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- Publisher
- Oxford University Press
- Copyright
- © The Author(s) 2018. Published by Oxford University Press. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com
- ISSN
- 2050-0688
- eISSN
- 2050-0696
- DOI
- 10.1093/jaenfo/jny001
- Publisher site
- See Article on Publisher Site
Abstract
Abstract This article reports on a research study undertaken to explore the organizational practices and processes that make possible and enable prioritization in the Competition Commission South Africa. Priority-setting, resource marshalling and evaluative organizational processes were found to enable prioritization. Four organizational practices associated with prioritization were identified, each engendering specific organizational values. The practice of managing cases from ‘cradle-to-grave’ is an approach that encourages ownership of priority cases. The practice of constituting inter-divisional teams promotes joint responsibility and shared accountability among team members. The mid-term review provides an opportunity to calibrate organizational alignment to priorities in a structured and periodic fashion. The practice of encoding priorities in the business plan encourages communication. Furthermore, the analysis highlights how sector expertise, priority setting and project management capabilities associated with prioritization enable the organization to identify and exploit opportunities by re-configuring its resource base. I. INTRODUCTION Of the nine operational competition authorities in the Southern African Development Community (SADC), the Competition Commission South Africa (CCSA) is the only authority that has adopted and implemented a formal prioritization framework.1 This article reports on a research study undertaken to explore the organizational processes and practices that enable prioritization in the CCSA. Shedding light on the practical implementation of prioritization is intended to offer guidance to other authorities considering the adoption of prioritization as a strategic approach to competition enforcement. This study does not focus on the enforcement outcomes achieved as a result of prioritization. In other words, it does not provide an impact assessment of prioritization on the enforcement record of the CCSA. Rather, the research is exploratory and aims to map the prioritization processes, practices and emerging dynamic capabilities to add to our understanding of how prioritization works in practice. Competition authorities are encouraged to prioritize their enforcement activities in view of limited resources with which to pursue their mandates. Multi-lateral agencies and international organisations such as UNCTAD2 and the International Competition Network (ICN)3 have long been proponents of prioritization as a mechanism to allocate resources to enforcement activities likely to make the greatest impact. However, knowledge of the practice of implementing prioritization is limited, notwithstanding the efforts made by such organization to promote its adoption. This article aims to shed light on the practices and processes that enable prioritization in the CCSA. It explores dynamic capabilities that emerge as a result of prioritization in the context of competition enforcement. The study draws on theoretical frameworks that emphasize process and practice perspectives in organizational development, rather than traditional mechanistic conceptions of organizations and strategic action. Process and practice perspectives emphasize the dynamics and consequences of strategic action and facilitate a rich description of prioritization based on actors’ own accounts and their actions.4 A process perspective shifts the focus from what determines strategy and performance to how they are determined,5 while a practice perspective emphasizes and focuses on day-to-day activities occurring at the micro-level, which relates to strategic outcomes.6 The study identified three categories of organizational processes as key to enabling prioritization in the CCSA. First, priority-setting processes were identified, incorporating governance, strategic and business planning, and scoping processes. Secondly, resource-marshalling processes channel and direct resources towards enforcement priorities. Thirdly, evaluative processes structure actions that assess priorities, account for progress in their implementation, and make adjustments when required. In the analysis of the four organizational practices identified and associated with prioritization, it was revealed that each promotes specific values. The practice of managing cases from ‘cradle-to-grave’ is an approach that encourages ownership of priority cases. The practice of constituting inter-divisional teams is a specific form of organization that promotes joint responsibility and shared accountability. The mid-term review provides an opportunity to calibrate alignment to enforcement priorities in a structured and periodic fashion. The practice of encoding priorities in the business plan using colour-coded categories of priorities promotes communication. Finally, the study demonstrates how the capabilities built up in the organization’s priority-setting processes and practices enable the identification of opportunities and re-configuration of the CCSA resource base to take advantage of those opportunities. Insights from this study are pertinent to competition authorities considering the adoption of the prioritization approach to their enforcement activities. It commences by briefly noting the methodology used in the research. II. RESEARCH DESIGN An inductive research strategy was adopted with a case study design focused on the CCSA as the site of study.7 This approach supported the collection of ‘open-ended, emerging data with the primary intent of developing themes from the data’.8 By taking this approach, the researcher was able to draw inferences from observations9 encountered in the case study.10 Both primary and secondary data were used to identify prioritization processes and practices, as well as analyse the development of dynamic capabilities associated with the implementation of the prioritization approach in the CCSA. Primary data collection consisted of semi-structured interviews in which an interview schedule defining the lines of enquiry was used to guide the interview process. Eleven interviews were conducted with nine senior managers, a middle manager, and an administrator during September to December 2015. The secondary data consisted of literature on strategic planning and prioritization, and internal documents of the CCSA. NVivo 10, a software programme for analysing unstructured qualitative data, was used to organize, structure, code and analyse the data and information. A three-phased approached was adopted in the data analysis. The first phase focused on analysing the internal documents of the CCSA and documents relevant to prioritization in competition authorities. The review of existing secondary data sources provided the opportunity to develop an initial set of themes and codes pertinent to prioritization practices, processes, and capabilities. The second phase of analysis was focused on the interview data. Each interview was transcribed and the transcripts uploaded to NVivo for coding purposes. In this phase of the analysis, the focus was on identifying what processes and practices enable prioritization, and what capabilities emerge as a result of this approach. The third phase of analysis was focused on how these processes, practices, and capabilities enable prioritization in the organization. III. EVOLUTION