The local rooibos market in South Africa comprises 8 large processing firms which account for approximately 90% of the market, with Rooibos Limited controlling 60% of the market. Similar to other processing firms, Rooibos Limited purchases large quantities of tea from commercial farmers and processes it into bulk tea which is subsequently sold to packaging firms to pack into finished products. A case against Rooibos Limited has recently been referred to the Competition Tribunal alleging exclusionary abuse of dominance in contravention of section 8(d)(i) of the Competition Act.
A summary of some of the major mergers, acquisitions and enforcement cases in the region.
Small and Medium Enterprises (SMEs) are key drivers of inclusive growth in the South African economy, contributing about 55% to the gross domestic product, while their contribution towards employment is as high as 60%. In addition, small firms and new entrants enhance competition within different economic sectors, resulting in lower prices and greater variety for consumers, as well as dynamic and productive efficiencies.
The South African Competition Commission has been very successful in uncovering cartels, with a large number of settlements over the past 10 years. It should be noted that settlements typically involve an admission on the part of the companies involved. Given the regional scope of many companies’ activities across southern Africa this begs the question as to whether these cartels affected neighbouring countries and should also be prosecuted in these countries.
The Competition Commission of South Africa’s land-based public passenger transport market inquiry, which commenced in June 2017, addresses a range of questions including issues with intermodal transport links. The inquiry relates to excessive short distance passenger transport fares charged by buses, peak season long distance bus fares, operational subsidies disadvantaging operators that are not subsidised, and restricting particular providers to operate in specific areas and routes. The issues to be considered cut across several public transport modes. The inquiry coincides with the Gauteng provincial government’s plan to expand its high speed train, Gautrain, into two of Gauteng’s largest townships.
Firm competitiveness can be understood as the ability to provide products and services at least as efficiently and effectively as competitors. At the industry level, international competitiveness is the ability of domestic firms to achieve sustained success against foreign competitors such as in terms of unit labour costs and relative productivity. Competitiveness is critical if a country’s firms are to take advantage of the opportunities presented by the regional and international economy. Furthermore, it can stimulate industrialisation and economic growth which subsequently promotes job creation, higher productivity and innovation.
The world population is expected to reach ten billion by 2050, which has implications for food security in the context of climate change. In the recent $43 billion acquisition of Syngenta, a global seed company, by ChemChina, a chemicals company, the CEO of ChemChina notes that the merger was driven by China’s need to secure future food supply, given the country’s history of famines. This strategy highlights the importance of access to seeds as a key input in agricultural production. This article looks at the implications of increased consolidation in the global seed industry on access to seed and food security.
In April 2017, the COMESA Competition Commission (CCC) conditionally approved a large merger between Brasseries Internationales Holdings (BIH) Ltd and Carlsberg Malawi Ltd (Carlsberg). BIH is the holding company of Castel Group, a French beverages company. The second party to the merger, Carlsberg, is a beverages manufacturer participating solely in the Malawian market in Africa. The merger spans four countries: Ethiopia, Malawi, Madagascar and the Democratic Republic of Congo.