Economic Development Minister Ebrahim Patel has stepped up his efforts to use competition policy to address concentration and lack of transformation in SA’s economy, appointing an advisory panel to draft legislative changes that would give the competition authorities the tools to look at these issues proactively.
Patel said on Thursday that SA faced growing challenges with economic concentration and social exclusion, and it was time to come up with practical and workable measures to address the high levels of concentration in the economy. There was a political constituency for this.
It was better to do this using the trusted institutions of the competition authorities than by regulating sectors irrespective of the economic consequences, he said.
Patel was addressing the 11th annual competition conference hosted by the Competition Commission and Competition Tribunal at the Gordon Institute of Business Science.
The four-person advisory panel consists of advocate Michelle le Roux, attorney Doris Tshepo, Competition Commission chief economist Liberty Mncube, and Wits University dean of commerce law and management Imraan Valodia.
They will develop draft amendments to the competition legislation to bolster the remedial tools that the competition authorities have to address issues of market structure when they scrutinise mergers and investigate allegations of anticompetitive behaviour, and propose appropriate remedies.
Patel noted that SA’s competition legislation was focused mainly on the conduct of market participants rather than the structure of markets, and while this was part of industrial policy, there was room for competition legislation as well.
The minister called for a more integrated approach to economic policy, giving the example of the recent ArcelorMittal SA settlement, in which competition and trade and industry regulators and ministers collaborated.
In addition to the R1.5bn in penalties for breaches of the competition legislation, the settlement included a range of agreements on jobs and capital investment to make the company more competitive, with R90m of the penalty payment used as seed funding to establish a fund for smaller manufacturers.
The minister has intervened in some of SA’s largest mergers lately — including AB Inbev’s purchase of SABMiller and the three-way Coca Cola merger — to agree public interest conditions in areas such as job retention, investment in small suppliers, access to fridges in spaza shops and taverns for small manufacturers, and black empowerment.
Competition commissioner Tembinkosi Bonakele said SA’s economy was one of the most concentrated in the world. A Competition Commission study had found that at least 70% of sectors were dominated by three to five large companies which commanded a combined 46%-67% of their market, on average.
Bonakele also told the conference that there should be a clear competition policy for state-owned entities.
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