Has competition law enforcement been effective in South Africa?

Abstract

ABSTRACT The South African Competition Act was crafted on the basis that it could be used to address distortions and inequalities in the market through enforcing competition. A question which has arisen is whether competition enforcement has been effective given that many economic sectors are still largely dominated by monopolies, duopolies or oligopolies. In this study, I assess whether competition enforcement has reduced inequality in South Africa by studying the link between market power and inequality, following a competition intervention in selected product markets. Using the nonlinear autoregressive distributed lag model, I assess whether competition enforcement in the market for bread, maize meal, and sunflower oil, has been effective in increasing consumer welfare, by lowering income inequality through lower prices. The findings of this study suggest that firms in these markets abuse their market power even post-intervention, such that they can raise prices and reduce consumer welfare, increasing inequality indirectly.