dominic
Legal Expert: Telecoms
yada yada yada
State to crack down on monopolies - http://www.busrep.co.za/index.php?fArticleId=2602462
"June 28, 2005
By Andile Ntingi
Johannesburg - The government was poised to crack down on South Africa's monopolies and cartels by raising the level of competition, while stimulating development in the downstream industries, trade and industry minister Mandisi Mpahlwa said yesterday.
In a veiled reference to firms such as Telkom, Mittal Steel South Africa (which dominates the steel industry) and Sasol (the petrochemicals group) Mpahlwa said the government would work towards bringing direct competition to these local giants to force them to lower the prices that they charged their customers.
The banking industry, which is dominated by four big lenders, is another sector that is on the radar screens of the competition authorities because of its perceived steep fees.
"The government intends sending a strong message to all sectors and firms in the economy that there must be increased competition to promote the growth of downstream and value-adding economic activity, which holds the key to a sustainable and job-creating economy," said Mpahlwa. "In particular, the government is focused on lowering the costs of key resource-based inputs and telecommunication prices."
To prevent the high concentration of pricing power, Mpahlwa said a concerted effort would be made to strengthen competition laws and to eliminate the controversial import-parity pricing model that compelled downstream industries to pay exorbitant prices for key inputs such as steel and chemicals.
In many respects, the dominance of the steel and chemical sectors by a few large companies is responsible for stifling development in downstream industries such as construction, plastics, rubber and paint, most of which are labour intensive.
Complaints have been levelled by downstream manufacturers against Sasol and Mittal Steel South Africa for using the import parity pricing mechanism, which they say is responsible for inflating prices.
An import-parity price model is based on a practice of fixing the price of a domestically produced good to be equivalent to that of an imported product. In other words, shipping costs and import tariffs are added to the price of a home-made product, to make it equal to the price of an imported good.
Mpahlwa said the strategy of reducing costs for manufacturers would be accompanied by the provision of specific incentives to assist struggling downstream industries.
Earlier this month, Lumkile Mondi, the chief economist at the Industrial Development Corporation, told Business Report that one of the reasons South Africa failed to attract meaningful foreign direct investment was the high barriers to entry in some of the domestic industries.
Mondi said a plan that slashed transport, energy and telecommunications costs would crowd in investment and boost economic growth and employment.
Increases in the cost of essential inputs such as water, electricity and telephones often ran above the country's inflation target of between 3 percent and 6 percent a year.
In some instances, these high costs were responsible for sucking the life out of manufacturers already struggling from the impact of the strong rand and increased import competition from Asia's low-cost producers, such as India and China."
___________
talk the talk, walk the walk
State to crack down on monopolies - http://www.busrep.co.za/index.php?fArticleId=2602462
"June 28, 2005
By Andile Ntingi
Johannesburg - The government was poised to crack down on South Africa's monopolies and cartels by raising the level of competition, while stimulating development in the downstream industries, trade and industry minister Mandisi Mpahlwa said yesterday.
In a veiled reference to firms such as Telkom, Mittal Steel South Africa (which dominates the steel industry) and Sasol (the petrochemicals group) Mpahlwa said the government would work towards bringing direct competition to these local giants to force them to lower the prices that they charged their customers.
The banking industry, which is dominated by four big lenders, is another sector that is on the radar screens of the competition authorities because of its perceived steep fees.
"The government intends sending a strong message to all sectors and firms in the economy that there must be increased competition to promote the growth of downstream and value-adding economic activity, which holds the key to a sustainable and job-creating economy," said Mpahlwa. "In particular, the government is focused on lowering the costs of key resource-based inputs and telecommunication prices."
To prevent the high concentration of pricing power, Mpahlwa said a concerted effort would be made to strengthen competition laws and to eliminate the controversial import-parity pricing model that compelled downstream industries to pay exorbitant prices for key inputs such as steel and chemicals.
In many respects, the dominance of the steel and chemical sectors by a few large companies is responsible for stifling development in downstream industries such as construction, plastics, rubber and paint, most of which are labour intensive.
Complaints have been levelled by downstream manufacturers against Sasol and Mittal Steel South Africa for using the import parity pricing mechanism, which they say is responsible for inflating prices.
An import-parity price model is based on a practice of fixing the price of a domestically produced good to be equivalent to that of an imported product. In other words, shipping costs and import tariffs are added to the price of a home-made product, to make it equal to the price of an imported good.
Mpahlwa said the strategy of reducing costs for manufacturers would be accompanied by the provision of specific incentives to assist struggling downstream industries.
Earlier this month, Lumkile Mondi, the chief economist at the Industrial Development Corporation, told Business Report that one of the reasons South Africa failed to attract meaningful foreign direct investment was the high barriers to entry in some of the domestic industries.
Mondi said a plan that slashed transport, energy and telecommunications costs would crowd in investment and boost economic growth and employment.
Increases in the cost of essential inputs such as water, electricity and telephones often ran above the country's inflation target of between 3 percent and 6 percent a year.
In some instances, these high costs were responsible for sucking the life out of manufacturers already struggling from the impact of the strong rand and increased import competition from Asia's low-cost producers, such as India and China."
___________
talk the talk, walk the walk
