SA’s state-owned enterprises have a long history of battling issues such as poor management and high levels of debt, which have put substantial strain on the country’s national budget. This has particularly been the case for SOEs that have had to rely on government bailouts to keep afloat.
What happens when a company formerly owned by the state becomes majority-owned by a private shareholder, and the government becomes a minority shareholder? This situation raises three key questions around the running and regulation of entities that were publicly owned and are now privately run.As the government disposes of its shares in a public enterprise, new private shareholders will enter the business.
This is to ensure that parties in the merger are not decreasing competition by doing so, that there is no abuse of a dominant position by a firm that could lead to excessive or discriminatory pricing, and that a firm is not denying competitors access to essential facilities, as well as any other exclusionary acts.
For instance, will the commission require that the government dispose of any other assets before allowing the disposal of its majority shares in an SOE as it would sometimes require from a private business? Will it ensure that the government doesn’t abuse its dominance in the various sectors it has major stakes in? Competition regulation around both SOEs and new formerly state-controlled enterprises needs to be made clearer as soon as possible to address transparency in pricing,...