OF PRIORITIZATION IN THE CCSA A large focus of the work of international organizations has been on prioritization within competition agencies in the face of constraints related to scarce resources relative to the requirements for effectively achieving the mandates of these agencies. The assumption is that it is necessary to decide what must be achieved over a period of time, establish a plan to do so, and provide a framework for prioritization. Setting strategy and developing a plan to implement it must enable an authority’s limited resources to be focused on high-impact cases and markets with great significance in terms of direct economic impact on the market in question or by virtue of deterrence value or value in setting precedent or policy.11 The focus on strategy and prioritization is in direct response to the recognition that competition authorities all over the world, but especially in developing countries, simply do not have the resources to deal with every complaint brought before them. The CCSA was established in 1999 following the enactment of the Competition Act of 1998. The purpose of the Competition Act is to promote and maintain competition in South Africa by promoting the efficiency, adaptability, and development of the economy; providing consumers with competitive prices and product choices; promoting employment and advancing the social and economic welfare of South Africans; ensuring that small- and medium-sized enterprises have an equitable opportunity to participate in the economy; and promoting a greater spread of ownership, in particular, to increase the ownership stakes of historically disadvantaged persons. The objectives of the Act explicitly promote the participation of previously excluded groups (small and medium enterprises and historically disadvantaged persons) in the economy and address the legacy of concentrated ownership and control.12 The first five to eight years of the CCSA’s work was dominated by merger regulation.13 Since 2006, the CCSA has stepped up its enforcement activities. The intent to improve its enforcement capacity was signalled, with a specific focus on detecting and prosecuting cartels.14 The organization embarked on strategic planning and implementation in 2006, seeking to consolidate its experience into a strategic plan and respond appropriately to developments and changes in the environment.15 The organization has since then progressed to further planning cycles (2006–200916 and 2010–201417), and is currently implementing its third-generation strategy from 2015 to 2020.18 Whilst the first-generation strategy focused on establishing internal organizational systems and methodologies and promoting an enabling climate and culture, subsequent strategies have been more outward oriented with a key focus being the authority’s impact on the economy. The third-generation strategy confirms this outward orientation by seeking to regulate competition in a manner that contributes to a growing and inclusive economy in line with the South Africa’s national development plan, Vision 2030.19 A consistent feature of the strategic plans of the CCSA over the past decade has been the adoption and implementation of a prioritization strategy to its work. According to the Commissioner, ‘[t]he challenges are so enormous and the resources so limited that you have to constantly prioritise. In the past ten years or so, we have really institutionalised strategic planning, prioritisation of sectors, and so on’.20 Prioritization refers to ‘a process of deciding what type of activities, enforcement actions, advocacy initiatives, or in general competition policy measures a competition authority might pursue in a given period of time’.21 Prioritization is predicated on competition authorities being able to make choices about what they regard as strategically important or not. The ability to make these choices assumes that competition agencies have discretion to do so. This was a concern shared by CCSA staff at the time when discussions on prioritization followed the strategic planning process in 2006, as noted by a senior manager: There was some debate around…prosecutorial discretion. Can we do this, you know? Can we say we will focus on this and not do other things you know? We did get to a point where we realised that yes; … there is no conflict between prioritisation and prosecutorial discretion. Then we reconciled there is no internal conflict between prioritisation and prosecutorial discretion. (Senior manager interview). Focusing limited resources on areas in which the CCSA is able to make the greatest impact was a key motivation for adopting prioritization, and was widely shared among the respondents interviewed. According to respondents, the logic of prioritization is one in which setting priorities enables the organization to focus and concentrate its limited resources on sectors and cases in which the eradication of anti-competitive conduct would make a difference in the economy: Ja, prioritisation is once again; it’s a product of trying to balance you know, the limited resources that you have and still make an impact in the market in terms of what you do, because prioritisation says, identify the sectors that are important, not just important for the sake of being important, but important for the economy at large… (Senior manager interview). By 2006, the organization recognized that it was on the verge of a new phase of development influenced by changes such as the competition policy review and appointment of new leadership, and it responded to these changes by formulating and implementing a strategic plan.22 A key outcome of the planning process was an acknowledgement that the CCSA ‘should take a more proactive stance in dealing with sectors that have high levels of concentration and anti-competitive market structures and practices.’23 As such, the organization set the goal of defining and clarifying its prioritization approach and methodology. The evolution of the CCSA prioritization methodology is characterized by an increasing level of sophistication in the approach adopted, criteria used, and the recommended instruments for intervention. Three periods of development and implementation are discernible, that is, 2006 to 2009, 2010 to 2014, and 2015 onward. For the period 2006–2009, the processes for developing the prioritization framework involved undertaking an assessment of the relationship between competition policy and government’s broader national policy objectives; explaining how prioritization of certain sectors or complaints will improve the effectiveness of the organization; reviewing experience of other jurisdictions; and recommending sectors based on identified prioritization criteria. The approach was formalized in the Framework for Prioritising Sectors and Cases.24 The priority sectors were financial services, infrastructure and construction, food, agro-processing and forestry, telecommunications, and intermediate industrial products. These sectors were identified following the application of specific criteria in the framework. The first criterion focuses on competition concerns and considers the degree of concentration (including barriers to entry; price unrelated to cost of demand factors, irregular price differences; low rate of price switching), and the most harmful anti-competitive practices, including hard-core cartels and the abuse of dominance. The second criterion focuses on alignment of the sector to government economic policy and sector priorities, by considering its importance to economic policy; importance to South Africa’s competitiveness and