A Radical Fix for a Power Crisis: South Africa Suspends Competition Rules for Struggling Industries

In an unprecedented move to prevent the total collapse of key industrial sectors, the South African government has temporarily suspended core competition rules, allowing companies on the brink to band together to negotiate for cheaper electricity. The intervention, spearheaded by Trade and Industry Minister Mpho Parks Tau, is a direct response to an energy cost crisis that has seen prices soar 900% over 17 years, pushing energy-intensive businesses into survival mode.

The revised Energy Users Block Exemption, gazetted on 5 January and agreed with the Competition Commission, creates an exemption for an “industry in distress.” This status will be granted on a case-by-case basis to sectors experiencing “substantial exit by firms” and “industry-wide job losses” due to macroeconomic challenges, primarily unsustainable electricity costs.

What the Exemption Allows

Companies within a designated distressed industry can now legally collaborate in ways normally forbidden under antitrust law. They can:

• Collectively negotiate power supply contracts to secure better rates.

• Collaborate on developing shared energy infrastructure like backup generation.

• Share sites, equipment, and facilities to optimise energy use and reduce costs.

The crucial condition is that collaboration must be solely for securing energy supply and reducing costsnot for fixing the prices of their own products.

A Lifeline for Smelters and Heavy Industry

While no specific industry is named, the move is clearly aimed at salvaging South Africa’s ferrochrome and manganese smelting sectors. These operations are extraordinarily power-hungry and have been decimated by uncompetitive electricity tariffs and cheaper Chinese imports. Companies like Transalloys (the country’s last manganese smelter) and major ferrochrome producers have been forced to idle plants and issue thousands of retrenchment notices.

The government’s logic is one of brutal pragmatism: strict competition rules are meaningless if the entire industry they govern ceases to exist. By allowing a collective bargaining bloc, the state hopes these companies can negotiate survival-level power tariffs or invest jointly in alternative energy, something impossible for a single, cash-strapped operator.

This regulatory shift is a stark admission of the depth of the energy crisis. It prioritises job preservation and industrial continuity over free-market principles in the short term. For the workers and communities dependent on these plants, it’s a potential lifeline. For the broader economy, it’s a high-stakes experiment in whether temporary cooperation can save what relentless cost pressures have nearly destroyed. The exemption is not a solution to the power crisis, but a desperate tool to buy time until one is found.