ONCE-off interventions such as punitive fines levied by competition authorities to correct anticompetitive behaviour have limitations, even in smaller developing African markets, delegates at Bowman Gilfillan’s annual Africa Competition Law Conference heard on Friday.
The gathering came in the same month that a World Bank economic update for South African noted that increased competition could spur economic growth and innovation.
The report noted while competition authorities had been successful in combating cartels, particularly in food, agroprocessing and construction, markets in the transport and telecommunications sectors labour under high regulatory obstacles to competition.
The conference on Friday was told that mechanisms used to correct excessive pricing had potential drawbacks, although this was by no means a criticism of regulators.
Such drawbacks included the fact that it was difficult to quickly gauge if price hikes could be viewed as excessive.
Senior manager for legal at Sasol Natasha Pharo said the issue of what constitutes excessive pricing was a headache and, legally, it was difficult to give quick and authoritative answers on price increases to clients, given the sheer amount of necessary assessment.
Speaking during a panel discussion on regulatory tools to address concentrated sectors in Africa, a partner at RBB Economics, Richard Murgatroyd, said while the use of "invasive interventions" was necessary for smaller developing markets, it could be compared to less invasive means used in larger jurisdictions.
The European Union and the US were more likely to wait to see if supply-side market forces corrected pricing perceived as excessive, and instead of seeking one-off punitive costs they could monitor the sector. High prices could be a signal to the market for new entrants and could also lead to innovation, he said.
Speaking on progress and developments in the Common Market for Eastern and Southern Africa (Comesa), director of Comesa’s competition commission George Lipimile said understanding regional frameworks was increasingly relevant for national competition authorities in Africa — even as some continued to build capacity to operate domestically.
Comesa’s commission itself will spend the coming year increasing the number of cases it dealt with — as opposed to just advocacy — while issues of public interest questions were firmly on the agenda.
This included the interest of the informal sector in these markets through its linkages with the formal sector, said Mr Lipimile.
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