Why new competition act is actually bad news for small business

Tackling the structure of the economy has been a long-standing policy position of the current government. The latest policy tool applied to challenge industry is the newly signed Amended Competition Act 18 of 2018.

Such reasoning presupposes that new market entrants are inherently competitive and able to achieve allocative efficiencies. In practice, this is not always the case. Furthermore, the notion that concentration is bad has been contested and found wanting in various economic camps. In fact, the global trend has been towards large-scale manufacturing to achieve economies of scale that are beneficial to consumers and create competitive advantages for the country in which the industry is based.

We believe the dearth of broad-based economic transformation in the economy has less to do with market concentration than with a lack of focused industrial policy. Essentially, we see the new act as a zero-sum policy favouring political objectives at the expense of SA’s manufacturing sector. The German Wirtschaftswunder in the 1950s was largely SMME driven, relying on a deconcentrated base of small family-owned businesses with access to a high skills base. SA does not have this infrastructure, and therefore will struggle to create investment at a scale sufficient to drive large-scale job creation.

The most common frustration voiced by an SMME is difficulty in accessing markets and finance . The importance of working with existing large business should not be ignored. This offers the chance to identify and integrate opportunities for new entrants across value chains.

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OPINIONISTA: Why company law and the King Codes can’t save corporate SAWhat lies at the heart of the rot in corporate SA may surprise you. Where government gets it right, the private sector and SOEs get it spectacularly wrong. You to recite case law pretty well but one obvious point that is being missed is the respective boards make up and how it came to be. Due to enforced governmental policy via BEE we have a scenario by which certain role players being selected due there political conections. The process is filled with corruption abd unetchical behavior but the company is blind to the process itself. This has a massive ripple effect as these boards are involved in driving the top management structure IE who gets employed etc. King codes etc is nothing more than a guiding principle and a framework and non compliance and there is no real framework of real enforement as the respective boards are made up of people there out of personal interest. With strong moral or business etchics the business culture
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