Sunday, January 29, 2023

Is Competition Commission living up to expectations?

Before it was created, there were several arguments for the establishment of the Competition Authority. The thinking was that once established, especially through an Act of Parliament, the Commission would improve fairness in business. To be honest, it took much longer to create this crucial organ of fair competition in business than was necessary.

Our view is that long after it was created Competition Authority is still struggling to assert its authority. It has not gained traction. It has many weaknesses, many of which are not legal but structural, technical and administrative. In short the officials manning it simply lack a backbone, and this opens them to not altogether implausible charges of favoritism and even corruption.

The cost of living crisis has opened Competition Authority to renewed public scrutiny. There are many areas of business where the organ could seemingly be doing more. Yet like our politicians they too are too weak to act in the public interest. Take for example the chicken industry. It has been years since this authority commissioned a study on this sector. That study was long published yet the authority has not acted on it.

The industry remains under the clutches of no more than three families that own a few companies. Politicians see nothing wrong with this anomaly because they get sponsored by the chicken czars in many different ways. Then there is the car dealership. The competition authority has deliberately and steadfastly opted to stay away from this. Every time people complain about local monopoly they are told that Zeerust and Rustenburg across the border in South Africa are not too far away and that they provide competition to local monopolies.

There is a blatant abuse of market advantages here, not least because the biggest customer is government. This is madness, to say the least. But by far the biggest scam has to be the petrol filling stations. It cannot be correct that Competition Authority has facilitated monopolies in this sector – directly and indirectly. The fuel stations in Botswana has established monopolies, well known to the competition authority. These big players continue to buy out small players  without the intervention of the Commission. This clearly undermines and breaks the very law that the authority was created to enforce.

Too many Batswana have given up on the Competition Authority. Ahead of its establishment, cynics argued that its officials would become pawns of big business. That prediction has come to pass. Competition Authority is abetting and facilitating the emergence of monopolies in Botswana. There is no need to increase the Authority’s powers. It just needs to exercise the powers it already has under the law and stop deferring to politicians and their masters in business. The fuel retail business in Botswana is too concentrated.

An intervention is long overdue. There has to be a regulatory crackdown to get the economy more competitive. Business as usual is no longer sustainable. The biggest mistake made was to fail to separate the Authority from politics. Its leadership is as close to politicians as can be managed. This has been a practical but also an economic tragedy.

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