Tag: regulation

Regulation as a Barrier to Entry: The Competition Commission’s Review of Regulatory Impediments to Competition and SME Participation

Posted on by Editor

By Jannes van der Merwe and Astra Christodoulou

On 22 April 2026, the South African Competition Commission (“the Commission”) launched a review of regulations that may act as barriers to competition and the entry and expansion of firms with particular focus on small and medium enterprises (“SMEs”) across all Markets in South Africa (the “Review”). The Review forms part of a broader national policy effort to support inclusive economic growth, reduce compliance burdens and modernise the regulatory environment in a manner that promotes competitiveness at all levels in the market. The Review was initiated against the backdrop of President Cyril Ramaphosa’s 2026 State of the Nation Address (“SONA”), in which one of the topics addressed was the need to reduce red tape and improve the ease of doing business.

This announcement follows several prior market inquiries by the Commission, including those in the grocery retail, data services and healthcare sectors, in which the Commission found that regulatory design to be a recurring impediment to competitive market outcomes.  The Review, therefore, demonstrates a meaningful evolution in the Commission’s approach, moving from a reactive, conduct-based enforcement toward a more structural and upstream engagement with the rules that govern market participation.

Legal and Policy Framework

The Commission’s mandate to engage with legislation and public regulations is well established under the Competition Act 89 of 1998 (the “Act”). Section 21(1)(k) of the Act empowers the Commission to “review legislation and public regulations, and report to the Minister concerning any provision that permits uncompetitive behaviour.”This regulatory review function is distinct from, and complementary to, the Commission’s market inquiry powers under Chapter 4A of the Act.

The Competition Amendment Act 18 of 2018 (the “Amendment Act”), which introduced significant reforms to the Act with effect from 12 July 2019, reinforced the Commission’s structural mandate by addressing two persistent constraints on the South African economy: elevated levels of economic concentration and the skewed ownership profile of the economy. The Amendment Act strengthened provisions relating to abuse of dominance, price discrimination, and public interest considerations in mergers, while also enhancing the market inquiry framework to ensure that outcomes result in enforceable action.

The Commission has actively pursued change and reform in favour of SME’s following the Amendment Act. The Commission issued Regulations on Buyer Power on 13 February 2020, which included factors and considerations to combat unfair practices by dominant firms that will impede effective participation by SMEs. The Commission further issued the Block Exemption Regulations for Small, Micro and Medium-Sized Businesses on 23 May 2024, with the purpose of stimulating the growth and participation of SMEs in the economy.

Further, the Commission issued a Guide for SMEs in September 2022 with the aim of assisting and informing SMEs about their rights and the Commission’s functions and processes in protecting and promoting SMEs in the broader South African market.

This Review takes the next logical step by addressing regulatory structures early, before market distortions become entrenched competitive problems. Section 2 of the Act articulates the purposes of competition policy in South Africa, which include ensuring that SMEs have an equitable opportunity to participate in the economy and promoting a greater spread of ownership, in particular to increase the ownership stakes of historically disadvantaged persons (“HDPs”)

Categories of Regulatory Barriers Under Review

The Commission has identified six broad categories of regulatory barriers that fall within the scope of the Review.

Administrative Barriers

Complex, lengthy or uncoordinated authorisation and licensing processes that delay market entry or expansion are identified as a primary category of concern. These barriers weigh most heavily on SMEs, which generally lack the organisational capacity and financial resilience to withstand the prolonged regulatory delays that larger, established operators can absorb with relative ease. Earlier Commission market inquiries, particularly those examining the healthcare and grocery retail sectors, found that licensing and authorisation delays had a measurable constraining effect on competitive entry.

Rules Entrenching Monopoly Supply or Artificial Scarcity

Regulations that create or entrench monopoly supply or an artificially limited number of suppliers, through exclusive rights, long-term contracts or restrictive licensing, are a second category. These mechanisms often reflect the legacy of the pre-democratic regulatory order and persist across sectors ranging from electricity generation to port logistics. Where such frameworks are not the product of a deliberate and demonstrably justified policy choice, they function as state-conferred barriers to competitive entry.

Onerous Licence and Permit Conditions

Licence and permit conditions that unduly limit who may operate in a market, including conditions that are disproportionately costly or time-consuming, or that impose unnecessary caps on licence holders, are the third category that will be considered in the Commission’s Review. This includes regulatory frameworks in sectors such as liquor retail, transportation and financial services, where licensing regimes have historically served to consolidate market access among established players.

Unreasonable Standards and Compliance Requirements

The Commission also identifies unreasonable or unnecessary standards and licensing requirements for operating, registering, constructing or meeting compliance obligations as a source of competitive harm. While minimum standards serve a legitimate function in protecting consumers and ensuring safety, the design and implementation of such standards can effectively foreclose entry where requirements are disproportionate to the relevant risk or are not calibrated to accommodate smaller-scale operators.