the effective working of the economy; extent to which it provides essential inputs to other economic sectors; and the extent to which the sector is able to contribute to empowerment, new entry and growth of small, medium and micro-enterprises.25 An internal task team reviewed the prioritization of sectors and cases in 2010, following the adoption of the second-generation strategy for the period 2010–2014.26 The review took account of changing external conditions particularly with regard to government’s emphasis on labour-absorbing economic growth aimed at addressing unemployment and poverty. The approach to the prioritization of sectors and cases recommended by the task team was refined in two material ways. First, the CCSA sought to bring the full range of available instruments to bear on priority sectors, including investigations, advocacy, and market inquiries. In the prioritization of sectors, it was proposed that different interventions are targeted at specific sectors. Thus, the priority sectors for investigation were identified as infrastructure inputs into construction; mineral resources and intermediate industrial products; food and agro-processing; and telecommunications. Banking, construction services, and public transport were earmarked as priority sectors for advocacy, while the healthcare sector was targeted for a market inquiry.27 Secondly, the criteria for selecting priority investigations were further refined and described in more detail. For an investigation to be prioritized investigators must consider whether the complaint is in a priority sector; the competition issues involved, the type of infringement, and potential for precedent-setting; and the likely net result considering the nature of the complaint relative to the extent of harm and the enforcement capability of the organization. The task team integrated the different criteria into screening principles referred to as SCREEN (Sector, Competition Issue, Resources, Extent of Harm, Enforcement Capability, Net Result). Between 2011 and 2012, the CCSA initiated consultations with a wide range of stakeholders, including business representative organizations, unions, National Treasury and others, as part of a further review of prioritization. The review included taking into account additional factors from the Income and Expenditure Survey (IES), sector and industry contribution to Gross Domestic Product (GDP), and government’s Medium-Term Expenditure Framework (MTEF) in order to broaden the scope of prioritization. Also, an assessment was conducted of enforcement in previous priority sectors, highlighting investigations, outcomes and outstanding work that culminated in the development of a Prioritisation Advisory Note.28 The advisory note recommends priority sectors that form the focus of various interventions by the organization, including investigation and enforcement, impact assessment, scoping study, advocacy, monitoring, and market inquiry interventions. The sectors in which these interventions are to be implemented are food and agro-processing; intermediate industrial products; financial services; media; energy; and private healthcare. How did the CCSA implement its prioritization approach? Which processes and practices enabled its implementation? Has prioritization contributed to the development of dynamic capabilities? These are the questions addressed in the rest of the article. IV. ENABLING ORGANIZATIONAL PROCESSES Processes are the ways in which activities are organized, whereas practices are the ways that tasks are carried out or done. Processes are the vertical structures that emphasise hierarchy, command, and control, while practices emphasize lateral connection through which activities are coordinated.29 Processes are definable, describable, and repeatable; they follow a linear and logical sequence; and have predictable outcomes.30 The research identified relevant processes by asking respondents to identify those that enable implementation of the prioritization strategy in the CCSA. Six processes organized into three categories were identified. Priority-setting processes While priority setting happens at different levels of the organization and for different purposes, the study identified specific processes examining, endorsing, and embedding priorities in the organization. This category incorporates governance, strategy and business planning, and scoping study processes. Governance processes are those by which the CCSA direct, control, and account for its performance, as required by legislative prescripts for public entities in South Africa.31 Strategic and business planning processes are fundamental to priority setting and involve extensive consultation with staff to define priorities with detailed performance targets and describe the programmes by which the targets will be achieved in pursuit of the strategic goals of the organization. The authority to direct and control the affairs of the CCSA is vested in key governance structures and processes, including the Commissioner’s Meeting, Case Management Committee Meeting, Executive Committee (EXCO), and the Management Committee (MANCOM).32 The EXCO Meeting, for example, is the meeting of the administrative body of the CCSA and is chaired by the Commissioner. This governance structure advises the Commissioner and his deputies on administrative aspects of their functions. EXCO plays an important role in priority setting through the strategy and business planning process, and in keeping track of performance through the quarterly meetings in which the quarterly report is reviewed: The discussions at Exco are intense. Largely around where people present draft business plans. Yes and essentially there is a lot of back and forth engagement then around whether something is really, of strategic, a particular case is strategic. Is it winnable? Does it matter? And whether it is even in a priority sector? You know, is it a critical case for the economy? And of course then they would continue to tell us what budget, and what resources they are intending to put there; quarterly milestones … and then what risks they anticipate and how they would mitigate those upfront per case (Senior manager interview). The scoping processes enable the CCSA to gather information and develop knowledge on specific competition issues by conducting studies of selected markets. Scoping studies are regarded as a ‘catalytic agent to the principle of prioritisation – for they enable the Commission to initiate work in the targeted sectors, without undue reliance on public complaints’.33 These processes facilitate examination of priorities by providing the framework in which information is structured, options and alternatives are generated, and proposed courses of action against priorities are assessed. Governance processes provide a mechanism for structuring information, filtering what is relevant to the priorities of the CCSA by examining alternatives and, based on this examination, proposing specific courses of action. These processes further provide the authority framework in which priorities are endorsed. In these processes, organizational decision-makers confirm the priorities of the organization by taking decisions that formalize selected priorities. The strategy and business planning processes encode the priorities of the organization in the strategic and business plans and thereby endorse these. Decisions about priorities taken in these processes carry the authority vested in the decision-making structures, are formally noted and become part of the organisational record. Priorities that are endorsed signal to