Barriers to entry and implications for competition policy

Competition requires rivals. While this rivalry may come from imports, the development of local capabilities and productive capacity for rivalry, including by black industrialists in the South African context, means understanding the barriers to entry that local producers must overcome. Barriers to entry are also critical for the correct balance between the risks of over-and under-enforcement and are one reason why it has been recommended that countries should adopt different standards for competition evaluation. This chapter draws on studies of barriers to entry in different markets in South Africa to consider the nature and extent of these barriers and the implications for competition policy. It highlights issues related to regulatory barriers, consumer switching costs and branding, routes to market, and vertical integration, as well as economies of scale and access to finance.