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By Vhahangwele Nemakonde

Digital Deputy News Editor

Consumers must be able to choose freely

Irrespective of what other jurisdictions are doing, we need to have a competition legal field that does not consider business the enemy.

Eskom has a monopoly on energy and this is due to state protection. Prior to the changes to regulations, which now allow for private generation of electricity – subject to state licensing, of course – all energy activities were monopolised by Eskom.

Theoretically, there cannot be a company that can enter the energy market and compete with Eskom. This is an example of a monopoly.

The area of law that professes to deal with monopolies is Competition or Anti-Trust Law. One would think that, surely, there would be a case to be made against the monopolisation that is state-led? Not even a peep from SA competition authorities is heard.

Instead, private businesses, that have competitors, are deemed “effective” monopolies for simply being freely chosen by consumers. Consumers do not have a choice, nor the latitude to create a choice, when it comes to their energy provision – it is either Eskom or going off-grid. Yet, we do not see parties who will call for big business to be reined in, calling for the same with Eskom.

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Consumers freely choose Google, for instance, even when they know there’s Yahoo, Duck Duck Go and the TOR search engines. So, when Google will be called a monopoly even though I just listed three of its competitors, then what will actual monopolies, as we have just described Eskom, be called?

The problem with anti-trust law, globally, is that it endeavours to solve a problem it was not acutely aware of nor had the know-how to solve.

Dating back to the promulgation of the Sherman Act of the US and the historic dissolution of Standard Oil, anti-trust has had its priorities misplaced. Standard Oil was not enjoying any state protection from the US government.

There was a possibility of another player entering the oil business and competing with the company which started out small and grew to its height of over 80% market share to 65% market share when the US government brought an anti-trust case against it.

Its market share was not acquired because there was a law barring it from being competed with, but because it was willingly patronised by Americans at the time. The main point with Standard Oil is that from the outset another company could have competed with Standard Oil, yet still it was sanctioned.

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This error in the use of state force has been perpetuated to the modern day. Barring any state protection of certain business and markets which creates monopolies, the state cannot do anything else to “help” competition.

Irrespective of what other jurisdictions are doing, we need to have a competition legal field that does not consider business the enemy, nor one that will punish consumer beneficial success just because it came at the expense of “inducing customers not to deal with a competitor” and succeeding.

Zakhele Mthembu, BA Law, LLB (Wits), is a legal researcher at the Free Market Foundation.

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Eskom Monopoly

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