Manufacturing

The manufacturing sector is characterised by a diverse set of activities ranging from industrial inputs and manufacturing to fast-moving consumer goods. Genesis has extensive experience in providing services across the broad spectrum of this sector, from the manufacture of steel, cement, chemicals, resins and fertilisers to credit cards, supermarkets, cereals and tyres.

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Expertise Areas

Behavioural economics

In our experience organisations often design solutions based on the behaviour of a hyper-rational consumer.  The Applied Behavioural Economics practice understands that humans routinely use biases and heuristics to make decisions, and that this often results in atypical or unexpected outcomes.

Broadcasters and telecommunications firms typically deal with large volumes of customers at arm’s length. We have proven that businesses like these can derive considerable value from designing for the fallibility of human decision-making, whether that be in product design, marketing, sales, service, channels, or other functional areas. 

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Competition economics

We offer clients a comprehensive range of expert economic services in the area of competition law, and remain the provider of choice for most top law firms when they need to retain expert economists to advise on critical matters. Our application of rigorous economic analysis, using quantitative and conceptual approaches, has resulted in blue-chip companies across Africa routinely relying on us for expert advice and support when they interact with competition authorities.

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Trade disputes and damages quantification

In addition to our competition and regulatory experience, we have a diverse range of experience in litigated and contested processes, including international trade disputes and damages quantification. Our evidence-based and rigorous analysis brings clarity to arbitration hearings and court proceedings across a number of fields. 

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Regulatory economics

Genesis is also a leading provider of regulatory economics advice, offering the full spectrum of expert economic and regulatory accounting services to governments, regulators and private firms. We have played a central role in critical policy and regulatory debates across numerous sectors.  

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Projects

Expert analysis on impact of Walmart-Massmart merger

Project name:
Expert advice and testimony on public interest issues in the landmark Walmart merger before the competition authorities

Service:
Competition economics

Sector:
Retail
Manufacturing
Public and Social

Area of Expertise:
Merger analysis and public interest
Expert testimony

Client:
South African Commercial, Catering and Allied Workers Union

Date:
2011-2012

Country:
South Africa


Genesis was appointed to provide expert analysis on Walmart’s proposed acquisition of Massmart by affected trade unions, which were later joined by the Department of Economic Development. This was considered a seminal case regarding public interest issues related to mergers and acquisitions in South Africa.

The central issues at stake were whether the acquisition would result in a loss of employment, or reduction in the conditions of employment, and an increase in global sourcing at the expense of domestic industry. Genesis was brought in to provide expert analysis of these issues by the trade unions, later joined by the Department of Economic Development. 

The particular challenge in this case was not only to determine if such effects were likely on the economic and documentary evidence, but also if likely, what the quantum of effect would be. Genesis was able to meet this challenge through the careful extraction of key information from the vast discovery and the application of a variety of economic tools drawn from international trade theory, labour economics and input-output analysis. 

This evidence was central to the Competition Tribunal adopting a condition that Walmart put in place a supplier development fund, and the Competition Appeal Court singling out Genesis as fulfilling the expert role in these kinds of proceedings in an exemplary fashion.       

When the Competition Appeal Court later decided to refer the matter of the size and structure of the supplier development fund to a group of experts, Genesis was once more involved in developing submissions, which were co-authored by Nobel laureate, Joseph Stiglitz. This process ultimately resulted in the total funds dedicated to a supplier development fund being raised from R100 million to R200 million. At the conclusion of the proceedings, the Appeal Court singled out the Genesis team for fulfilling its expert role in the proceedings in an exemplary fashion

The Walmart case not only shaped the legal view of public interest in merger control, but the contribution made by Genesis  demonstrated that economists are able to bring useful tools to bear in matters such as these. Using these tools, they are able to accurately quantify and measure the effects on public interest variables and, in doing so, to greatly improve legal decision-making on otherwise vague concepts.   

Impact of Walmart merger on Namibia

Trade-related analysis on poultry imports from USA

Project name:
Trade-related analysis on poultry imports from USA

Service:
Trade

Sector:
Agriculture and Agribusiness
Manufacturing

Client:
South African Poultry Association (SAPA)

Date:
2015

Country:
South Africa


Genesis has become an important source of independent analysis and advice to the South African Poultry Association (SAPA) and, through these engagements, also to decision-makers in South Africa’s International Trade Administration Commission (ITAC), the Department of Trade and Industry (the dti) and the Department of Agriculture, Forestry and Fisheries (DAFF).

Over the past three years, we have helped ITAC to understand the potential impacts on domestic prices and consumers, and also on domestic poultry producers arising from SAPA’s tariff and anti-dumping applications against imported poultry products. Our work has also shaped and developed all stakeholders’ understanding of the conceptual underpinnings of the trade remedies available in South Africa’s Trade, Development and Co-operation Agreement (TDCA) with the European Union (EU).

In these various work streams, Genesis has modelled the transmission mechanism between higher tariffs, domestic prices and consumer welfare, as well as the average return on capital employed by domestic producers to be able to continue investing in their businesses. These analyses have generated a clearer understanding of the trade-offs between different types and levels of import protection. They have also assisted ITAC in its consideration of various objections raised by the importers and retailers who contested SAPA’s tariff and anti-dumping applications, many of which were speculative rather than evidence based.