the organization the legitimacy of the actions to be pursued. Strategic and business planning processes embed outputs and targets at granular levels of detail in organizational plans. The level of detail provided in these plans was emphasized by several respondents as a key measure that supports prioritization: This is this business planning process that I’m talking about. I mean the divisions’ business plans, I think, are way more useful and helpful now than they used to be. You know they set out the cases specifically, and that filters down to performance contracts with individuals, and I think that is embedding that idea that these are priority cases. These are the cases that will result in delivering against the business plan. (Senior manager interview) Resource marshalling processes The second category of processes is those oriented towards assembling resources for accomplishing priorities. These include resource allocation and case management processes. The allocation of resources towards priorities in the CCSA has become more deliberate, according to respondents. This is to ensure that there is better alignment between available resources and the selected priority sectors and cases: If a matter is a priority matter, you then allocate resources accordingly in terms of external counsel, law firm as well as the interim resources. So even the resourcing process is performed by the prioritisation. (Senior manager interview) Organizational divisions have become more capable of setting budgets and assembling the required resources by taking into account the level of priority and the funds and people needed to pursue specific priorities: So, the same thing because we knew on the big cases, especially the big cases, I mean you’re gonna need senior council, you’re gonna need this, you’re gonna need that. So, you target with your prioritisation, you prioritise your division’s budget to be focussed on those cases. (Senior manager interview) These processes often involve negotiation and trade-offs with matters deemed less important getting scaled back or sequenced for implementation at a later stage. In this way, the resource allocation processes ensure that limited resources are directed towards investigations and cases that are the top priority in the organization. A case is managed through various stages, including receiving and screening a complaint; initiating an investigation; taking a decision on whether to refer or non-refer a matter to the Competition Tribunal of South Africa; and prosecuting the matter. In the case management processes the teams, including external counsel and funding resources are assembled to pursue and investigation or a case. The case management processes assess whether the required resources are assembled to successfully conclude an investigation or a case throughout its life cycle. Bottlenecks and challenges are identified in this process so that the appropriate resources can be assembled to take priority matters forward; whether it is by bringing additional people from other divisions onto the team responsible for the case or shifting funds from cases deemed less of a priority. The case management processes thus play a pivotal role in ensuring that the CCSA is able to accomplish priority tasks. Evaluative processes Performance monitoring and evaluation, including impact assessment processes, are oriented towards evaluating progress in achievement of priorities. As such, these processes are evaluative in character, enabling the CCSA to judge its progress through assessing performance, accounting for deviations, and adjusting to improve performance. The CCSA adopted the Outcomes-based Planning Approach in 2010, in line with requirements for public entities in South Africa.34 This approach calls for a systemic assessment of what impacts and outcomes are achieved as a result of the Commission’s interventions. An important aspect of this approach is the need to establish indicators as the basis for monitoring progress and evaluating results. The planning approach of the CCSA entails a hierarchical chain that links the strategic plan to individual performance plans. The strategy is at the apex of the chain, and provides the framework and focus that directs the work of the CCSA. An Annual Performance Plan (APP) takes the goals set out in the strategic plan and breaks these down into annual targets and activities. In turn, the targets and activities are embedded in Individual Performance Plans (IPPs) of Commission staff. Performance information is a cornerstone of this planning approach and framework that enables assessment of performance: One of the most important practices that have emerged out of this new or improved planning framework is actually performance information; keeping track or keeping record of performance information. That has become very critical because it is that performance information that you know, is evidence of how we are doing in terms of business planning and strategy executions. So there’s a lot of focus currently on performance information (Senior manager interview). Furthermore, impact assessment processes play an increasingly important role in prioritization, through monitoring and evaluation by the CCSA. These studies are aimed at understanding the impact of the organization’s interventions in specific markets and sectors. The studies ‘demonstrate to stakeholders the harm of anti-competitive conduct and the gains arising to the public from the Commission’s interventions’.35 Impact assessments are undertaken in three main categories: (i) estimation of the impact of anti-competitive conduct; (ii) ex-post evaluation of specific enforcement interventions; and (iii) evaluation of the broader economic impact. A senior manager noted: I think that one of the things that we also have now recognised is the, there is a link between our impact assessments and what we do now, because they have a lot of lessons for how we prioritised, and what we prioritise. (Senior manager interview) The CCSA has been able to cascade the priorities in the strategic plan into the business plan. The responsibility for each division is set out in the business plan. This, in turn, enables divisions to cascade divisional targets into the outputs of individual staff members and teams. In this way, the expected contributions of staff members in the business plan are linked to their individual performance contracts. Thus, individual staff members must account for their performance relative to investigations and cases they work on through performance monitoring processes. Similarly, impact assessments evaluate the effectiveness of CCSA interventions in a given market. The impact assessment produces the necessary evidence and accounts for the impact of the interventions by the CCSA. Tracking performance and evaluating the reasons for deviation through the processes for performance monitoring and evaluation provide the information and feedback necessary for the organizational leadership and management to adjust planned performance output. This provides the organization with the flexibility necessary to make adjustments in response to changes in the internal and external environment. Adjustment of plans and priorities is informed by what the organization learns through the process of doing and reviewing, and commissioning specific impact assessment studies to determine whether sectors remain a priority and, what measures need to be implemented to bring about the desired outcomes. V. PRIORITIZATION PRACTICES Practices are the ways tasks are carried out or done, whereas processes are the way in which