The internationalisation of supermarkets, the nature of competitive rivalry between grocery retailers and the implications for local suppliers in Southern Africa

Abstract : The growth and spread of supermarket chains globally has transformed how consumers purchase groceries and household consumable products and how these supply chains have developed. This thesis analyses the spread of supermarket chains in Southern Africa, with a specific focus on South Africa, Botswana, Zambia and Zimbabwe. It analyses how the internationalisation of supermarket chains in these countries has affected, and is affected by, competition dynamics and what the implications on suppliers are. This study is among the first to assess these topics in Southern Africa, particularly the implications on the competitive landscape and the effects of market power of supermarket chains on rivals and suppliers. The thesis draws on a critical review of the literature on industrial organisation-based theories of foreign investment and Ownership-Location-Internalisation (OLI) principles to understand the patterns of supermarketisation and internationalisation in the region. It identifies the significance of national policies, political economy dynamics, proximity to suppliers and firmspecific strategies related to market power in understanding the spread of supermarkets. A key finding is that internationalisation has not been to the extent that the literature predicted, including the entry and growth of transnational retailers in Southern Africa. What is seen instead is the ‘regionalisation’ of South African supermarket chains, essentially extending their home networks and oligopolistic rivalry into the region. The thesis also identifies the resilience of alternative forms of retail through buying group-led independent retailers in South Africa, alongside supermarketisation that started in the apartheid period. The complexities of how supermarket chains compete and how market power is exerted affects their spread. The study examines the impact of market power of supermarket chains, showing that competition needs to be understood narrowly by format and segment in very localised markets, possibly limited to a shopping mall in the South African context. Importantly, the analysis reveals the shortcomings of viewing competition through just a price lens and highlights the importance of understanding non-price dimensions of competition, given the characteristics of supermarkets and the way in which the positioning of supermarkets changes over time. This requires a more dynamic perspective. Through extensive firm-level and organisation interviews in each country, the thesis evaluates the impact on suppliers through a combination of a global value chains framework and industrial organisation principles of competition in markets. The forms in which buyer power is exerted in Southern Africa and the impact that this and other requirements has on regional supplier development is evaluated. It finds that supermarket chains are important in driving the upgrading of supplier capabilities to meet these requirements by providing access to wider ii markets, facilitating their climb up a regional or global value chain ‘ladder’. The study however also finds strong concerns of buyer power imposed through the trading terms negotiated with suppliers. As gatekeepers to store networks in the region, supermarkets offer suppliers the opportunity to access more consumers. However, unequal bargaining power leads to rents extraction from value chains by supermarkets, negatively affecting supplier participation and upgrading. The thesis shows that these topics are complex and inter-related, requiring multiple lenses to analyse them. Supermarketisation and internationalisation affect the structure of markets and the competitive landscape, while the degree of competitive rivalry and market power in turn impacts the pace of supermarketisation and internationalisation. Similarly, the market power of supermarket chains has a significant impact on suppliers, while the ability of supermarkets to grow into new markets hinges on the proximity and links to well-established supplier networks.D.Phil. (Economics

The implications for suppliers of the spread of supermarkets in southern Africa

Abstract: The growth of supermarkets in southern Africa opens local and regional markets to suppliers through participation in supermarket supply chains. Supermarkets in the region provide an important route to market for processed foods and household consumable products. Through a regional value chain lens, this article provides an assessment of the implications of the growth of supermarkets for the participation of suppliers in Botswana, South Africa, Zambia and Zimbabwe. The research finds that, while supermarkets provide important opportunities for suppliers, they also exert considerable buyer power that limits supplier development and upgrading. High private standards, onerous requirements and costly trading terms negatively affect supplier participation in value chains. Long-term investments are required to build the capabilities of suppliers to meet supermarket requirements in terms of quality, consistency, volume and cost-competitiveness

The inter-relationships between regulation and competition enforcement in the South African liquid fuels industry

The competition authorities have devoted considerable time and energy to investigating anticompetitive conduct in the broad area of liquid fuel, gas and related products, where regulation sets rules for firm conduct. Competition cases have included the Sasol-Engen merger, collusive arrangements in gas distribution and the pricing of bitumen for road construction projects, and alleged coordination through information exchange in diesel. Drawing on a review of these matters we assess the inter-relationships between regulation and competition enforcement. We argue that regulation can be designed to enable greater competitive rivalry, while anti-competitive conduct can also be better remedied through recognition of the role of regulation

