Competitive Advantage and Competition Policy in Developing Countries

Competitive Advantage and Competition Policy in Developing Countries

The CRC Series on Competition, Regulation and Development

Edited by Paul Cook, Raul Fabella and Cassey Lee

The book discusses competition from different theoretical perspectives and examines the implications these viewpoints have for policy. The contributors assess competitiveness in domestic markets and the impact of foreign competition. They also review the experiences of a range of countries in developing competition policy and examine both the strengths and weaknesses of these policies.

Chapter 12: The Role of South African Competition Law in Supporting SMEs

Kim Kampel

Subjects: development studies, development economics, law and development, economics and finance, competition policy, development economics, public sector economics, law - academic, law and development


Kim Kampel INTRODUCTION The South African Competition Act No. 89 of 1998 reflects the government’s aims to incorporate particular public interest policies that reflect the changing socioeconomic and political context within which the Act was promulgated. One of the Act’s explicit purposes is to ‘ensure that small and medium-sized enterprises have an equitable opportunity to participate in the economy’. Such policy considerations are embodied in certain provisions of the Act, which is interesting from the perspective of a developing country with a fledgling competition regime. Nearly five years on, it is useful to examine how the Act has fared. The ultimate goal of any competition policy is to enhance consumer welfare. The premise is that markets are not competitive where it can be shown that prices increase or the choice of product or service available to the consumer is limited as a result of monopolistic conduct. However, the South African Act specifically mandates attention to small and mediumsized enterprises’ (SME) interests. Therefore, South African competition law is in theory SME-friendly, insofar as it proclaims to protect SME interests by promoting access to markets as well as acknowledging their rights to participate in the economy. However, the enforcement of competition law may in reality sometimes be incompatible with SME interests. The difficulty is precisely that frequently the larger, integrated firm is more efficient than its SME counterpart. Large firms are able to leverage their relative strength in the market to source at lower cost and to...

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