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Collaboration, competition & the digital economy

Competition in the digital economy continues to be an important issue in the face of complex technology and dominant platforms with concentrated market power that stretches globally. The second part of this blog series explores the new approaches competition authorities around the world have been taking to deal with new competition issues in the digital economy. One common thread has been clear – local and global collaboration is essential to effectively deal with these new issues.

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Competition & the digital economy

There is increasing pressure globally to understand the dynamics of the digital economy and the implications on markets, from a competition perspective, the urgency has now increased due to the times we find ourselves in. Competition policy will need deal with complex issues including data, platforms and big tech while carrying out a careful balancing act between encouraging innovation and protecting consumers and creating an efficient marketplace.

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Who is brewing my tea? Tea brokers and dominant tea processors

The Kenyan and South African tea cases show that although competition adjudications are made to protect and promote fair competition among companies, competition authorities also protect and promote fair price setting for the benefit of consumers. Consumers should be protected from paying excessive prices for inferior goods, and should be given the freedom to choose from multiple, high quality and innovative products.

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Will imprisonment derail collusion or the competition authorities’ efforts?

Many countries across the globe (including BRICS countries) now have a competition enforcement regime in place. But why bother? Why is it so important to promote competition? Economics tells us that increased competition can lead to lower prices, increased quantities of goods and services being supplied, greater innovation, improved quality and a wider variety of choice for consumers. It also drives economic efficiency and dynamism, which can stimulate economic growth and job creation, thus contributing to broader policy goals.

So how successful have the South African Competition Authorities been in enforcing the Competition Act and in sending out the correct signal to current and would-be cartelists and abusive firms?

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Open source but anti-competitive? A discussion of the EC’s case against Google

The European Commission recently issued a Statement of Objections explaining its preliminary view that Google has behaved anti-competitively in the EU in respect of its Android operating system (OS) and apps. This development is somewhat counter-intuitive, given that Android is an open source operating system, which should in theory should make it easier, not harder, for competitors to develop competing operating systems based on Android. In this article, we try to unpack the EC’s objections in order to resolve this apparent paradox, and then consider some of the possible counter arguments that Google might make.

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David against Goliath: does competition law deter large firms from engaging in predatory conduct?

In September 2015, the Competition Tribunal found that Media 24 had contravened the Competition Act by engaging in a predatory strategy in order to eliminate a small competitor in the community newspaper market in Welkom.[1] The Tribunal found that the prices Media 24 had charged prices for advertising for one of its two titles in Welkom were lower than its cost of producing the newspaper over a sustained period. As the newspapers were distributed for free to readers, advertising costs were the only available source of revenue, so Media 24 was operating the paper at a loss. The Tribunal moreover found that Media 24 had done so with the intention of eliminating its competitor, and that following the exit of the competitor it had raised prices in the market in order to recoup the earlier losses. This had harmed customers (both advertisers and readers) by reducing price competition and limiting choice.

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Can mobile money drive competition in financial services in South Africa

Anyone who has recently spent time in Kenya, Zimbabwe or Tanzania could not help but notice the pervasive influence of mobile money on everyday life. Mobile money has changed the nature of payments in these countries, lowering transaction costs, driving financial inclusion and providing consumers and small businesses with easy, cheap and safe ways to transact. Even a cursory comparison reveals that South Africa is lagging far behind in terms of both uptake and innovation. A number of attempts to launch similar solutions in South Africa have failed, although more recent efforts such as MTN’s mobile money offering appear to be more successful. Is South Africa’s divergent experience a result of its sophisticated banking system and different customer demographics? Or is a highly restrictive regulatory environment to blame? This blog, based on research done with the Centre for Competition, Regulation and Economic Development at the University of Johannesburg, attempts to unpack this complex market and analyse some of the reasons we are so far behind our regional peers.

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‘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.

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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.

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