Competition in any economy is healthy.Zambia is no exception. In fact, competition in an emerging economy such as ours serves to foster innovation and price of product sensitivities. However, just like any competitive sport, rules and regulations on how players in the game compete are important. They provide for an equal playing field for all those that chose to participate in value creation in a particular competitive environment.
Management teams in Zambia that have enjoyed monopolies of scale have often scorned the prospects of competition.Not only do competitive elements eat into market share but have the potential of destroying value. Although in the latter case the consumer is the one who benefits the most, value destruction often leads to strategic decisions emanating from competing companies that may include changes that may affect internal stakeholders of those firms. For example, reductions in sales revenue that ultimately leads to reduction in earnings may have a management team consider downsizing in order to reduce their administration costs so that they can boost earnings on their income statement. This move can be unpopular for companies in Zambia as many companies would want to be seen in the public eye as contributing not only to GDP but to employment creation. Therefore, it becomes a dilemma for balancing social economic issues and maintaining value creation.
In hindsight, the purpose of a Competition Commission(in part) in any economy is to ensure that companies with scale do not practice tactics that may force competing firms to seek options such as the one discussed. Promoters of flexible competition rules will argue that too much regulation can stifle innovation.This is true to an extent. It is evident in companies that depend on technology to stay ahead of competitors. However, if a management team is bounded rational and does not answer the question “what business are we in?” they can find themselves standing on pulpits condemning regulators and spending copious amounts money on lawyers to defend their limited ability to create value. Astute management teams will think critically and outside the box. They will outfox regulators by innovating around regulation. First movers in this realm will be seen to purse agendas that may include stakeholder management. Examples of these are CEOs who lobby to be part of regulatory bodies or associations that protect the interests of their market. This is a clever move as it is one way of ensuring that their company’s strategies are in tune with any futuristic regulatory measures that are around competition that may affect their ability to grow value.
In order to achieve compliance, startups in Zambia are encourage to register their entities with PACRA. This body offers not only the legalization of the firm but also offers competitive protection by ensuring that company brands, patents and trademarks are protected. This is significant for any startup as not only does it ensure unique visibility but also makes these firms products easily identified in the market. This is a plus when a company has a product that faces competition. In addition, startups also have access to the Competition & Consumer Protection Commission whose mandate includes reviewing and assessing mergers, investigating cartels, ensuring consumer protection from unfair trading practices and enforcing legal actions for dissatisfied consumers. The dual can be considered as entities that seek to bring parity to competition in Zambia.