1. Zambia Competition Commission How Competition Law & Enforcement can enhance Distribution and Price of Food by Chilufya Sampa Cape Town International Convention Centre 2 May 2006 South Africa

2. Zambia Competition Commission Comments  Paper highlights increased investment  Increased competition  Small firms did not disappear  Increased mergers and acquisitions  Prices of food went down  Farm prices have remained high

3. Zambia Competition Commission African Perspective  After liberalisation poverty levels increased  While prices went down – efficiencies in the market- people were not able to afford the food  Small firms did not disappear because to start with there were no small firms  State ‘monopolies’ to private ‘monopolies’

4. Zambia Competition Commission African Markets - Distortions  Standard eco theory says ‘competitive forces work best and deliver expected outcomes when there exists a market that is not overridden by distortions  Developing countries markets are less than perfect  Huge strides made in market reform over the last 15 years

5. Zambia Competition Commission African Markets cont’d  Business enterprise in the country with high concentration are prone to engage in restrictive business practices  RBP affect the developing countries more  RBP are a threat to competition especially that competition benefits are a transition to an end  Poverty levels are high – Govt still consider price controls

6. Zambia Competition Commission Hunger MDG can competitive markets deliver  Reduce poverty and hunger by 50% by 2015  Provision and access of food at right price to low income groups  Last 15 years – confidence in free markets

7. Zambia Competition Commission Others differ  Private sector is not capable of carrying out social responsibility – especially areas of loss making  Argument stems from increased poverty levels after abolition of food marketing boards

8. Zambia Competition Commission Reasons for Poverty Increase  Markets had many distortions  PS had to obtain licenses – bureaucracy and perhaps corruption  Transaction costs were high  Markets channeled resources to other sectors with little bureaucracy and regulations - trading

9. Zambia Competition Commission Competition benefits  Lower prices – attested by Brazil  Quality goods  Economic growth – Zambia growth now averages 4 percent  Innovation  Employment creation – poverty alleviation and wealth distribution

10. Zambia Competition Commission Distribution Challenges  Refusal to deal  Exclusive dealing  Tied selling  Market restrictions  Vertical agreements foreclose markets

11. Zambia Competition Commission Benefits of Controlling RBP  Expand entrepreneurship base  Employment creation  Innovative methods of distribution and production  Goods easily accessible  Lower prices  Competitive markets reinforced

12. Zambia Competition Commission Challenges  Technical barriers to entry  Suagr fortification – costs 3x more than world market price – no import competition  Maize fortification – under review – big milling companies supporting this  Justification – Poor health levels and lack of micronutrients

13. Zambia Competition Commission Conclusion  Way forward to food security and effective distribution is through competitive markets  Competition authorities in developing countries require strengthening  The enforcement of competition has eliminated RBP and created employment – even though it is still poorly supported by Government

14. Zambia Competition Commission Thank You Contact: Zambia competition Commission Zcomp@zamtel.zm