How Pin Pops got this student into competition law

Competition law governs the rivalry between companies and ensures healthy environment by regulating anti-competitive behaviour by companies. Kgothatso Kgobe (22) is a fourth year LLB student at Wits. He told The Daily Vox why the Competition Tribunal and competition law are important for ordinary citizens.

My love for competition law started in Grade 10 when I was in boarding school in Mpumalanga. One Saturday I called my father to ask for money for new soccer boots because soccer season was approaching. He refused because he had already sent me pocket money, and I had spent it on other things. I had to make a plan to come up with cash. Coincidentally I was craving a lollipop with a bubblegum centre called a Pin Pop. The school tuckshop didn’t sell Pin Pops, they only sold Fizz Pops and Yoguetas.

I had an idea to sell those lollipops – even though it wasn’t allowed. That same day my friend and I went to a nearby town that stocked those lollipops. We wanted to experiment to see if people would buy them. We bought three packets and they sold out that same day. We sold them for R1,50 each. We made a good profit. It was a good idea to make some quick money, so we went back to buy more. In three weeks I made enough money to buy a pair of Nike Mercurial soccer boots for R750.

Some other guys also ventured into this business. Four guys that were popular got people to get them the lollipops for free and sold them for R1. They stole our business and drove off the competition. Once we were out, they started selling the lollipops for R2. Eventually they got caught. Then the school started selling Pin Pops for R2.

I asked my economics teacher about all this. I loved economics and my teacher and I would speak about it often. I asked her if there was something we could do about it. She said it was part of competition law which I would learn about in university. She said it was collusion and price fixing. At Wits I became more familiar with all of this. In July this year, I went to the Competition Tribunal for my internship and I’ve learnt a lot more about anti-competitive practices.

My high school experience was a textbook example. The other guys at my school were popular; they were like big fish in the market. They fixed the prices, then they sold below cost (they didn’t have costs because they were stocked for free) and drove us out of business before raising prices again.

In the broader economy, competition law is meant to regulate big companies’ behaviour and prevent this kind of situation. But most people aren’t familiar with it. In the townships, big supermarkets ask whatever price they want for goods, because they don’t have much competition.

It’s the same with maize meal, for instance. People in the rural areas don’t have money to go into town to buy maize meal at a cheaper price. There are few places where they can buy their maize meal, and they just have to pay whatever prices they’re offered. They don’t know that something can be done about the excessive pricing of staple food in their areas. For instance, small spazas could be at the mercy of these large complexes in townships who could be selling bread at lower prices just to drive these small spazas out of business. Once they are out of business, complexes increase prices, probably to recoup lost profits and because people only buy bread there now. These people cannot go to big cities where they could find food at lower prices. Instead they’ll just toil on trying to get enough money to pay for their next meal.

If more people were aware of competition law, they could report such activities to competition authorities. Competition authorities hold market enquires every now and then.

Competition law is meant to keep bigger companies in check so that they don’t exploit consumers. But it’s not accessible to the average person, mostly because of language barriers and illiteracy. There should be more awareness of competition law because one of its imperatives is consumer welfare. The people most affected by anti-competitive activities are those who live in townships and rural areas, those who do not know that there’s a law protecting their welfare.

Competition law is useful to the average person because it protects their welfare and protects small businesses from being bullied out of the market. Most small business owners don’t know that some of the fines the competition authorities impose are used for the development of small businesses. If more awareness is created, many small businesses would probably be entering their respective markets – with the necessary protections at their disposal.

As told to Shaazia Ebrahim, edited for brevity and clarity

Featured image via Wikimedia Commons, additional image supplied

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