1. Address to Trade & Industry Portfolio Committee on IPAP
Simon Roberts
31 October 2012

2. Overview Links between competition and industrial policy
Effective competition and inclusive growth
IPAP objectives linked to competition:
Industries: polypropylene; forestry; steel; fuel
Strengthening implementation of competition policy;
identification of appropriate complementary measures to improve competitive outcomes
Stronger conditionalities attached to state support
Links with trade policy

3. Competition and industrial policy
Relationship of competition and industrial policy? Should be complementary and mutually reinforcing
Evidence from East Asian countries – support rivals; use competition to get the most from policy tools
Conduct of large firms is critical? Competing in investing in improved capabilities, not in controlling profits
Industrial policy for ‘catch-up’ – adoption and adaptation of technologies; building capabilities and complementary investments
Opening up access to economy, this requires proactive industrial policies

4. Work of competition authorities
Continued focus on priority areas: food products; intermediate industrial products; construction
Settlements in construction inputs such as cement, reinforcing steel
Referral in fuel
Construction bid-rigging
Ongoing cases in polypropylene, wheat flour, mealie meal, poultry, newspapers
Investigations continuing in supermarkets, forestry, media
Established separate cartels division

5. Case studies Polypropylene Steel Forestry
Key input to many plastic products
Case referred in August 2010, after investigation at request of Min of Trade & Industry; to be heard in 2013
By-product of liquid fuels (partially regulated); produced by Sasol from coal (subject to mining rights)
Steel
Agreement to have ‘Developmental Steel Pricing’ not implemented as DTI-AMSA deadlock on what this meant. AMSA pricing above own proposed international benchmark (‘basket’).
Forestry
Investigation after sawmills closed; state-owned KLF controls biggest log supply, not supplying independent mills on same terms as its own
Commission and IDC research report for government as shareholder
Commission finalising investigation

6. Regional dynamics Important dynamics across region
Firms and anti-competitive arrangements operate across the whole southern African region
Regional cartels, and single firm dominance, for example:
Cement
Beer
Poultry
African Competition Forum established
Competitive rivalry combined with stronger value chains – linkages across countries

7. Where have we come from? What can we do?
Industry insiders have long established ‘ways of working’, where they maintain high profit margins, cast themselves as the ‘custodians’
New participants are ‘cut-in’ through share ownership, not as new independent entities, who are instead excluded
Low levels of investment, not dynamic
The ways of working are part of ‘settlements’; what is the new settlement we need and how can we get there?
Coordinated action across competition authorities, regulators and government to underpin participation, more competitive outcomes
Better use of existing levers
Government as shareholder?