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Construction‚ poultry‚ retail among those singled out as sectors plagued by cross-border price-fixing

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Construction‚ poultry‚ retail among those singled out as sectors plagued by cross-border price-fixing

Construction‚ poultry‚ retail among those singled out as sectors plagued by cross-border price-fixing
Photo credit: Mike Hutchings | Reuters

Construction‚ cement‚ poultry‚ milling and retail sectors have been singled out as the top sectors plagued by cross-border price-fixing‚ collusion and bid-rigging at the expense of the poor in the Southern African Development Community member states.

The identified sectors are top on the priority list of the 15 SADC member states' agreement on which to share expertise‚ information‚ resources and financial muscle to uproot anti-competitive connivance.

Thembinkosi Bonakele‚ SA's competition commissioner‚ said the region had a long history of cross-border cartels but there had been no cooperation arrangement to jointly combat the harmful anti-competitive practice.

“It is important that we look at it from a regional point of view to ensure there is no safe haven for cartels within SADC. We are committed to assist each other in uprooting them...the area involves price-fixing‚ collusion and bid-rigging; where firms coordinate each other's responses on tender bids often by governments‚ so that is the area of focus‚” he said.

However‚ for the agreement to succeed the countries would have to first overcome some hurdles as members states were at different levels of competition laws and institutions.

Luyamba Mpamba‚ Zambia's director of mergers and monopolies‚ said out of 15 SADC members states that were part of the agreement‚ five - Lesotho‚ Mozambique‚ Angola‚ Madagascar and Democratic Republic of Congo - either had no competition laws or had the laws but were in the process of establishing institutions to enforce those laws.

“Some countries are in a situation where‚ for instance‚ there is a cartel conduct in the country but there is no competition authority so it becomes difficult to enforce the law there. Sometimes there is law but no institutions set to enforce the law. (Cartels) may get away with that behaviour there‚” she said.

Mpamba said therefore it was important for the SADC secretariat to encourage formation of competition authorities‚ saying that some countries were more advanced and more developed in terms of competition laws and institutions whereas others were just beginning.

“So we have to try to bridge the gap by cooperating with each other‚” she said.

Magdeline Gabaraane‚ Botswana's Competition Authority's director for mergers and monopolies‚ said their institution was established five years ago and would benefit from SA which was far ahead.

She said SA was more advanced in terms of when they were established and the resources available to them in terms of both manpower and financial power. She said SA had uncovered a lot more cartels and the competition culture in SA saw lots of countries using it as the benchmark.

“You also find that the markets are not the same‚ for instance Botswana's market is not as complex as SA and companies that are in Botswana are headquartered in SA so cooperation with SA is paramount. These investigations are very expensive‚ resource intensive and some of us cannot afford to have those type of resources. These are the dynamics that we need to manage and see how the more advanced ones can assist the less advanced ones‚” she said.

She added that anti-competitive behaviour was harmful in that it robbed the poor and the benefits that would flow from competition included choice and quality of goods.

A recent World Bank study on competition policy in South Africa showed that by tackling four cartels in wheat‚ maize‚ poultry and pharmaceutical‚ some 202‚ 000 individuals were lifted above the poverty line through the lower prices that followed.

The savings put an additional 1.6% back into the pockets of the poorest 10% by raising their disposable income.

The gross effects of cartels in the continent are also documented in a joint report by the African Competition Forum and the World Bank‚ which showed that the retail prices of ten key consumer goods (including bread‚ milk‚ eggs‚ potatoes and frozen chicken) are on average 24% higher in African cities than in other economies around the world.

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