Linda Ensor
11 November 2009
Cape Town — The Competition Commission has proposed that the government and development finance institutions take proactive measures to support the entrance of new players in monopolistic markets to create more competition.
Such intervention would be in addition to litigation against anticompetitive behaviour, though this took a lot of time and was very costly, Parliament's economic development portfolio committee heard yesterday.
Commissioner Shan Ramburuth, his deputy Tembinkosi Bonakele and Competition Commission economist Simon Roberts briefed MPs on the commission's work in tackling cartels in the food and agro- processing sector.
Committee members expressed frustration at the lack of progress in changing corporate behaviour and believed the commission was not using its legislative powers to their full extent.
These investigations were partly prompted by the dramatic increases in food prices and the high levels of concentration, and vertical and horizontal integration, in the industry.
The probes related to anticompetitive behaviour in a number of food-related industries including fertiliser, tin-plate, bread-milling, wheat, dairy, maize, grain storage and trading, poultry, pelagic fish, and edible fats and vegetable oils.
At the retail level, the commission is investigating supermarket chains and possible abuse of their monopolistic buying and leasing power as well as possible collusion among producers over the placing of products on supermarket shelves. Most of the investigations were still at an early stage, Ramburuth said.
Despite the commission's work, SA's economy remained highly concentrated and there had not been a decline in prices. Efforts would have to be made to undermine the cartels by encouraging new entrants into these markets.
"Competition policy has to create the space for new entrants and break the stranglehold of the old boys' club in the marketplace in the different markets," Ramburuth said.
"Commission investigations uncover past conduct and its consequences, and proactive measures are required to increase competition and change outcomes.
"This requires a fair amount of co-ordination between public institutions and government."
Interventions could also include leveraging government shareholdings to encourage competitive conduct. For example, as a Sasol shareholder, the government could put pressure on the company.
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