Director Liability Under Competition Law in South Africa

Many directors still treat competition law exposure as a corporate problem. That is a dangerous assumption.

Under South African competition law, cartel conduct is not only a risk for the business. In the right circumstances, it can also expose directors and persons with management authority to personal criminal liability. The Competition Act prohibits cartel conduct under section 4(1)(b), and section 73A creates an offence for directors or managers who cause the firm to engage in cartel conduct or knowingly acquiesce in it. A conviction can attract a fine of up to R500,000, imprisonment for up to 10 years, or both.

For directors, this means competition law is no longer a compliance issue that can be left to commercial teams, sales staff or procurement departments. A pricing discussion, tender arrangement or market-sharing understanding can become a personal crisis very quickly.

Barter McKellar advises businesses, boards and senior executives on cartel risk, internal investigations, dawn raid response and urgent competition law strategy.

Can Directors Be Personally Liable?

Yes. In South Africa, directors and certain managers can face personal criminal exposure for hard-core cartel conduct.

The Competition Act targets a person who, while being a director of a firm or holding management authority within it, either caused the firm to engage in a prohibited practice under section 4(1)(b) or knowingly acquiesced in that conduct. Section 4(1)(b) covers cartel behaviour such as price fixing, market allocation and collusive tendering.

This is a major shift in risk. It means the company may face administrative penalties, while individuals behind the conduct may face criminal consequences.

What Conduct Creates Personal Exposure?

Director liability does not arise for every competition law issue. The clearest personal exposure is linked to cartel conduct prohibited by section 4(1)(b). This includes:

• Price fixing with competitors

• Bid rigging or collusive tendering

• Market allocation between competitors

The Competition Commission describes a cartel as an agreement or concerted practice between competitors to fix prices or trading conditions, divide markets or engage in collusive tendering.

A director or manager may be exposed where he or she:

• Instructed or approved the conduct

• Participated in competitor discussions

• Allowed the conduct to continue despite actual knowledge

• Turned a blind eye to arrangements that were obviously unlawful

The danger is that exposure does not only arise from formal board resolutions. Informal conversations, WhatsApp messages, trade association meetings and procurement discussions can become evidence.

What Does “Knowingly Acquiesced” Mean?

This is one of the most dangerous features of section 73A.

The law is not limited to the person who actively designed the cartel. It also reaches a director or manager who knowingly acquiesced in the firm engaging in the prohibited conduct. In practical terms, that means actual knowledge combined with passive acceptance can still create personal exposure.

That is why silence is risky. A director who becomes aware of collusive conduct and fails to stop it may later struggle to argue that the matter was someone else’s problem.

Penalties Directors Face

The penalties are serious and should not be understated.

A person convicted of a section 73A offence is liable to a fine not exceeding R500,000, imprisonment for a period not exceeding 10 years or both. Separately, the firm itself may face administrative penalties of up to 10% of annual turnover in the Republic and exports from the Republic.

This creates dual exposure:

• The company may face a major financial penalty

• The director or manager may face personal criminal prosecution

That combination can place enormous pressure on boards, executive teams and shareholders.

This Is Not Limited to Executive Directors

A common mistake is to assume that only CEOs or managing directors are at risk.

Section 73A applies not only to directors, but also to persons engaged or purporting to be engaged in a position having management authority within the firm. That wording is deliberately broad. It can extend beyond the board to senior commercial, procurement, sales or divisional leaders depending on the facts.

Businesses that allow competition-sensitive decisions to be taken informally are especially exposed. Titles will not always protect the individual if the evidence shows real managerial authority.

How Director Liability Usually Arises

In practice, personal exposure often starts long before any criminal prosecution. It usually begins with one of the following:

• A whistleblower complaint

• A leniency application by another cartel participant

• A dawn raid by the Competition Commission

• A review of suspicious tender patterns

• Internal emails or meeting records uncovered during an investigation

The Commission actively investigates cartel complaints and administers its Corporate Leniency Policy, which allows the first cartel member to approach the Commission to seek immunity from prosecution and fines for the firm. That creates a race dynamic: one participant may try to save itself by exposing everyone else.

For directors, the practical consequence is stark. By the time the business realises there is a problem, another participant may already have gone to the Commission.

Does Corporate Leniency Protect Directors?

Not automatically.

The Commission’s Corporate Leniency Policy is aimed at firms and offers the possibility of immunity from prosecution and fines for the first cartel member that comes forward. But the policy is primarily a corporate enforcement tool. Directors should not assume that a company-level leniency strategy automatically resolves their own personal exposure. That is one of the most dangerous misunderstandings in this area. A board may believe it is managing regulatory risk while individual directors or managers remain exposed.

Because the facts, timing and strategy matter enormously, this is an area where early legal advice is critical.

Common High-Risk Scenarios for Directors

The following situations repeatedly create problems:

• Competitor discussions about pricing, discounts or margins

• Tender-related communications before bids are submitted

• Agreements not to pursue certain customers or regions

• Trade association meetings where commercially sensitive information is exchanged

• Internal approval of sales strategies built on competitor alignment

• Receiving suspicious information from staff and doing nothing about it

In many cases, the real damage is done after the first red flag appears. Once a director is aware of the risk, failure to act can become part of the case.

What Directors Should Do Immediately if There Is a Risk

If there is any suggestion of cartel conduct, delay is dangerous.

Immediate steps usually include:

• Obtain legal advice before launching internal discussions

• Preserve documents and electronic communications

• Stop any ongoing competitor contact that may be problematic

• Ringfence who is informed internally

• Assess whether leniency or another strategic response is available

• Prepare for possible Commission engagement or a dawn raid

Handled badly, an internal response can worsen the position. Staff may delete documents, create inconsistent explanations or alert third parties. Handled properly, early intervention can preserve legal options and reduce damage.

Why Boards Should Not Wait for the Commission

By the time the Competition Commission contacts the business, the matter is already serious.

The Commission’s cartels division investigates cartel complaints, prosecutes cartel cases and administers the leniency policy. Once an investigation is under way, the business may face document demands, interviews, dawn raid risk and significant reputational fallout.

For directors, the problem is more personal. Waiting for a formal complaint can mean:

• Lost opportunity to contain the issue early

• Reduced control over evidence and narrative

• Increased risk that another participant seeks leniency first

• Greater personal exposure for those who knew and failed to act

How Barter McKellar Can Assist

Barter McKellar advises on director and management exposure arising from competition law risk, including:

• Urgent cartel risk assessments

• Internal investigations

• Dawn raid response

• Competition Commission engagement

• Leniency strategy

• Board-level compliance and remediation steps

Our approach is practical, discreet and commercially focused. Where there is personal exposure, speed and strategy matter.

Take Action Before Personal Exposure Becomes a Criminal Problem

Directors cannot assume that competition law liability stops at the company.

In South Africa, cartel conduct can expose directors and managers personally. Once documents are seized, leniency is sought by another participant or the Commission begins asking questions, room to manoeuvre narrows very quickly.

If there is any concern about price discussions, tender coordination, market-sharing arrangements or suspicious competitor contact, legal advice should be obtained immediately.

Speak to a competition law specialist at Barter McKellar. Request confidential advice before the risk escalates.