Competition Law: The South African Competition Commission Launches a Fresh Produce Market Inquiry

The South African Competition Commission has launched a public inquiry into the conduct of participants in the fresh produce sector. The investigation will entail an examination into whether there are any features in the food produce sector’s value chain which lessen, prevent or distort competitiveness, aiming to shed light on a pivotal sector within the economy. The inquiry will look at all participants in the sector including, but not limited to, manufacturers, producers and suppliers in the fresh produce market.

Agriculture plays a substantial role in the South African economy due to its influence on food production, raw material supply to the agro-industrial and manufacturing sectors, job creation and foreign exchange income from exports. As such, the inquiry is of utmost importance to understand the state of competition within the industry, the market features affecting price outcomes and the trials currently faced by farmers.

On the 25th of March 2022, the Commission published the draft terms and references for the inquiry. The inquiry is set to focus on particular issues that exist at each layer of the value chain. The following themes (for determining which features of the market may impede, restrict or distort competition and market outcomes) have been identified by the Commission:

  • Theme 1Efficiency of the value chain:
    • This theme focuses on the fresh produce market and on defining how the value chain and varying levels of concentration (such as route to market) influence prices and efficiency;
  • Theme 2Market dynamics and the impact of key inputs for growers:
    • This theme focuses on the upper end of the production value chain. Growers rely heavily on certain inputs such as fertilizers, seeds, agrochemicals and farm equipment which are generally imported or priced on international base prices and could lead to substantial cost effects for growers.
  • Theme 3Small and historically disadvantaged (HDP) growers and participation:
    • This theme focuses on the lower end of the production value chain. The Commission will look into the hurdles faced to entry by small and historically disadvantaged growers as well as the issues around access to the fresh produce market/retailers through contract farming.
  • Theme 4Barriers to entry:
    • This theme focuses on the broad regulatory environment present in the fresh produce market.

The inquiry would most likely focus on sellers of seeds, fertilizers, farming equipment, pesticides, herbicides and other goods in the fresh produce market supply chain. DKVG has participated in several Competition Commission market inquiries and has an expert team available to assist you.

This article is for general information purposes and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us At DKVG Attorneys for specific and detailed advice.