activities are organized. A practice is seen as a frequently repeated act, habit, or custom that is associated with the uncodified ‘know-how’ resulting from human experience, improvisation, and innovation. In this sense, strategic practices are nested in organizational processes.36 The study set out to identify key organizational practices associated with the implementation of the prioritization strategy and approach. Four practices were identified that are closely associated with prioritization in the CCSA, each of which engenders specific values in the organization. Managing cases from ‘cradle-to-grave’ Since 2014, the CCSA has adopted an approach whereby teams that lead cases do so from investigation through to litigation—the entire life cycle of the case, known in the organization as managing a case from ‘cradle-to-grave’. Before this practice was adopted, cases would be handed over to the Legal Services Division (LSD) for litigation. It was the function and responsibility of LSD to develop the litigation strategy and procure the necessary external legal resources. The CCSA identified this hand-over process from investigation to litigation as a serious bottleneck that contributed to an unmanageable case load. Furthermore, the hand-over process created a gap in case knowledge, since the team that managed the investigation and had intimate understanding and knowledge of the case, handed over the management thereof to a team in LSD. As a result of these limitations, the CCSA decided that teams investigating cases would remain responsible for their litigation so that there is no hand-over of the cases from one team to another: That’s the principle that’s been introduced, that the investigation divisions have to take ownership of the cases from cradle to grave. So even once it’s a case at litigation stage, it’s still their case. They still have to take responsibility for it. LSD is simply a resource. (Senior manager interview) The new practice requires continued involvement of the same team from the start of the case to its conclusion. The introduction of this practice has promoted a sense of ownership by team members of their cases. The logic inferred from this approach is that if team members assume ownership of priority cases, they assume ownership of the priorities of the organization. A senior manager reflecting on this approach stated, ‘[t]hat’s the principle that’s been introduced that the investigating divisions have to take ownership of the cases from cradle to grave.’ Establishing inter-divisional teams The practice of allocating investigations to inter-divisional teams has been identified as an important support for the implementation of the prioritization strategy. Teams are constituted with staff members from different divisions. The composition of the team is informed by the required sector knowledge and the specific matters of law under investigation: Yes. In cases. But, and taking cases to, one of the things is the, so a cradle-to-grave approach with inter-divisional teams. So, the team that starts the investigation is the team that will litigate all that. No handing over, no, it’s a practice. (Senior manager interview) Promoting the establishment of inter-divisional teams is motivated by a desire to work together beyond the structural constraints and limitations imposed by a functional organization design that gives rise to the divisional structure of the CCSA. Inter-divisional teams are expected to work across divisional boundaries bound together by the successful completion of an investigation and prosecution of a case. The rationale is, therefore, to ensure joint responsibility and shared accountability by team members towards the outcome of their work. Joint responsibility and shared accountability are valued because this promotes unity of purpose. In this practice, joint responsibility implies that team members are willing to step in when others are unable to contribute for some or other reasons, since responsibility for the success of an investigation or case rests with all the team members, irrespective of the division a team member is deployed from. In this practice, accountability for outcomes is shared by all members of the team. Conducting mid-term reviews A number of respondents highlighted the workshop held every six months, and known as the mid-term review, as a key forum for prioritization. The mid-term review comprises the senior leadership and middle management of the CCSA. This meeting is focused on assessing progress with regard to implementation of the organization’s priorities. The mid-term review performs a special review function that enables the organization to make adjustments to its plans relative to its priorities, particularly in areas where performance lags behind expectations. The mid-term review also plays a role in ensuring alignment of organizational resources behind priorities, as highlighted by a senior manager: So in the final term review because that is when the work would’ve already started to work towards the business plans for the next financial year; that is where we meet as an organisation and we try to ensure that there is alignment across the organisation in terms of the business plans going forward. (Senior manager interview) This workshop provides an opportunity for re-calibrating organizational alignment to priorities by taking into account performance in a changing environment, re-assessing and making changes necessary to remain focused on those priorities. Alignment involves arranging, structuring, and ordering priorities and resources in a means-end logical fit so that the organisation’s efforts are concentrated and directed towards the achievement of planned outcomes. In this way, the mid-term review workshop as a practice engenders the value of alignment. Encoding priorities in the business plan The business plan plays a key role in codifying the priorities and the performance expectations related thereto. It highlights specific priority cases, the people associated with the implementation of the priority cases and the resources available for implementation. Divisions are required to use a standard template to capture the priorities for a specific year in the business plan. The standardization of the way in which information is presented has improved the comparability of data across divisions. The introduction of colour coding to visually represent priorities has further enhanced the business plan as a communication tool. A senior manager noted: That’s right. So essentially then, divisions would identify who the people will be that speak to that target, what the priority level of that target is. Now, it’s colour coded as you can see. Green being… yellow being least of a priority. Red being the most of a priority. We colour code those priority cases to the rate and that’s the identification of those priority cases is obviously Exco. (Senior manager interview) The introduction of colour codes to visually enhance the representation of priorities enables communication and instant recognition of priorities at a glance.37 It engenders the value of communication of priorities in the CCSA. VI. PRIORITISATION AND THE DEVELOPMENT OF DYNAMIC CAPABILITIES The dynamic capabilities perspective regards the ‘capacity of an organisation to purposefully create, extend or modify its resource base’ as a key means by which to channel organisational change.38 It is the ability of an organization to integrate, build, and reconfigure internal and external competences to address rapidly changing environments.39 Dynamic capabilities are the organizational and strategic routines