Johannesburg - A probe into the high cost of mobile data was a major priority of the South African government, as wireless communication was a critical factor in driving the economy forward.
This was one of the key messages from Minister of Economic Development, Ebrahim Patel, in his address at the 11th Annual Competition Law, Economics & Policy Conference, currently being held at Gordon Institute of Business Science in Illovo, Johannesburg.
Patel said black businesses and the country’s most disadvantaged communities in particular were at the receiving end of business malpractices such as collusion.
“It stunts our economic growth, prevents the entry of new players, reduces consumer choice and feeds the growing resentment of black South Africans of the failure to recognise promises made by the Competition Act and the vision of the Constitution,” said Patel.
Patel added that the probe into data costs will look at a variety of things, including comparing costs of data in South Africa against other international countries.
“We will benchmark South African data costs against international norms and assess the state of the competition in the market by looking at, among other factors, market structure, strategic behaviour and lastly fixed and mobile incumbents. We will make recommendations to government on measures to use to improve competitiveness in this sector and how data costs can be brought down.
“We are not only responding to the strong and legitimate call of young people for the data costs to fall. This is also recognising that data will be a driver of many of the innovations that we have seen in the 21st century onwards. High costs will limit South Africa’s ability to play in this field.”
The Competition Commission of South Africa has received a staggering 418 mergers of notifications from firms in its current financial year, though the rise of cartels and the collusion of large companies for dominance is a grave concern.
To stress the importance of the conference, the country’s Deputy President Cyril Rampahosa, is a key note speaker, while other confirmed speakers during the conference included Economic Freedom Fighters Deputy President Floyd Shivambu and the Chairperson of the ANC’s Economic Transformation Committee Enoch Godongwana.
Over the past few years the Commission has dealt with close to 200 cases involving cartels and of these, 33 have been referred to the Competition Tribunal for adjudication.
These cases include the case of collusion against 17 banks that allegedly conspired in trading of the US dollar and the Rand and the excessive prices of Cancer drugs. At least 25 premises, of cartels in the fresh produce, red meat suppliers and fire control business, were raided this year. Stuttafords Van Lines faces the highest number of charges, with 649 counts of collusive tendering for office furniture removal tenders issued by the state.
Currently the commission’s Cartels Division roll of cases stands at 177 cases, of which 84 are prosecutions before the tribunal and the other 93 are still under investigation. At least three cases of abuses of dominance were referred to the tribunal for adjudication.
Competition Commissioner Tembinkosi Bonakele said in his opening address on Thursday that despite the spike in the flouting of the regulations by businesses, there were some improvements in the number of companies who alerted the commission of their plans to merge. The commissions Mergers and Acquisitions Divisions received 418 such notifications as compared to last year’s 391. He said South African society had become more aware of their rights as 205 complaints were received from the public.
The commission has also initiated market inquiries into public transport and the cost of mobile data.
“The Annual Conference presents an opportunity to reflect on all these developments, as well as contemplate what the future holdsAs we have said before, competition policy and execution in developing countries for its own legitimacy, must respond to local challenges of inequality, unemployment and poverty,” he said.
He added that barriers to entry have manifested themselves in market conduct or firms’ behaviour, which leads to abuse of dominance or cartels with an aim of excluding small competitors. He said this came in different forms such as price discrimination, in favour of large companies and regulatory barriers to restrict a number of participants through licensing.
At the conference, there was also a major focus on cooperation between competition authorities in the Southern African Development Community (SADC) to combat the harm caused by cartel conduct and ensure the effectiveness of each country’s anti-cartel enforcement regime.
Competition policy, Patel said, is going through something of a “golden age”, with enormous public interest in the work of the competition authorities and widespread public debate on what is done and what should be done. Patel said neither corruption in the public sector (with its private sector counterparties) nor collusion between large firms are “victimless crimes”.
“Corruption takes resources away from housing, jobs, social grants, education, health facilities. Collusion increases the costs of doing business, stunts the dynamism and competitiveness that is needed and has a negative impact on growth and jobs.
“We recently did an exercise to quantify the cost of corruption in the public sector, based on just a 10% increase in price in infrastructure projects as a result of corruption. Based on our modelling, it leads to at least R27bn foregone annually in GDP and the loss of 76 000 jobs that would otherwise have been created,” said Patel.