Households need to access food at reasonable prices

When the Competition Act was drafted just over 25 years ago, it sought, among other things, to take the best practices from competition authorities across the globe and develop a regulatory framework that would foster a growing and deconcentrated economy for the benefit of all South Africans.

SA has, in turn, become a leader on the world stage; actively contributing to competition regulation discourse; promoting advocacy as a crucial engagement tool for competition regulators; illustrating the impact public interest provisions have on protecting jobs and reducing barriers to the market for new entrants.

At the recently held 23rd International Competition Network (ICN) Conference in Brazil, commissioner Doris Tshepe led the Competition Commission delegation that participated in a series of plenary discussions that focused on topics such as the interaction between global markets and local agriculture and food markets.

Agricultural markets have always been one of the commission’s priority areas for many reasons, including that for lower income households, around 70% of the income goes towards the purchasing of food.

Let’s unpack some of the ways the commission has sought to address these concerns.

The current competition regulation dispensation empowers competition authorities to play a role in contributing meaningfully to the immense interest from the public to better understand how the prices of food items come about.

At the ICN’s plenary session, Commissioner Tshepe highlighted the role of the Essential Food Pricing Monitoring (EFPM) Report as a mechanism to ensure more transparency with regards to the pricing of food. Our research team uses various methodologies to break down the cost and margins throughout the value chain to determine if price increases are justified.

Our research work has helped to inform the public and enabled the Commission to call out what may be exploitative practices by processors or retailers. In addition, the information could be used to initiate investigations or advocate for retailers or processors to reduce prices. For example, an EFPM Report indicating the high prices of cooking oil resulted in processors reducing their prices.

One of the key competition issues in the agricultural sector is the market structure, and in SA’s agriculture supply chain there are features that are conducive to potential anti-competitive conduct.

Market Inquiries also offer us a platform to investigate industries, for example, our Fresh Produce Market Inquiry (FPMI) has over the last 14 months examined features in the fresh produce market that could impede, restrict or distort competition in the value chain of apples, citrus, bananas, pears, table grapes, potatoes, onions, carrots, cabbage, tomatoes and spinach.

And to ensure transparency and public participation, the hearings were live-streamed, enabling the public full access to the proceedings.

There has been a growing focus on using agriculture as a cornerstone for the participation of Small and Medium Enterprises (SMEs) and as a tool for growth and employment to actively deconcentrate these markets to not only improve structure but to ensure market resilience.

Imposing public interest provisions on mergers to protect contracts and agreements with small-scale farmers and processors are another avenue through which the Commission can aid the agricultural sector to become stronger.

The agricultural sector does not operate in a vacuum, nor does the Commission. Our work in this field has been used by non-governmental organisations such as the DG Murray Trust to try and look at possible interventions.

Other soft law tools such as leveraging the watchdog role of the media to hold firms accountable and call for transparency when it comes to the pricing of food have become essential. The Commission believes it is crucial to ensure that the country’s households can access food at reasonable prices.

Therefore, we will continue to conduct market inquiries, advocacy work and research studies to understand the issues that have the potential to effect competition throughout the value chain of food items and play a pivotal role in allaying these competition concerns.

• Makunga is spokesperson for the Competition Commission of SA