholders are not hamstrung with restrictions that are not applied to their compatriots. To allow this decision to stand creates a second-class corporate citizen.
This letter was first published on BusinessDay on 6 June 2021.
Neil Emerick is the Technical Director at Nightsbridge.
Publish date: 15 June 2021
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The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.