Ina Opperman
Business Journalist
2 minute read
7 Dec 2021
7:48 pm

Competition Commission hands over Economy Concentration Tracker Report to Minister Patel

Ina Opperman

A new report from the Competition Commission will make it easier for government to make policy and enforce competition law.

Tembinkosi Bonakele Commissioner of the Competition Commision speaks to media during press conference held at their offices, 13 June 2017, Pretoria. Picture: Jacques Nelles

The Competition Commission handed over its first Economy Concentration Tracker Report that measures concentration and participation in 178 markets, as well as levels and trends over the past five to ten years in the South African economy to Minister of Trade, Industry and Competition, Ebrahim Patel.

The year-long study used data collected by over 80 industry organisations, regulators and government departments, as well as data from SARS, Stats SA and the commission itself. It was recently served before Cabinet and recommends how persistent concentration and lack of participation can be addressed through more coordinated competition policy and law enforcement.

The report, which will be added to every two years, includes agriculture, retail, forestry, health care services, financial services, media, energy, property, gambling and construction, as well as the automotive and airline industries.

It investigates the origins of concentration in South Africa’s economy as a direct result of the concentrated “market structure from the Apartheid era” which the commission says left the country with an economy characterised by excessive levels of concentration of ownership and control, as well as a lack of participation.

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Objectives of the study

The study was done to provide the basis for more strategic enforcement and policy around concentration in the economy and assist the commission and other spheres of government in making informed decisions to address concentration and broader participation in the economy in numerous ways, including:

  • Establishing absolute and relative levels of concentration across the economy and aid decision-making around prioritisation and focus of institutional and government action
  • Focusing on trends as well as levels to provide a way to detect adverse trends of increasing concentration or decreasing participation in sectors before it becomes irreversibly entrenched
  • Examining trends and levels of participation and concentration to provide important insights into the barriers to increased participation and where to aim efforts to transform concentrated sectors
  • Providing a quantitative basis for policy makers and institutions to determine whether efforts to reduce concentration and improve participation are working.

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Worrying concentration in these sectors

According to James Hodge, chief economist of the commission, market concentration in sectors such as agriculture, chemicals, finance, banking, insurance, fibre internet and transport are worrying, with low participation by small enterprises.

Small and medium enterprises make up 95% of all enterprises and create jobs for 38% of the work force, but only contributes 24% of the value of tax-paying enterprises compared to industrial countries where the figure is 50 to 60%.

The top 10% of companies contribute 86% of the turnover, compared to only 1.6% of the total turnover of the bottom 50%.

Tembinkosi Bonakele, the Competition Commissioner, said the commission will act against concentration in the economy.