The public discourse on various platforms of public communication shows that many consumers are unaware of the full scope of the work the Competition Commission does.
This is probably the reason there is a relatively low consumer activism on issues that directly impact consumers.
From merger assessments and market inquiries to research and monitoring of food prices, our work is vast and varied yet our goal remains the same – to play our part in driving an economy that is growing, deconcentrated and inclusive.
But how does the commission’s work benefit you as a consumer?
Before I unpack this popular question, let me provide more context as to how and why the commission does what it does.
Established by the Competition Act 25 years ago, the commission is one of three national competition agencies.
It is mandated by this legislation to investigate, control and evaluate restrictive or anti-competitive practices, potential abuse of a dominant market position and to regulate mergers.
History has shown that if competition is not regulated, firms will engage in anti-competitive behaviour, such as agreeing on prices, allocating customers and abusing their dominance through excessive or discriminatory pricing.
All these different aspects of our work seek to promote and maintain competition in the market.
Why is competition in markets important?
For businesses, competition in their respective markets encourages firms to become more efficient and innovative as they attempt to gain more customers. The commission’s role is therefore to level the playing field so that firms, big and small, can compete fairly.
For consumers, more competition between businesses leads to improved quality, more competitive prices and greater product choices.
Our work and the prescripts of the Competition Act enhance consumer welfare by deterring firms from monopolising industries or colluding to raise prices.
The commission has the power to investigate and refer anticompetitive conduct to the Tribunal for prosecution. If found guilty, a fine of up to 10% of a firm’s annual turnover may be imposed.
Although some mergers may benefit consumers in allowing firms to operate more efficiently, others may reduce competition and cost consumers thousands in the form of excessive prices and reduced product quality, consumer choice and innovation.
Mergers between a producer and a retailer may harm competition by making it difficult for competitors to gain access to an important product.
The commission has the mandate to prohibit a merger that has undesirable consequences for competition.
Our economists apply the Competition Act when considering if a price is excessive. This includes four steps: Determination of the actual price charged; the economic value of the good or service; if the actual price exceeds the economic value, it must be determined whether the difference between them is unreasonable; and if so, it must be determined if charging of the excessive price is to the detriment of consumers.
Consumers are often victimised because they don’t report anti-competitive practices.
How can you help us in the detection of anti-competitive conduct which the Commission is not aware of? Consumers may informally report contraventions of the act if they do not wish to lodge a formal complaint via our WhatsApp line 084-743-0000.
* Makunga is spokesperson for the Competition Commission of SA
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