Competition Policy Role in Country Economic Development - Samples

Question: Discuss about the Competition Policy Role in Country Economic Development. Answer: Competition Policy Role in Countrys Economic Development Competition describes the rivalry among the companies in marketplace and stretches to the envisaged and potential rivalry. On the other hand, competition policy describes the government policy that preserve or promote the competition among the players in the market as well as promote additional government policies as well as process which allow development of competitive environment (Lipczynski, Wilson and Goddard 2005). Competition policy plays a key role in economic development of any economy. To be efficient and effective in supporting the process of development, competition policy and law (CLP) should be supported as well as compatible with additional complementary pro-development polices which is able to bear on the countrys economic development. Competition policy has 2 key instruments. The 1st instrument is the competition law that encompass the rules to restrict anti-competitive market and enforcement mechanism like an authority. The 2nd key instrument is the competition advocacy which is especially significant in interface with additional economic policies. The developing economies are often beset by a range of obstacles to competition. An urgent need is required for an effective competition policy and law. Owing to a range of market features and legal as well as challenges in enforcement, it remains harder to undertake the implementation of competition law and policy in the developing economies than in developed economies. The uncompetitive markets remain a greater problem in the developing economies. The need for effective competition law enforcement remains great. Competition policy has a direct effects of increasing efficiency. The indirect effects of competition policy is strengthening the impact of policies promoting the economic development for example, the indirect effects will include strengthening impact of policies promoting economic development including investment and FDI; financial development; international trade; economic policies (private sector development, institutional reform, policies-health and education). The final macro-level objective of competition policy in terms of economic development is the sustained increases in the human welfare for as many as feasible (White 2008). The competition law and its enforcement as one of the instrument of competition policy, lead to the direct effect of freer competition culminating in enhanced efficiency and higher consumer welfare. Extent Competition Policy/Legislation Deterred Anti-Competitive Behavior in SA Competition policy is a portion of novel international orthodoxy in the economic policy, and concurrently, was perceived in SA as a vital aspect of economic transformation. The competition authority in South Africa has been assisting the private sector to be a level playing ground, free from the type pf prices and quality manipulation which keeps certain companies thriving, whereas others struggling to make entry or make any type of headway in the industries. The barriers to entry in SAs markets have come down and the authority has created the environment for prices to decline and quality to improve. For example, the intervention of the SAs Competition Commission and Competition Tribunal in the soda ash market culminate in SA becoming the global lowest-priced soda ash producer. This created the soda ash consumers influx from Kenya, America and India thereby benefiting SA soda ash industry. The competition authority intervened in the concrete pipes industry where the prices were influenced by a concrete pipes cartel encompassing Aveng Africa, Conrite Walls, and Southern Pipeline Contractors. Such anti-competitive was eliminated thereby leading to a fall in prices of concrete pipes after the tribunal intervention that disbanded the cartel in year 2007 between 25-and 30%. This is because five novel firms made entry to the market in regions that were reserved initially for the members of the cartel. The former members of cartel had to expand their geographic regions of operations thereby bringing competitive commodity choices to consumers who were initially limited by outputs of cartel. The prices of concrete dropped by 37.0% and 27.0% in Durban and Johannesburg from mid-2009 to mid-2011. This was a typical case of consumer being overpriced in the course of cartel existence. The dramatic reduction in drug price for the treatment of HIV/AIDS following the commissions finding that key international drug firms were overpricing. The efforts of the commission in conjunction with NGOS as well as foundation saw the improvement in QoL of several South Africans, assisting them to remain active contributors to the SAs economy (Competition Act 89 of 1998). The prohibition of the merger between Pick n Pay with Fruit Veg by the commissions further removed the anti-competitive behaviors as can be observed when visiting Food Lovers Market. The work of the commission has been due to strategic and deliberate emphasis on industries with hugest potential to deliver SAs economic development like agro-chemicals processing, food and construction. References Competition Act 89 of 1998. Lipczynski, J., Wilson, J. and Goddard, J., 2005. Industrial organization: competition, strategy, policy (p. 780). Pearson Education Limited, Prentice Hall, London. White, L.J., 2008. The role of competition policy in the promotion of economic growth.