SIYABULELA MAKUNGA | Commission advancing efforts to promote inclusive economy

Every year on December 5, competition regulators commemorate World Competition Day.

The theme for this year is “Competition and Inequality”, and I am proud to share that the Competition Commission has long been a leading voice on the global stage actively advocating for competition regulators to focus on sectors that are crucial to alleviating poverty and that directly impact low-income households.

Competition regulation is one of many state tools utilised to meaningfully reduce inequality.

In her paper prepared for tabling at the 23rd Global Forum on Competition, Prof Eleanor M. Fox, an internationally acclaimed scholar of competition law, argues that “inequality of opportunity, of income, and of wealth,” are the three commonly discussed inequality dimensions.

She underscores inequality of opportunity as “the most directly relatable to competition law because competition law in many jurisdictions aims to afford equal opportunity to contest markets on one’s merits, free of anticompetitive obstructions”.

This year, the commission continued to focus on markets that affect low-income consumers, including food prices, health care, and energy supply. With health care, the commission is playing its part in ensuring access to more affordable health care and monitoring the exploitive and exclusionary impact patent evergreening has on the affordability of pharmaceutical drugs.

In September 2023, the commission initiated an investigation against two global pharmaceutical companies based on information that they had filed a secondary patent for Bedaquiline (trading as Sirturo®), a drug used to treat tuberculosis.

This practice raises prices to the state and South Africans. It also limits potential competition from generic manufacturers, which could drive prices down. In June, following extensive engagements with the companies, they agreed not to enforce the Bedaquiline patent in 134 low and middle-income countries, including SA.

This opened the market, allowing for the entry of generic suppliers. The price the health department pays for Bedaquiline was also reduced by 40%, meaning the funds can now be reallocated by the department.

We remain committed to prioritising markets and cases that directly impact the lives of ordinary South Africans and seek to address the rapidly rising cost of living. Since 2020, the commission has been monitoring essential food prices to gain insight into the drivers of high and rising food inflation.

These quarterly reports and the commission’s advocacy work with retailers support greater transparency regarding the margins earned by producers and retailers of products that include sunflower oil, brown bread, canned pilchards, and individually quick frozen (IQF) chicken.

In one of the reports this year, our research team observed that cash-strapped consumers are swapping out traditional sources of protein such as beef and chicken for the more pocket-friendly canned pilchards to save money on grocery bills. While the price of canned pilchards has increased, producers have absorbed some of the cost increases which is likely to have benefited cash-strapped consumers.

In terms of energy supply, the commission is also intensifying its focus on the competition dynamics in new or green energy markets, having conducted studies on the uptake of solar PV products by households and businesses in the country.

This research provides the commission with an in-depth understanding of the barriers to entry new market entrants might face.

It is often new markets that create more opportunities for ordinary citizens but also might exacerbate concentration in existing markets. Our work under the Online Intermediation Platforms Market Inquiry (OIPMI), for example, fostered a competitive environment which allowed small and medium hotels and other establishments to offer lower prices on their websites for online bookings.

As we join the world in commemorating World Competition Day, we also acknowledge our work is far from complete and reaffirm our commitment to fulfilling our mandate of creating an inclusive economy.

• Makunga is spokesperson for the Competition Commission of SA