by which managers change the resource base of the organization to achieve their strategic goals.40 Sensing and seizing opportunities by transforming organizational resources to enhance performance are regarded as dynamic capabilities.41 Study participants in the CCSA were asked to consider whether implementation of the prioritization strategy contributed to the development of specific dynamic capabilities. The research identified sector expertise, priority setting, and project management capabilities as key strategic capabilities associated with implementation of the prioritization strategy. Sector expertise According to respondents, prioritization has contributed in a significant way to the development of sector expertise in the organization. Staff have developed specific sector expertise by collecting information and researching specific sectors over time, thus developing knowledge and understanding of the dynamics of specific markets, competitors and competition issues. This is a learning process, which is facilitated by scoping studies, impact assessment, case investigations, and other formal and non-formal means of research and information gathering by teams. A senior manager noted that: … people that are very much experts or know quite a lot when it comes to certain sectors of the economy, you know. I mean, an example is, if you get a steel case, you know that this case has to be given to a certain person because the person knows the industry very well; or you get a polymers matter, or whatever, you know. So, from that point of view, I think, it has helped in terms of, you know, having that benefit of having people who are in a way, experts in certain sectors. (Senior manager Interview) Priority-setting expertise Respondents identified the ability to prioritize as a significant capability that the organization has developed as a consequence of having adopted the strategic approach of prioritization. Priority setting is a continuous process that has been refined over time through experimentation and learning. Prioritization happens at various levels in the organization, including in teams, in divisions and organization-wide. Prioritization is undertaken for different purposes and in relation to how the range of interventions is prioritized to address specific competition issues, as observed by a senior manager: … prioritising for different purposes, you know, … you prioritise for a market inquiry, you prioritise for enforcement, you prioritise for advocacy, you know there are all these things now that we are able to prioritise for when at the beginning really, it was prioritisation on limited things so, you know … (Senior manager interview) Prioritization involves making choices about competing demands within the organization’s prioritization framework. It involves a continuous process of strategizing at different levels within the organization about the best possible areas of focus and means with which to achieve the desired enforcement outcomes. Project management capability Cases and other initiatives such as market enquiries are regarded as projects and as such, planning and organization of these interventions are done on a project basis. Skills such as planning, budgeting, organizing, and reporting are developed in teams. The project organization of case investigations, market enquiries, and special projects means that ‘demands for project management are ever growing’ (Senior manager Interview). According to respondents, this capability is not yet fully developed across the organization and requires further support to enable it to develop into an organization-wide capability. A senior manager describes this in the following way: ‘… we are becoming a lot more sophisticated in terms of project management. Our investigation plan, our litigation plan is forcing us to become better at project management: budgeting, risk and so on.’ Large organization-wide initiatives such as the Fast Track Construction Settlement Project and the Health Inquiry are cited as examples of large projects that required a project management discipline for implementation. In this regard, a senior manager noted: So we said look, this is something that’s never been taken on before. And then we said okay, it’s a huge task, it’s huge budgets, we’ve actually gotta split this up and take a project management approach. (Senior manager interview) Significance of dynamic capabilities This section discusses the ways in which these capabilities enable the organization to sense and seize opportunities and to change its resource base accordingly. The CCSA’s focus on a limited number of sectors that have an impact on low-income consumers, have competition concerns and are aligned to government policy and sector priorities has enabled the organization to build up a knowledge base and expertise in priority sectors. The organization is able to learn about these sectors through the complaints received from the public, the investigations it initiates, the scoping studies it undertakes and the impact assessments it conducts. The continuous process of learning and knowledge building in regard to dynamics of the prioritized sectors enables the organization to sense opportunities insofar as addressing competition concerns. Sensing opportunities involves recognising emerging patterns in the environment through interpreting signals, symbols, and information.42 The Fast Track Construction Settlement Project initiated by the CCSA in 2011 is a useful illustration of how the organization’s work in the construction sector enabled it to identify patterns of anti-competitive behaviour over time by interpreting and synthesizing the information obtained. Signs of collusion in the sector were apparent as early as 2007 following a corporate leniency application (CLP) by Rocla, a subsidiary of Murray & Roberts—one of the largest construction firms in the country.43 This exposed a hugely profitable cartel that operated from 1973 to 2007 in three provinces in South Africa. The sector was prioritized after the CCSA uncovered collusion by top-tier construction firms. It was also influenced by the infrastructure programme that Government was due to embark upon at the time. The CCSA subsequently undertook an in-depth study of the entire value-chain of the construction sector, and during this time, more CLP applications were received. With this information, the CCSA initiated investigations into bid-rigging and collusion that led to the organization inviting firms involved in these anti-competitive practices to settle their contraventions provided they fully disclosed the extent of their involvement and, where applicable, paid an administrative penalty. In 2013, the CCSA concluded settlements for these contraventions between 2006 and 2009 with the majority of firms, with administrative penalties from the settlement process totalling R1.46 billion.44 The work done in the sector enabled the CCSA to progressively establish patterns of information that were synthesized to build up sector knowledge and expertise. In turn, this contributed to the organization identifying the opportunity for intervening in the sector to address wide-spread anti-competitive practices by firms. The capabilities of priority setting, sector expertise, and project management developed over time contribute to the CCSA’s ability to seize opportunities. Not only was the CCSA able to sense an opportunity in the construction sector, but it was also able to take advantage thereof through the establishment of the Fast Track Construction Settlement Project. The fast track settlement procedure constituted a