BARRIERS TO ENTRY

Barriers to entry, by creating and reinforcing the market power of large firms, tend to lead to higher prices, lower levels of innovation and a less competitive economy. In a country like South Africa where there are significant challenges of unemployment, poverty and inequality, it is critical to understand the nature and extent of barriers to entry in the economy, in order to ensure that regulatory and policy interventions have a meaningful impact on creating inclusive and shared growth.

For this reason, CCRED conducted a programme of research focused on barriers to entry and inclusive growth, the project was funded by the National Treasury. The project involved researching and analysing the barriers to entry across a range of sectors in South Africa and in the region with the intention of formulating policy recommendations that will help to facilitate greater levels of entry and competition and thus drive higher growth.

Review paper 1Key debates in competition, capabilities development and related policies:
Drawing the link between barriers to entry and inclusive growth

Review paper 2: The links between competition policy, regulatory policy and trade and industrial policies

Firm entry case studies

  1. Study on Barriers to Entry in Liquid Fuel Distribution in South Africa
  2. Competition, barriers to entry and inclusive growth - Soweto Gold Case Study
  3. Competition, barriers to entry and inclusive growth - Retail Banking - Capitec Case Study
  4. Competition, barriers to entry and inclusive growth - Fruit and Veg City Case Study
  5. Competition, barriers to entry and inclusive growth - 1Time and FlySafair Case Study

Sector case studies

  1. Competition, barriers to entry and inclusive growth - Telecommunications Sector Study
  2. Competition, barriers to entry and inclusive growth - Agro-processing

Policy briefs

  1. An Agenda for Opening up the South African Economy: Lessons from Studies of Barriers to Entry
  2. POLICY BRIEF: Barriers to entry for black industrialists - the case of Soweto Gold’s entry into beer
  3. POLICY BRIEF: Barriers to entry in banking, lessons from Capitec’s experience
  4. POLICY BRIEF: Barriers to entry in supermarkets
  5. POLICY BRIEF: Barriers to entry in telecoms
  6. POLICY BRIEF: Barriers to entry and inclusive growth: policy recommendations for agro-processing

INDUSTRIAL DEVELOPMENT RESEARCH PROGRAMME (IDRP)

The orientation and interests of large firms are at the heart of how countries develop. However, the decisions, strategies and responsiveness of firms to government interventions for industrialisation are poorly understood in the South African context. This study focuses on assessing the impact and effectiveness of government interventions for industrialisation.

The project will study large firms and develop a system for regular tracking of their strategies and decisions. The identification of large, lead and dynamic firms (LLDs) within sectors, and the ability to engage with capabilities and points of leverage in relation to these firms, is a key priority for the DTI. As such the main areas of work forming part of this research include:

  •  Development of a system to track the strategies of large private and public firms that report in the public domain, which will be extended over time to major unlisted private firms. 
  • In-depth assessment of the main conglomerates and the large firms in critical sectors (for instance, agro-processing or construction) including unlisted companies and medium to large firms and recent entrants. 
  • A review of the influence of different hard and soft policy levers on the behaviour of large firms.

IDRP Project Studies

  1. Growth and strategies of large, lead firms - Agro-processing sector
  2. Growth and strategies of large, lead firms - Remgro Ltd
  3. Growth and strategies of large, lead firms - Supermarkets
  4. Railway Locomotives and Transnet: A Case Study

IDRP Policy Briefs

  1. POLICY BRIEF: Growth and strategies of large, lead firms - Agro-processing sector
  2. POLICY BRIEF: Growth and strategies of large, lead firms - Remgro Ltd
  3. POLICY BRIEF: Requiring Local Content in   Manufacturing:
    Insights from Transnet’s procurement of 1064 locomotives