Foregrounding his department’s response on the need to prioritise inclusive growth, minister Parks Tau has reassured South Africans that: “The DTIC [department of trade, industry and competition], along with its DFIs [development finance institutions], technical infrastructure institutions and its regulators, will work together to create an enabling environment that results in joint planning, joint implementation and joint accountability.”

Admittedly, numerous nuances have been noted in the public domain regarding what this means in practical terms. To bring it closer to home, let me try to demonstrate some of the quick wins in the competition regulation landscape.

For context, Tau, using the provisions of section 10 (3) (b) (iv) of the Competition Act 89 of 1998 (as amended), recently announced new block exemptions for the ports, rail and key feeder road corridors. But what exactly are block exemptions and why are they important?

Block exemptions are essentially a legislative tool designed to facilitate and enable co-ordination and co-operation between firms that would otherwise constitute a contravention of the Competition Act.

Ordinarily, co-ordination between competitors is prohibited by the Competition Act as it often stifles competition and results in higher prices for consumers.

But in certain circumstances, competition may not always be the best tool to achieve social and economic goals. For example, competition may hinder the ability of firms to develop innovative products due to limited individual funds.

However, collectively, and through pooling resources, firms may be able to make a significant contribution to the economy.

Tau, in consultation with the Competition Commission, may therefore issue block regulations in a particular industry or sector for public interest purposes. Such regulations form part of a broader strategy to stabilise and optimise a particular sector or to contribute to an industry’s security and efficiency.

Take exports, for example. One citrus farmer may not be able to produce enough oranges to export to international markets. However, if several citrus farmers pool their produce, together they can export a significant number of oranges.

Similarly, the recently announced block exemption for ports, rail and key feeder road corridors is aimed at facilitating collaboration between competitors, customers and suppliers in the rail, ports and road sector to address the systematic inefficiencies and infrastructure challenges facing the transport and logistics sector in SA.

 The block exemptions are aimed at:

The commission also worked closely with the department to develop block exemptions for energy suppliers and energy users. Why? Increasing and optimising the supply of alternative energy sources in the market will alleviate electricity supply constraints.

While the benefits of block exemptions may not be obvious for consumers, they create a significant opportunity to improve and enhance efficiencies in different sectors for the greater good of the South African economy.

The commission calls on firms and SMMEs operating in the energy supply, energy user, ports, and rail sectors to identify opportunities for using block exemptions and seek written permission from the commission before engaging in the conduct: at [email protected] and [email protected].

Makunga is a spokesperson for the Competition Commission of SA.