new approach to dealing with large volumes of uncovered contraventions of the Competition Act. The CCSA made commitments towards developing the requisite fast track settlement procedures and developed the organizational infrastructure to deal with the process in the form of an inter-divisional team. Settlements were reached with 15 of the 21 firms under the settlement procedure covering more than 300 instances of bid-rigging.45 The Health Inquiry was cited as another example of how the CCSA was able to draw on its priority setting and project management capabilities, and thereby take advantage of conditions in the external environment to initiate this inquiry. The healthcare system is described by Government as ‘neither efficient nor fair’ with concerns raised about the inequitable nature of the existing system in which ‘the privileged few have access to a relative lion’s share of general health resources’.46 Further, complaints about competition issues have been received in the healthcare sector over a period of time so that a market inquiry to determine whether or not there are anti-competitive features in the private healthcare market and what their effects are, was appropriate.47 Formal powers to conduct a market inquiry were granted to the CCSA by virtue of Section 6 of the Competition Amendment Act 1 of 2009. The provisions pertaining to market inquiries came into force on 01 April 2013 following intervention by the CCSA. The CCSA recognized that conducting the market inquiry would be costly, and additional resources would need to be mobilized. This was achieved partly as a result of alignment between the regulatory framework on competition and the interest of key stakeholders to better understand the competition dynamics, including market power and distortions of competition at various levels, barriers to entry, and factors limiting access by consumers to private healthcare.48 The ability to renew and recreate the organization’s resources is essential for making adjustments and adaptations in order to take advantage of opportunities sensed and seized. The emerging project management capability within the CCSA was identified by respondents as a key ability that enables the organization to reconfigure its resource base. The project management capability in the organization has several important features that facilitate the process of renewing and reconfiguring the resources at its disposal. First, by structuring an initiative as a project, resources from across the organization can be coordinated in a way that is focused on the needs of the project. For instance, a person with sector expertise that may be required for a specific project can be enlisted as part of the project team irrespective of the division in which that person is employed. In so doing, the CCSA is able to address departmentalism that results from functional organizational structures.49 Secondly, projects are inherently temporary in nature so that the resources built up in regard to a specific project can be re-deployed elsewhere in the organization or moved to the next project. For instance, many of the staff recruited to work on the Fast Track Construction Settlement Project were subsequently recruited into the Cartels Division once the project ended. Both the ability to coordinate resources across the organization and the temporal nature of projects provide the CCSA with a level of flexibility that otherwise may not have developed. Thirdly, projects serve as a useful means to experiment, learn, adapt organizational routines, and replicate where required.50 The Fast Track Construction Settlement Project illustrates this point. The fast track settlement procedure applied in the construction cases has proven its usefulness for dealing with large volumes of cases, and the approach and lessons learnt from this project were replicated to deal with cartel investigations in the furniture removal industry involving more than 5000 tenders.51 VII. DISCUSSION AND CONCLUSIONS If a key focus of enforcement strategy is allocating resources between competing claims on scarce resources,52 then prioritization is an inherent concern of competition enforcement. Effective prioritization enables authorities to focus on competition issues that matter most and then to align organizational resource behind that focus. The ability to determine priorities and to action those priorities in practice is, therefore, a critical area of enquiry and discovery. This study indicates that prioritization, as a strategic approach to competition enforcement in the CCSA, has become widely institutionalized and embedded, and permeates the way things are done in the organization. Organizational processes structure organizational action. These provide the framework, rules, resources, and linkages that enable and steer action in organizations. Three categories of processes support prioritization in the CCSA. First, the priority-setting processes comprising governance, strategic and business planning and scoping processes structure and enable prioritization in the CCSA. These processes enable the leadership and management of the CCSA to examine priorities in decision-making about what sectors to focus on, what cases to pursue and what resources to dedicate to these priorities. Once decisions are made they are legitimized by virtue of being formally endorsed in these processes. Furthermore, these processes are oriented towards action that embeds the priorities across the organization. The strategy and business planning processes play a particularly important role in this regard by embedding the priorities of the organization into the day-to-day actions of divisions and individuals. Secondly, there are resource-marshalling processes comprising the resource allocation and case management processes in which resources are assembled and channelled towards the accomplishment of priorities. Resource allocation and case management processes are particularly relevant in this regard, and facilitate evaluation, negotiation, and trade-offs in assembling the required resources for priorities. These processes further ensure that members of the organization are able to accomplish their priorities by concentrating and focusing resources on priority cases. Thirdly, there are evaluative processes incorporating performance monitoring and evaluation procedures, including impact assessment, that enable leaders and managers to assess performance, account for progress, and make adjustments where necessary. Feedback plays an important role in this regard and is aided by setting clear targets with defined owners, underpinned by a performance information system. While processes frame and structure action, practices emerge from socially defined and recurrent modes of action.53 Practices comprise many different forms of doing, including meetings, workshops, rituals;54 the use of tools and techniques;55 or specific organizational structures and committees that provide a platform for repetitive strategic action.56 The study found four key organizational practices associated with prioritization. Each practice engenders specific values in the organization. The CCSA has adopted the practice of managing cases from ‘cradle-to-grave’ that engenders ownership of priority cases in the organization. The organization has adopted the practice of establishing inter-divisional teams that in turn, promotes joint responsibilities and shared accountability for priorities among team members. The practice of conducting mid-term reviews affords the CCSA an opportunity to re-calibrate and engender alignment to selected