The formation of the co-operation of Brics Competition Heads of Authorities necessitated the signing of a memorandum of understanding (MoU) between competition regulation authorities of the Federative Republic of Brazil, the Russian Federation, the Republic of India, the People’s Republic of China and the Republic of SA.
Signed in Russia on May 19 2016, this MoU envisioned, among other things, the recognition of the need to promote long-term sustainable and rapid development of their respective economies.
It also sought to affirm that “effective enforcement of their competition laws is of crucial importance for growth and efficiency in the economy and the protection of consumers.”
At its ninth Brics International Competition Conference, hosted by the Competition Commission of SA in Cape Town early this month, more than 300 delegates universally agreed that Brics has grown and undergone necessary transformation to become a central pillar in the global economic order that champions fairness, inclusivity and the aspiration of the Global South. It became evident that amid ongoing fractured multilateralism, Brics competition authorities are poised to play a leading role in this reimagined multilateral economic order.
The conference included a series of topical conversations that ranged from sustainability and trade to digital markets and artificial intelligence. The conversations created an important platform for the exchange of best practices, views and recommendations between competition practitioners and representatives from Brics nations and other jurisdictions. Brics working groups also provided updates and insights on competition regulation in the pharmaceutical, digital markets and food sectors.
Of note, the Brics Competition Law and Policy Centre has already taken a momentous step towards this with a recent research study and subsequent report into the grain sector. The study offered an innovative approach to analysis from the perspective of global processes. Traditional antitrust analysis of the grain market has focused primarily on horizontal competition – interaction at the same level of the supply chain.
However, to gain a deeper understanding of market dynamics in the Brics countries, an analysis of vertical competition was conducted, which involved examining the relationships between different levels of the supply chain, including producers, traders, infrastructure operators, and financial intermediaries – from the field and port to the consumer. Researchers paid particular attention to the activities of global grain traders through the prism of the economic and technological changes that markets are undergoing today.
According to the authors of the study, the global grain market has long been controlled by an oligopoly of major agricultural traders known as ABCD+ (ADM, Bunge, Cargill, Louis Dreyfus Company + COFCO, Olam, etc.). This concentration of market power, as well as certain structural features of this market, make it vulnerable to price fluctuations and various types of speculative behaviour, which negatively affect both grain producers and consumers.
The report proposes the need to involve antitrust regulators of the Brics countries in the design of the Brics Grain Exchange as a single platform where pricing will be more transparent and, most importantly, hedging mechanisms will be more transparent.
The grain exchange has already been initiated by the leaders of the Brics countries and if implemented correctly, it could be a step towards reducing price volatility, increasing pricing transparency and improving the quality of market competition in the global grain market.
Readers may access the report online at https://www.bricscompetition.org/ru/grainreport
- Makunga is spokesperson for the Competition Commission of SA.
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