Competition Commission widens net for review

Retail and health care sectors to follow completed LPG inquiry

THE Competition Commission has been emboldened to conduct more market inquiries in sectors where it suspects collusion and market concentration following this week’s launch of the commission’s first market inquiry report.

On Monday, the commission launched the report on the liquefied petroleum gas (LPG) sector inquiry. It was the first inquiry conducted since the 2013 amendment of the Competition Act allowing the commission to conduct market inquiries into the “general state of competition in a market for particular goods or services, without necessarily referring to the conduct or activities of any particular named firm”.

This has fortified the commission’s resolve to conduct more market inquiries in other sectors; with the private health care and grocery retail industries next in the anti-graft agency’s sights.

Commissioner Tembinkosi Bonakele told The Star that the agency would continue with its pursuit of protecting South Africa’s consumers where uncompetitive behaviour is suspected.

“The commission’s mandate is set out in the Competition Act, and it is very clear part of its mandate is to make sure consumers are not exploited through uncompetitive behaviour, and we are absolutely determined to protect consumers and the economy from any abuses that could be taking place,” he emphasised.

“So, the inquiries into the private health care and grocery retail sectors are going very well. I’m very glad that we have wrapped this (LPG) one up. Regarding the health care sector, our deadline for the inquiry’s completion is the end of this year, and I’m expecting that it should be completed at that time. The retail inquiry is also going very well. We are expecting that it should start public hearings in the second half of the year.”

Bonakele’s views were accentuated by Economic Development Minister Ebrahim Patel, who stressed the commission needs to continue “fiercely protecting” the public’s interests by taking on sectors where collusion and market concentration is suspected, as part of fostering inclusive growth and fair competition.

“In conducting its work, the commission also draws attention to challenges in the public sector in how the public sector needs to improve its own co-ordination so we have cheaper prices,” said Patel.

“And I would say the twin challenges that we have in ensuring inclusive growth are that in the private sector you can very often have high levels of collusion and concentration; and in the public sector there is the danger of state capture where private, commercial interests capture parts of the state and have decisions taken by the state that are in the private financial interests of individuals. We have got to combat both challenges,” he added, without being drawn into who the “private individuals” “capturing” the state were.

The LPG inquiry report found, among other things, that the industry is “highly concentrated” with only four wholesalers – Afrox, Oryx, Easigas and Totalgaz – accounting for 90% of the market share.

It recommended for the commission “to keep monitoring this market as the structure is conducive for collusive behaviour”.

Public sector needs to improve its own co-ordination