By Susan Joekes; Phil Evans
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Extra resources for Competition and Development: The Power of Competitive Markets (In Focus)
In any event, in many lines of business, the domestic market in small- and even medium-sized economies is too small to allow even a single firm to attain minimum efficient size. Such producers have to sell their products abroad as well as at home. In small economies, accordingly, exporting is the norm. The purpose of the competition law in this connection is to ensure that internationally successful firms do not act anticompetitively and exploit consumers in their home country. the import, wholesale, and retail sectors are tightly controlled by elite white groups that operate sole distributorships, interlocking directorates, and family ties across companies, making market entry difficult for the non-white population.
However, there is a case for merger control, particularly in the service sector, which may be especially vulnerable to abuse of dominance because foreign competition is often not an effective check. Belize offers some useful lessons in this regard. Belize has a very small population (fewer than 300 000 people) but a very large land mass (22 995 km2). Transport services are thus crucial. Until 2003, Belize’s main cross-country bus route had been served by seven companies. One company, Z-Line, undercut its rivals through predatory pricing and other tactics, then bought five of them outright.
Their economies tend to be very open, specialized in a few production lines, and highly dependent on importing what they do not produce. On the production side, the domestic market may be too small to support more than one or two firms of minimum efficient size. ca/in_focus_competition On the web The import business in small economies typically contains many small firms that might club together to import in bulk at lower prices. On its face, this constitutes anticompetitive behaviour even though consumers may benefit.