Restrictions on Price and Non-Price Competition

Restrictions that limit competition on price or non-price factors, including constraints on pricing, location, quality or marketing, constitute the fifth identified category. Such restrictions, whether explicit or the incidental product of regulatory design, diminish the incentive and ability of market participants to compete on the merits. The Commission also flags requirements that are reasonable in principle but are poorly implemented, resulting in administrative backlogs, inconsistent interpretation and unpredictable outcomes. This final category acknowledges that competitive harm may arise not only from the content of a regulatory rule but from the manner of its administration.

Poorly Implemented but Facially Reasonable Requirements

The sixth category is notable in that it acknowledges a source of competitive harm that is distinct from substantive regulatory design: requirements that are reasonable in principle but poorly implemented, leading to extensive delays, inconsistent interpretation, administrative backlogs or unpredictable outcomes. This category reflects an important analytical refinement. Competitive harm may arise not only from the content of a rule but from the dysfunction of the administrative machinery through which it is applied. For SMEs with limited resources to sustain protracted regulatory engagement, unpredictability and delay in implementation can be as effective a barrier to entry as an explicitly restrictive provision. This category also opens the door for the Commission to recommend administrative and institutional reforms, not merely amendments to the text of regulations, as a remedy.

B-BBEE, Transformation and Competition Policy: An Intersecting Mandate

The Review’s express attention to whether current regulatory frameworks adequately enable meaningful participation by historically disadvantaged persons (“HDPs”) raises a significant question regarding the relationship between B-BBEE regulatory requirements and competition policy. The Amendment Act reinforced the Commission’s obligation to consider the adverse effects of market structures and conduct on firms owned or controlled by HDPs. This represents an area where competition policy and transformation objectives must be carefully reconciled.

Regulatory frameworks that ostensibly promote transformation, through preferential procurement requirements, equity thresholds or ownership conditions, may in some instances operate to elevate compliance costs for new entrant firms to a degree that forecloses rather than facilitates participation. The Review presents an important opportunity to examine whether the architecture of transformation-focused regulation is designed in a manner that advances both its stated equity objectives and the competitive functioning of markets, or whether refinements to its implementation are warranted.

Practical Implications for Legal Practitioners and Businesses

The Commission has invited businesses and other stakeholders to make written submissions by close of business on 5 June 2026, to be directed to regulation@compcom.co.za. Submissions should identify the relevant regulation and specific provision, describe the manner in which it restricts competition or participation (including practical compliance experience), and propose reforms to remove or modify the barrier while maintaining the regulation’s underlying purpose.

For legal practitioners advising clients in regulated sectors, the Review represents a significant and time-sensitive engagement opportunity. A well-constructed submission should situate the identified barrier within the statutory framework of the Act, particularly the section 2 purposes relating to SME participation and HDP ownership and should be grounded in demonstrable commercial experience of the regulatory impediment in question. Submissions that propose targeted, evidence-based reforms, rather than wholesale deregulation, are likely to carry greater persuasive weight with the Commission.

Sectors in which practitioners may wish to consider engagement include, without limitation:

  • construction and property development (certificate of need and development authorisation processes);
  • healthcare (facility licensing and certificate of need requirements);
  • logistics and freight (port access and operator licensing);
  • retail liquor (licence conditions and geographic restrictions); and
  • financial services (entry-level licensing thresholds and FAIS compliance burdens on smaller advisory firms).

Conclusion

The Review represents a significant exercise of the Commission’s regulatory advocacy function and marks a notable shift in the focus of competition policy intervention. By turning its analytical lens toward the rules and regulations in the market rather than exclusively toward the conduct of market participants, the Commission is engaging with the structural determinants of market concentration and exclusion at their source.

The effectiveness of this initiative will, however, depend substantially on two variables:

  1. the quality and breadth of submissions received from market participants with direct experience of the identified barriers and;
  2. the political will within the relevant line departments and regulatory bodies to implement the Commission’s eventual reform recommendations.

The Commission’s regulatory review function under section 21(1)(k) is advisory in nature; its recommendations do not bind regulators or the legislature. The Review’s long-term significance will therefore be measured not only by the rigour of its analysis but by the extent to which its findings translate into durable regulatory reform. The recommendations proffered by the Commission will have to be well structured and presented, to ensure that those who can impose regulatory reform, such as the Minister of Trade, Industry and Competition and other ministers engaged through the review process, are encouraged to impose the required reform.

Stakeholders operating in regulated markets are strongly encouraged to engage with this process. The submission deadline of 5 June 2026 affords sufficient time to prepare substantive, sector-specific contributions that could meaningfully shape the Commission’s findings and, ultimately, the regulatory landscape within which South African businesses operate.

Bonakele advocates regulation in lieu of antitrust enforcement

Posted on by Editor

south_africa

South African Competition Commissioner quoted as preferring legislative action rather than Commission action

In a BD Live article from today (“Competition policy ‘not best way to plug industrial loopholes’”), Linda Ensor reports on a presentation Tembinkosi Bonakele made to Parliament’s trade and industry portfolio committee.  In it, the head of the Competition Commission (“Commission”) remarked, according to the article, that “the application of competition law by the competition authorities was a slow process that should not be used to address loopholes in the implementation of industrial policy.”  Mr. Bonakele is quoted as noting that the “litigious nature of using competition policy as a mechanism to reduce prices was a ‘delayed remedy to the market’.”

