Cartel country

Pharmaceuticals, bread, milk, steel—hardly a week passes without the disclosure of a cartel in an essential industry. Many key industries are organised into cartels, which distort markets and divide them into highly profitable chunks.

Under its new leaders the Competition Commission is fighting a smart fight, targeting crucial industries such as construction, food and healthcare, and mobilising public support by targeting emotive markets such as basic foodstuffs, which heavily affect the poorest South Africans. The commission has become an important weapon in the war against inflation and deserves the support of all South Africans as one of the notable successes of the post-apartheid era

The public outcry that has followed each guilty finding has led to calls for harsher penalties and jail terms for executives involved in collusion and cartel activity.
So a draft law is before the National Assembly. It contains harsh penalties for executives at the helm of collusive companies, including a 10-year jail term and fines of up to R500 000.

The idea of criminalising anti-competitive behaviour and hitting the colluders is an attractive one. The fines currently imposed on anti-competitive firms are often a mere slap on the wrist. But we should be wary of populism. The tougher new powers could end up hindering the commission rather than aiding it.

If anti-competitive behaviour is criminalised the commission would need to prove guilt beyond reasonable doubt. At present, it has only has to rule on the balance of probabilities. This would bog down investigations in lengthy court cases and slow down the nimble-footed commission.

What should be done? There’s an obvious need for tougher penalties, including taxes on executives who perjure themselves before the competition authorities. The tribunal should be able to impose fines on revenue for every year a cartel has been in operation, rather than just the preceding year.

And then it’s also up to us. Citizens need to become activists by reporting collusion and keeping a beady eye on prices.

South Africa’s economy, it’s clear, has never quite emerged from the cosseted years of apartheid protection. Business practices are old and mouldy, though our business leadership is quick to criticise government for not being ahead of its game.

It’s vital that ordinary consumers be part of the drive to introduce world-class competition into our retail markets. Last year a corner shop-keeper in the Western Cape blew the lid on bread-price fixing, while a small dairy producer pointed out the sour business practices of Big Milk.

We should take a leaf from their books to let the fresh winds of competition ensure better prices for all.

Walking on Hector’s shoulders
Three years ago we at the Mail & Guardian grew tired of problematising and generalising about “the youth”. It is an amorphous, catch-all term for a very diverse sector of society.

Around Youth Day all you see are articles about unemployment, poverty and the disempowerment of young people. So, for the third year in a row we bring you our book of young South Africans you must take to lunch. It’s not about fine dining (indeed, many of the young people in here are not regular leisure diners at all), but a book of hope.

It is a symbol showing that South Africa is a country of dynamism and renewal—our young leaders are staking their places in business boardrooms, in politics and in civil society. They display a keen knowledge of the challenges facing our society but also reveal know-how about what to do.

The category where this is most apparent is the section on loveLife’s groundBreakers, where a range of young people play mayor for a day and consider what they would do. Compared with the bling-loving bunch who currently run our councils and cities, it might be no bad thing if the next generation takes over sooner rather than later.

In other parts of the paper we consider efforts at youth empowerment that work and are worth emulating. As he announced that he would soon leave office, Minister in the Presidency Essop Pahad also announced yet another makeover of the state’s various failed initiatives. Pahad tabled yet another youth development strategy that will result in an unending round of consultations and stakeholder conferences. We have suffered this for 13 years now—a period during which the country has arguably created another lost generation.

Various sets of research have revealed that the biggest problem areas for the country are youth unemployment (the result of a poor education ­system) and the fall-out of the HIV and Aids pandemic. The country does not need further research to describe problems; it needs leaders and projects that will quickly make a difference. It’s no use flogging a dead horse and this week we offer up various projects that have a track record.

A worrying survey released by the University of Cape Town’s business school, found that a representative sample of young ­people still feel government must provide for them and they are not their own liberators.

Any empowerment efforts must surely first rid us of this entitlement—various features in this week’s edition show how to walk on the shoulders of Hector Petersen, that ultimate ­symbol of struggle and of liberation.

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