The South African Federation of Trade Unions (SAFTU) commends the work done by the Competition Commission for conducting search and seizure at the premises of 8 insurance companies suspected of unfairly collusive practices, to enable further investigation.
In a statement released today (25 August), the Competition Commission has indicated that “BrightRock Life Limited; Discovery Limited; FMI, a division of Bidvest Life Limited; Hollard Insurance Group (Pty) Ltd; Momentum, a division of MMI Limited; Old Mutual Insure Limited; Professional Provident Society Limited and South African National Life Assurance Company (Pty) Ltd (Sanlam)” had colluded to manipulate prices.
The preliminary information says that the “companies share information on premium rates for risk-related products” such as life cover, funeral cover, disability cover and chronic medical condition; and “fees for investment products” such as retirement annuity. This “enables them to adjust the prices of their existing and new insurance products.”
If this preliminary information at the disposal of Competition Commission is correct, then the companies have contravened parts of section 4 of the Competition Act 89 of 1998.
But the fixing of prices does not only concern us because these companies have broken the law, but primarily because the price fixing affects our members badly.
Ordinary workers, who have insurance liabilities and assets such as funeral covers and life covers are impacted by prices fixing as it makes premiums and monthly instalments expensive. This adds to the rising cost of living, and workers have to lose more Rands and Cents onto insurance covers because of the insatiable drive for profiteering by these insurance companies.
Though we condemn this and would like to see them charged and fined according to their rulebook of the so called perfect competition, we are not surprised. The tendency of capitalism to eats away and squash competition, the very bedrock on which it is founded, leads to the emergence of oligopolies and monopolies who collude to fix and drive prices up so that they can maximise profits.
Competition, in an ideal capitalism drives down prices. But because capitalists enter production or commerce primarily to make profit, they tend towards concentration into oligopolies so that they minimise risk and maximise profits.
If the preliminary information by Competition Commission turns out to be true, which we strongly suspect it is, this would merely prove our economic understanding of capitalism and capitalist development.
But because they claim to be clean, fair and efficient, SAFTU will support every effort to hold them accountable for fixing prices higher and burdening our workers, and to expose their hypocrisy about free market capitalism.