The Acting Commissioner

At issue, in part, are the price levels of South Africa’s natural-resource sector, including a reference by Mr. Bonakele to “a loophole” in industrial policy and regulation, i.e., the Commission’s long-running investigation of alleged excessive pricing by Sasol Chemical Industries, which lasted about seven years prior to a ruling by the Competition Tribunal, in which Sasol was found guilty of excessive pricing of propylene and polypropylene products, fining it R534m.

Mr. Bonakele’s key suggestion was that there are alternative means for the government to intervene, e.g., through regulation.

 

#antitrustInnovation: Innovation crossing regulatory borders

Posted on by andreasstargard

new multi-part series

A continuation in our AAT multi-part series on innovation & antitrust as a thematic collection focusing on the concept of innovation markets and how competition and IP laws are able to address the, by definition, novel issues that arise.

By Sofia Ranchordás

In previous posts on the topic of Antitrust & Innovation, we discussed the definition of innovation, its relative character, and the role of regulation in its regulation and advancement, notably in developing countries. In Africa, the lack of a solid regulatory framework may, on the one hand, discourage foreign direct investment, and on the other, fail to stimulate local innovators to invent. However, there are more challenges regarding the advancement of innovation that are impeding a more effective ‘regulation of innovation’. In this short article, attention is paid to the regulatory borders that innovation seems to be crossing at the moment. The next installment shall be focused on two regulatory instruments that might facilitate the regulation of innovation in the dark, not only in Africa but also in other countries.

Democratizing access to finance

The regulation of innovation should start out with understanding the innovation process and its characteristics, notably its uncertain character; the need for diversity, sector-specificity, the complex access to finance, openness to changes and flexibility. An innovation-friendly environment does not exist in most African countries. The lack of flexible rules and the often somewhat inflexible interpretation of existing legal concepts are not helping either. While governments praise innovation as the highest salvation in times of crisis, the list of regulatory obstacles to innovation does not appear to be tackled. This is the case of the poor availability of finance for innovators, insufficient cooperation between public and private parties, or excessive regulation and outdated regulations and procedures.

Think about ‘kickstarter’: while there are already numerous crowdfunding projects supporting startups and non-profit projects in Africa, it is not easy for an African innovator to create this type of crowdfunding accounts from his/her own country and attract anonymous angels. In the case of ‘kickstarter’—one of the platforms with more visibility—this might even be limited to a number of countries (e.g. United States, New Zealand, Australia…) and be subject to specific requirements (e.g. permanent residence).

But what if you do not have a broad network and cannot contact someone reliable in one of those countries? I was recently contacted by a designer from Portugal who had developed an innovative device, but could not create a kickstarter account because he lives in one of the countries where you are not allowed to join this form of crowdfunding (www.dapowa.com). The same would apply to an innovator from an African country, only this one could probably be in a position where he would not even know anyone who would be willing to share his story with you.

There are multiple platforms of crowdfunding that are available worldwide, but the point that I would like to make is that regulators should start paying more attention to this form of democratization of finance. There are obviously risks and controversies behind crowdfunding, but, in a time when we need so much innovation, isn’t it about time we stop adopting an all-or-nothing perspective and rethink the regulatory framework of access to finance? Laissez-faire is not an option, certainly not in the case of finance. Shouldn’t developing countries have more flexible structures allowing their innovators—with properly developed business plans but with a limited social network—to improve access to finance? Funding projects should not necessarily be seen as a mere form of charity. It is a form of philanthropy that should be regarded as a stepping stone for the development of African economies and a complement to foreign direct investment.

Crowdfunding is simply one of the innovations that is putting regulation to the test and making us question the interpretation of existing legal concepts and institutions. Other examples—still less common in Africa—are present in the case of ‘share economy’ (e.g., Uber, Lyft, Airbnb). While ‘share economy’ and crowdfunding are innovative and valuable ideas, they bring along a number of serious risks for consumers (e.g. how many Airbnb houses comply with fire safety regulations? Will the money invested be used for the due purposes?). A ‘laissez faire’ approach might not be enough to conquer the trust of risk-averse consumers, but a stringent regulation of these new forms of democratization of access to finance and facilities will not either.

In this short article, we pose mere questions and alert for the need to think about regulatory solutions for the described democratization. Self-regulation, soft law and experimental regulations might be options to explore. The first step is however to start thinking about this topic, questioning the need for more transparency, and the need for rules. Crowdfunding and share economy will work while they are based on the bona fides of users. However, one incident might be enough to put an end to it all. Rules are created for a purpose and today’s challenge is to make sure that, on the one hand, ‘too much [law] will not kill [innovation]’, ‘if regulators can’ t make up their minds’ and, on the other, ‘too little law’ does not ‘leave [innovation] behind’.