Competition Law and Economic Regulation

Shaping markets through competition and economic regulation is at the heart of addressing the development challenges facing countries in southern Africa. The contributors to 'Competition Law And Economic Regulation: Addressing Market Power In Southern Africa' critically assess the efficacy of the competition and economic regulation frameworks, including the impact of a number of the regional competition authorities in a range of sectors throughout southern Africa. Featuring academics as well as practitioners in the field, the book addresses issues common to southern African countries, where markets are small and concentrated, with particularly high barriers to entry, and where the resources to enforce legislation against anti-competitive conduct are limited. What is needed, the contributors argue, is an understanding of competition and regional integration as part of an inclusive growth agenda for Africa. By examining competition and regulation in a single framework, and viewing this within the southern African experience, this volume adds new perspectives to the global competition literature. It is an essential reference tool and will be of great interest to policymakers and regulators, as well as the rapidly growing ecosystem of legal practitioners and economists engaged in the field

Impact of opioid-free analgesia on pain severity and patient satisfaction after discharge from surgery: multispecialty, prospective cohort study in 25 countries

Background: Balancing opioid stewardship and the need for adequate analgesia following discharge after surgery is challenging. This study aimed to compare the outcomes for patients discharged with opioid versus opioid-free analgesia after common surgical procedures.Methods: This international, multicentre, prospective cohort study collected data from patients undergoing common acute and elective general surgical, urological, gynaecological, and orthopaedic procedures. The primary outcomes were patient-reported time in severe pain measured on a numerical analogue scale from 0 to 100% and patient-reported satisfaction with pain relief during the first week following discharge. Data were collected by in-hospital chart review and patient telephone interview 1 week after discharge.Results: The study recruited 4273 patients from 144 centres in 25 countries; 1311 patients (30.7%) were prescribed opioid analgesia at discharge. Patients reported being in severe pain for 10 (i.q.r. 1-30)% of the first week after discharge and rated satisfaction with analgesia as 90 (i.q.r. 80-100) of 100. After adjustment for confounders, opioid analgesia on discharge was independently associated with increased pain severity (risk ratio 1.52, 95% c.i. 1.31 to 1.76; P < 0.001) and re-presentation to healthcare providers owing to side-effects of medication (OR 2.38, 95% c.i. 1.36 to 4.17; P = 0.004), but not with satisfaction with analgesia (beta coefficient 0.92, 95% c.i. -1.52 to 3.36; P = 0.468) compared with opioid-free analgesia. Although opioid prescribing varied greatly between high-income and low- and middle-income countries, patient-reported outcomes did not.Conclusion: Opioid analgesia prescription on surgical discharge is associated with a higher risk of re-presentation owing to side-effects of medication and increased patient-reported pain, but not with changes in patient-reported satisfaction. Opioid-free discharge analgesia should be adopted routinely

Measuring excessive pricing as an abuse of doMinance - an assessMent of the criteria used in the harMony gold/ Mittal steel coMplaint

Abstract The Competition Tribunal recently found Mittal Steel SA guilty of abusing its super-dominant position by charging excessive prices to the detriment of consumers of flat carbon steel products. This article assesses the economic tests to be used for excessive pricing in light of the case and reviews the lessons that can be learned from the evidence required for the different tests. It discusses issues related to using profitability as a test and points out problems and pitfalls in profitability measures. JEL L4

The internationalisation of supermarkets and the nature of competitive rivalry in retailing in southern Africa

Abstract: In the past two decades, southern African countries have experienced rapid growth and spread of supermarket chains. This paper assesses the internationalisation of supermarkets and potential reasons for the uneven outcomes seen in different countries in the region. Several factors account for the spread, including rising urbanisation, increasing per capita income, greater economies of scale and scope and more efficient procurement and distribution systems. However, the current literature does not adequately consider the importance of culture, proximity to suppliers and impact of policy objectives of national governments on the success of supermarkets in host countries, especially in developing countries. It also does not consider the nature of competitive rivalry between supermarkets and how this affects internationalisation. This paper highlights the importance of these factors in understanding the outcomes in selected southern African countries

Competition Law and Economic Regulation

Shaping markets through competition and economic regulation is at the heart of addressing the development challenges facing countries in southern Africa. The contributors to 'Competition Law And Economic Regulation: Addressing Market Power In Southern Africa' critically assess the efficacy of the competition and economic regulation frameworks, including the impact of a number of the regional competition authorities in a range of sectors throughout southern Africa. Featuring academics as well as practitioners in the field, the book addresses issues common to southern African countries, where markets are small and concentrated, with particularly high barriers to entry, and where the resources to enforce legislation against anti-competitive conduct are limited. What is needed, the contributors argue, is an understanding of competition and regional integration as part of an inclusive growth agenda for Africa. By examining competition and regulation in a single framework, and viewing this within the southern African experience, this volume adds new perspectives to the global competition literature. It is an essential reference tool and will be of great interest to policymakers and regulators, as well as the rapidly growing ecosystem of legal practitioners and economists engaged in the field