SARS cannot afford not to pursue transfer pricing matters

Transfer pricing is a business practice that, when abused, can result in substantial lost tax revenue for any country. In South Africa, tens of billions of Rands are lost due to abuse of this practice. Given the cost to the country (relative to the cost of enforcement, SARS cannot afford to under-enforce firms who might be engaging in this abuse.

‘Brand Match’ may look appealing, but end up robbing customers of the ability to pit retailers against one another

Pick n Pay’s new strategy called Brand Match collects weekly prices of their major competitors and drops Pick n Pay’s prices instantly in the event that any competitor has a lower price. This is a power information gathering exercise and signalling tool to competitors which undermines their incentive to drop prices. This change in the competitive dynamic is likely to result in harmful and coordinated outcomes despite no explicit agreement or meeting between competitors.

How much damage did the construction cartels inflict?

Recent revelations of collusion in the construction sector in South Africa have led to widespread anger and debate. In June 2013, the Competition Commission of South Africa reached settlement agreements with 15 of at least 21 construction companies implicated in the cartel. Much less has been heard on the matter in recent months, but this apparent quiet might just precede the storm to come.

Cartels shielded from public outrage still have to worry about damages cases

The massive publicity surrounding the bid rigging cartel in the construction industry has done much to highlight the important work being done on a day to day basis by the competition authorities in South Africa. The public outrage confirms that society at large buys into the need for competitive markets. With any luck, further impetus will be given to cartel deterrence by the successful pursuit of civil damages suits, ideally with damages ultimately benefitting those who were truly harmed: the poor and marginalised, including learners whose schools did not get adequate funding to upgrade ablutions and families who continue to live in informal dwellings.