priorities. Finally, encoding of priorities in the business plan and use of colour-coding to visually represent priorities fosters communication of priorities. This study makes explicit the link between practices associated with prioritization and the values these practices seek to engender. While the study makes explicit the link between organizational practices and values, it is silent on the relationship and dynamics between these constructs that should become the subject of further research. The CCSA continues to evolve its prioritization practices. For instance, the organization now seeks to limit outsourcing by building expert legal capacity in-house in order to support its case pipeline more effectively and has adopted a multi-year approach to business planning so that it is in a position to determine the long-term resource needs relative to cases.57 In conclusion, the research found three strategic capabilities associated with the implementation of the prioritization approach that enables the CCSA to sense and seize opportunities by re-configuring its resource. The CCSA has built up capabilities in priority-setting, sector expertise, and project management. The generalizability of the study findings, however, is limited by the specific context of the case. Context matters and organizational processes, practices, and capabilities emerge and are shaped by specific organizational contexts and conditions. Stripping particular types of processes and practices out of the environment in which they emerge or occur, runs the risk of stripping them of their meaning. The processes, practices, and capabilities identified are, therefore, necessarily unique to the CCSA in terms of the way in which the organization implements its prioritization approach. A further limitation is that the study privileges the perceptions and experiences of managers and does not represent the views of a cross-section of organizational members. Having said this, senior managers play a particularly important role in strategizing on account of their positions and the roles they play, and their views should not be taken lightly.58 The findings may nevertheless provide guidance to authorities considering adopting prioritization for competition enforcement. Awareness of how selected processes and practices enable prioritization and contribute to the development of specific capabilities could lead to more intentional application of prioritization as a strategic approach to competition enforcement in competition authorities. Finally, it is proposed that future research focus on the challenge of assessing the impact of prioritization on enforcement outcomes to determine the extent to which it contributes to agency effectiveness and productivity. Conflict of Interest Statement: None declared. 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Competition Agency Practice Manual’ (2010) <http://www.internationalcompetitionnetwork.org/uploads/library/doc744.pdf> accessed 21 December 2015. 4 Sally Maitlis and Tom Lawrence, ‘Orchestral Manoeuvres in the Dark: Understanding Failure in Organisational Strategizing’ (2003) 40 Journal of Management Studies 109. 5 Moshe Farjoun, ‘Towards an Organic Perspective on Strategy’ (2002) 23 Strategic Management Journal 561. 6 Jane Lê and Paula Jarzabkowski, ‘The Role of Task and Process Conflict in Strategising’ (2014) 26 British Journal of Management 439. 7 Duane Monette, Thomas Sullivan and Cornel DeJong, Applied Social Research (5th edn, Harcourt College Publishers 2002). 8 John Creswell, Research Design (2nd edn, Sage Publications 2003). 9 Allan Bryman, Social Research Methods (2nd edn, OUP 2004). 10 Clair Wagner, Barbara Kawulich and Mark Garner, Doing Social Research (1st edn, McGraw-Hill Education 2012). 11 International Competition Network (n 3). 12 Getrude Makhaya, Wendy Mkwananzi and Simon Roberts, ‘How Should Young Institutions Approach Competition Enforcement? Reflections on South Africa’s Experience’ (2012) 19 South African Journal of International Affairs 43. 13 Getrude Mahaya and Simon Roberts, ‘Expectations and Outcomes: Considering Competition and Corporate Power in South African under Democracy’ (2013) 40 Review of African Political Economy 556. 14 CCSA, Annual Report, 2006/07 (2008) <http://www.compcom.co.za/wp-content/uploads/2014/09/annual-report-2006-2007.pdf.> accessed 25 June 2015. 15 CCSA, Annual Report, 2006/07 (2007) <http://www.compcom.co.za/wp-content/uploads/2014/09/annual-report-2006-2007.pdf.> accessed 18 October 2016. 16 CCSA, ‘Strategy, 2006 – 2009’ (2006). 17 CCSA, ‘Strategy, 2009 – 2012’ (2009). 18 CCSA, Strategic Plan and Annual Performance Plan 2015 – 2020: Competition Regulation for a Growing and Inclusive Economy. 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Industrial and Corporate Change’ (2010) 19 Industrial and Corporate Change 1175. 42 Constance Helfat and Margaret Peteraf, ‘Managerial Cognitive Capabilities and the Micro-foundations of Dynamic Capabilities’ (2015) 36 Strategic Management Journal 831. 43 Hekima Advisory, ‘The Role of CIDB in Limiting the Construction Industry Cartel’ (2014) <https://static1.squarespace.com/static/52246331e4b0a46e5f1b8ce5/t/534f8d5fe4b053dc26f7a611/1397722463112/1400407_EDD-UJ_RECBP_Project+Report_App12_Case+Study+-+Construction+and+Cartels_Final.pdf.> accessed 28 June 2016. 44 ibid. 45 CCSA, ‘Construction Firms Settle Collusive Tendering Cases with R1.5 Billion in Penalties’ (Media Release, 2013), <http://www.compcom.co.za/wp-content/uploads/2014/09/Construction-Fast-Track-Settlement-Process-Media-Release.pdf.> accessed 15 December 2016. 46 Department of Health, ‘Submission to Competition Commission Inquiry Panel Private Healthcare Market Inquiry’ (2014) 2 <http://www.healthinquiry.net/Public%20Submissions/Department%20of%20Health_Submission.pdf.> accessed 4 January 2016. 47 CCSA, Annual Report, 2013/14, (2015) <http://www.compcom.co.za/wp-content/uploads/2014/09/COMPETITION-COMMISSION-ANNUAL-REPORT-2015.pdf.> accessed 26 November 2016. 48 ibid. 49 Barry Cushway and Derek Lodge, Organisation Behaviour and Design (2nd edn, Kogan Page 1999). 50 Teece Pisano and Shuen (n 39). 51 CCSA, Annual Report, 2013/14, (2014) <http://www.compcom.co.za/wp-content/uploads/2014/09/Competition-Commission-AR-201314-web.pdf.> accessed 28 November 2016. 52 Mark Daniell, Strategy: A Step-by-step Approach to the Development and Presentation of World Class Business Strategy (Palgrave Macmillan 2004). 53 Paula Jarzabkowski, ‘Strategic Practices: An Activity Theory Perspective on Continuity and Change’ (2003) 40 Journal of Management Studies 23–55. 54 Saku Mantere, ‘Strategic Practices as Enablers and Disablers of Championing Activity’ (2005) 3 Strategic Organisation 157. 55 Richard Whittington, ‘Strategy Practice and Strategy Process: Family Differences and the Sociological Eye’ (2007) 28 Organisation Studies 1575. 56 Christina Hoon, ‘Committees as Strategic Practice: The Role of Strategic Conversation in a Public Administration’ (2007) 60 Human Relations 921. 57 CCSA, ‘Annual Report, 2016/17’ (2017) <http://www.compcom.co.za/wp-content/uploads/2014/09/Annual-Report-2016-17.pdf> accessed 07 January 2018. 58 Sydney Finkelstein, Donald Hambrick and Bert Cannella, Strategic Leadership: Theory and Research on Executives, Top Management Teams, and Boards (OUP 2009); Majorie Lyles and Charles Schwenk, ‘Top Management, Strategy and Organisational Knowledge Structures’ (1992) 29 Journal of Management Studies 155. © The Author(s) 2018. 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Journal
Journal of Antitrust Enforcement – Oxford University Press
Published: Feb 5, 2018