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PROGRESS REPORT ON PRIORITY SECTORS Presentation to the Public Sector Consultative Forum

PROGRESS REPORT ON PRIORITY SECTORS Presentation to the Public Sector Consultative Forum CSIR Convention Centre Tembinkosi Bonakele Deputy Commissioner: Competition Commission 26 March 2010. TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL. Outline. Background Priority sectors

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PROGRESS REPORT ON PRIORITY SECTORS Presentation to the Public Sector Consultative Forum

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  1. PROGRESS REPORT ON PRIORITY SECTORS Presentation to the Public Sector Consultative Forum CSIR Convention Centre Tembinkosi Bonakele Deputy Commissioner: Competition Commission 26 March 2010 TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

  2. Outline • Background • Priority sectors • Investigations in priority sectors • Current strategic goals • Conclusion TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

  3. Background • 2006 to 2009 strategic plan • Staff morale and motivation  • Align structure and work processes to strategic priorities • The Commission as a centre of information, knowledge and expertise • Approach and methodology to prioritization • Advocacy and communication  TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

  4. Background • The Commission identified prioritisation of cases and sectors as one of its primary objectives. • A framework for prioritising sectors and cases was developed. • Criteria for prioritisation: • Impact on consumers • Cost of doing business • Economic growth and development • Competition concerns, especially cartels TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

  5. Priority sectors • Food and agro-processing • Construction and infrastructure • Intermediate industrial products • Financial services TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

  6. Food and agro-processing • High concentration in trading, storage of grain (wheat, maize), processing (milling, baking of bread) • Market power of vertically integrated firms and cartels undermines government’s policy objectives for deregulation • Government regulation can facilitate anti-competitive behaviour e.g. fishing quotas • New entrants in the sector will result in greater competition TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

  7. Cases in food markets TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

  8. Intermediate industrial products • Chemicals and metals are key inputs in manufacturing • Prices have risen at rates in excess of producer and consumer inflation • Historically dominant firms in concentrated markets • High prices in these products make labour absorbing industries using these products uncompetitive TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

  9. Cases in industrial product markets TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

  10. Construction and infrastructure • Major infrastructure investments planned in excess of R840 billion • Anti-competitive prices increases the costs of government’s infrastructure programme • Input markets are generally concentrated • 52 CLP applications in construction mostly involving bid-rigging are currently under consideration • Bid-rigging increases the costs of infrastructure provisions for govt and SOEs • Commission to step up advocacy on bid-rigging TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

  11. Cases in construction and infrastructure TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

  12. Financial services • Banking enquiry (August 2006 to June 2008) • December 2008 report made 28 recommendations relating to: • - Penalty fees • - ATM pricing • - Payment and non-payment card interchange • - Access to the national payments system • -Consumer protection issues (e.g. ease of switching) • Most recommendation for regulatory intervention • Steering committee: Treasury, dti , SARB, Commission TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

  13. Current strategic goals(2010 to 2013) • In the next three years, the following will be the Commission’s strategic objectives: • Achieve demonstrable outcomes: continuous prioritisation of sectors and cases, market enquiries, impact assessment • Increased competitive environment for economic activity: engage with key stakeholders in the economy to influence policy formulation and decision-making • Realize high performance agency: efficient business processes, staff development and retention, effective decision making TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

  14. Conclusion • The prioritisation framework adopted by the Commission in the 2006 to 2009 strategic plan has helped uncover anticompetitive conduct in important sectors, many investigations ongoing • Often effectively addressing anti competitive outcomes in a sustainable way will require multi agency / departmental action TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

  15. Thank you Tel: 012394 3294 Fax:012394 4294 email: tembinkosib@compcom.co.za TOWARDS A FAIR AND EFFICIENT ECONOMY FOR ALL

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