As South Africa marks 25 years since implementing competition law, the Department of Trade, Industry and Competition (DTIC) is advocating for even greater government intervention to address market concentration and foster inclusive economic growth.
At the 18th Annual Competition Conference on 4 September 2024, Deputy Minister Zuko Godlimpi, speaking on behalf of Minister Parks Tau, emphasized the need for expanded competition policies to boost market efficacy and ensure fair access for small businesses.
The South African government introduced the Competition Act in 1998, aimed at reducing the high level of economic concentration created during the apartheid era. Under apartheid, large businesses were allowed to monopolize key sectors as a strategic response to international sanctions, limiting competition and distorting market dynamics.
Godlimpi pointed out that the competition law was designed to dismantle these monopolies and enhance economic participation for all South Africans, especially those historically excluded. “The apartheid regime allowed anti-competitive practices, masking the real state of economic concentration,” he said.
Progress Over 25 Years
Since the Competition Commission began its work in 1999, significant strides have been made in challenging dominant firms and opening up market access. Commissioner Doris Tshepe highlighted the Commission’s role in promoting fair competition and preventing exclusionary practices by powerful corporations.
The focus has been on sectors critical to low-income households, such as food, healthcare, telecommunications, and energy. A 2016 World Bank study underscored the positive impact of the Commission’s actions against cartels in industries like maize, poultry, and pharmaceuticals, which helped reduce poverty by lowering prices for essential goods.
Godlimpi praised these efforts, calling the Competition Commission’s “welfare dividends” vital for poverty alleviation. He also stressed the importance of public interest remedies, which aim to redirect the operations of big businesses toward more progressive economic transformation.
Expanding Interventionist Policies
Looking to the future, Godlimpi advocated for an expanded scope of government intervention in business regulation, despite resistance from some sectors. He acknowledged that many in the business community might prefer less regulation but stressed that competition policy is crucial for reducing inequality and driving inclusive growth.
“We need to be creative in using legislative tools not just to punish but to redirect the operations of big players in the economy,” Godlimpi stated.
This call for expanded regulation comes as the rise of digital markets and artificial intelligence is reshaping global business landscapes. Commissioner Tshepe noted that powerful tech firms, with their immense resources, are creating new challenges for competition authorities. She emphasized the need for ongoing regulation to ensure fair competition in these rapidly evolving markets.
Global Outlook for South African Business
In addition to promoting local competition, Godlimpi urged South African businesses to embrace the global market. He argued that expanding into international markets would enhance the competitiveness of local industries and open up new opportunities for growth.
As South Africa continues to refine its competition policies, the DTIC remains committed to fostering a more equitable and inclusive economy by addressing market concentration and encouraging broader participation across all sectors.
With the government poised to take a more active role in business regulation, the next 25 years of competition law enforcement could see even greater efforts to ensure fair competition and economic transformation in South Africa.
