EDITORIAL: Block-exemption regulations may open door to abuse by companies

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Patel’s plan to help small firms bargain for better prices may see big companies seek creative ways to benefit

Patel’s plan to help small firms bargain for better prices may see big business seek creative ways to benefitTrade, industry and competition minister Ebrahim Patel has in recent years done much to give the competition authorities greater powers to go after big companies. Now he clearly feels the need to do more to boost small companies. But the risks that could come with his latest idea could well outweigh the rewards.

All of this would help address disadvantages smaller firms have because they lack the scale and clout of larger companies. As Patel sees it, that would enable the growth of SA’s small and medium-sized business sector, boosting economic growth more broadly. The minister says his block-exemption idea builds on his experience of granting such exemptions during the Covid-19 and KwaZulu-Natal floods crises and is not unique to SA, with the EU also having such a measure in place. A key driver was a 2021 Competition Commission study, which found that the SA economy is highly concentrated, with many sectors dominated by a handful of large players while smaller players face barriers to entry.

It’s probably true too that smaller firms might benefit from good forms of co-operation, and even that it might help them to know that the competition authorities would not go after them if they did co-operate.

 

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1/2Dear Editor.The greatest risk to any system is the knowledge gap between stakeholders,hence advocacy remains crucial to close the gap. Your assessment of the draft block exemption may be a case in point. In practice, SMEs collaborate in many areas e.g. buying groups in retail.

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