CA advised to keep hawk-eye on social media disruptions
Pauline Dikuelo | Wednesday December 20, 2017 19:00
According to University of Botswana (UB) senior lecturer in the Department of Economics, Obonye Galebotswe, innovative disruptions like social media platforms may overtime become big and monopolistic and behave in an anti competitive manner whilst making anti competitive mergers.
Speaking at a recent panel discussion under the theme, ‘Competition and Disruption’ to celebrate World Competition Day, Galebotswe said social media platforms can present challenges in defining the markets as well noting that the disruption happens when incumbent mainstream customers start taking up the start ups products or services in volumes.
“Innovative disruptions successfully challenge incumbent firms. They first target those that have been left out in the lower end of the market and once they get into the mainstream that is when disruptions occur,” he said.
According to Galebotswe, smaller companies with fewer resources can unseat established successful businesses by targeting segments of the market that were neglected by incumbents typically because they are focussing on more profitable areas and they deliver products or services suited to incumbent’s overlooked customers at lower price.
However, he suggested that disruptions should prompt competition agencies to sharpen their market definition tools and ensure that they do not impede innovation, which is beneficial to consumers.
In terms of regulation, other panelists, who comprised Chandra Chauhan of Business Botswana as well as Noble Katse of Botswana Communications Regulatory Authority (BOCRA), agreed that disruptive innovations and technologies are posing a challenge to regulators such as the CA and BOCRA.
While the role of regulators is to promote competition in the market, disruptive innovation is always ahead of the existing policy and regulatory frameworks in terms of complexity and sophistication, as new products and services may not fit in the existing regulatory frameworks.
Meanwhile, the Authority handled a total of four mergers in the second quarter of 2017. This constituted a 55% decline when compared to mergers handled in the same period during the 2016/2017 financial year. These were also significantly less than the 10 mergers assessed in the first quarter of the current financial year.
“With the acceleration of Botswana’s economic growth in the second quarter, indicating a general increase in the country’s economic activities, one would have expected increased merger activity in the reporting quarter,” reads a statement from the Authority.
Out of the four finalised mergers, two were carried forward from the first quarter while the remaining two were received and finalised during the second quarter. Furthermore, three mergers were classified as simple and only one was a complex one. In terms of average turnaround times for assessed and finalised mergers, the Authority assessed the simple within an average of 20 business days while the complex merger was assessed in 55 business days.
Of the four mergers assessed in the period under review, there were no competition concerns identified and all mergers were approved without conditions.