Genesis also provided the dti with evidence-based analysis of the potential impacts of the USA’s decision to make South Africa’s continued inclusion in the African Growth and Opportunity Act (AGOA) contingent upon USA poultry producers gaining greater access to South Africa’s poultry market. This informed the dti’s negotiating strategy with representatives of the USA government, including the magnitude of the import quota eventually granted to USA producers. The objectives of this work required a thorough investigation of existing general equilibrium models to show the impacts on South African poultry producers and consumers of allowing USA poultry imports into the domestic market, as well as a rigorous analysis of the nature and extent of the potential harm to South African exports to the USA should AGOA preferences be revoked.

Genesis continues to provide economic advisory to SAPA on an ongoing basis. More recently, our team has been involved in assisting SAPA and the DAFF understand the impact of proposed brining regulations on domestic poultry producers and consumers.

Consolidation of safety-shoe manufacture

Project name:
Consolidation of safety-shoe manufacture

Service:
Competition economics

Sector:
Manufacturing

Area of Expertise:
Merger analysis and public interest

Client:

Date:
2012

Country:
South Africa


Genesis was approached by all the major safety-shoe manufacturers in South Africa in order to assist them in assessing what the competitive effects would be of a consolidation of the industry and whether this would pass muster under the Competition Act. This required not only a detailed assessment of what role imports played in safety-shoe sales of different standards and price, but also to model the potential efficiency effects of such a consolidation and reorganisation of the production plants.

Genesis was able to demonstrate through a quantitative analysis that while the majority of safety-shoe imports were primarily of a lower standard and cheaper price, these were effectively constraining safety shoes of a higher standard and price. This indicated that a single market was likely across differing qualities and that imports placed a significant constraint on domestic producers.

In addition, with the assistance of the manufacturers, Genesis built a model of the efficiencies that would likely arise through the reorganisation of production facilities and the net effect this was likely to have on costs of production. On this basis Genesis was also able to determine the potential public interest benefits from stemming the loss of employment and reductions in output for the domestic industry.

The Competition Commission’s own investigation of the merger also reached the conclusion that the merger would not lessen competition and, in contrast, was likely to help preserve jobs and output in South Africa. As a result, the merger was unconditionally approved by the competition authorities.

Winning customers with behavioural economics

Project name:
Optimising the onboarding of customers using behavioural economics

Service:
Applied behavioural economics

Sector:
Communications and Media
Manufacturing

Client:
Pan-African home entertainment provider

Date:
2014 – 2015

Country:
South Africa


A Pan-African broadcaster requested the Applied Behavioural Economics team to assist in changing customer behaviour during the customer onboarding stage, which is crucial in setting expectations and establishing behavioural norms. For example, in the onboarding stage customers learn about the various products available to them and how much these cost. They typically also learn more subtle behaviours, such as which service channels are useful for which queries.

In this engagement we optimised the onboarding process to increase product up-sell, cross-sell and first-time payment behaviour. We were able to equip customer service representatives with the tools to achieve these objectives and have positive conversations with customers. For example, staff could conduct a needs analysis with customers using only three questions, dramatically increasing their ability to match customers to the correct product (without complicating the conversation).

Through this work the customer service representatives were able to increase up-sell by up to 26% on certain products, while reducing the proportion of customers who missed their first payment by 45%. This realised considerable value for the firm, given that the client struggled with these objectives for many years before our involvement.

Competition Commission vs Netstar and others

Project name:
Competition Commission vs Netstar and others

Service:
Competition economics

Sector:
Manufacturing

Area of Expertise:
Abuse of dominance and prohibited practices

Client:
Netstar, Tracker

Date:
2009

Country:
South Africa


In what has become a landmark case, Genesis was retained by a number of vehicle-tracking companies to provide an independent economic analysis of the allegation that a standard set for the vehicle-tracking industry and its adoption by insurers had the effect of raising barriers to new entrants. This was the first product standard case in South Africa and raised a host of complex legal and economic issues. 

On the back of extensive research into USA and EU case law, Genesis tackled the issue from three major angles. The first was an analysis of whether the standard was developed in conjunction with, and on the instruction of, the insurance firms themselves. This is because, in economic theory, customers are unlikely to agree to a standard which would harm themselves. Second, Genesis sought to understand how widely the standard was adopted by insurance companies at the time, and therefore whether new entrants could gain traction with some insurers, even if not all. Finally, Genesis spent considerable effort in building evidence as to whether any potential entrant was ready for entry during the period the standard was in place and therefore whether it had the actual effect of preventing entry. 

This analysis contributed to the eventual finding by the Competition Appeal Court that the case against the vehicle-tracking companies lacked merit. Genesis’s work also helped the court establish an important legal principle in assessing these types of cases, namely that the effect cannot be hypothetical where a specific allegation is made by a litigant. Rather, in those cases the court found there was a need to demonstrate an actual effect.

Expert testimony in alleged case of excessive pricing

Project name:
Expert advice and testimony in an alleged case of excessive pricing in the polymer production industry

Service:
Competition economics

Sector:
Manufacturing

Area of Expertise:
Expert testimony
Abuse of dominance and prohibited practices

Client:
Sasol Chemicals

Date:
2015

Country:
South Africa


The concept of excessive pricing and how competition authorities should treat this prohibition has been the subject of much debate worldwide. The seminal Sasol Polymers excessive-pricing case has since set precedent as to how future claims of excessive pricing will be assessed in South Africa, and is likely to also shape the approach of other competition authorities across Africa. In this matter, Genesis was commissioned to provide an in-depth economic assessment of whether Sasol’s polypropylene export prices were likely to represent a valid comparator to the domestic prices that were alleged to be excessive. 

Central to this analysis was the question as to whether an investment in an export facility could be taken as a reliable indication that export prices were a reflection of economic value (and therefore a reasonable benchmark against which excessive prices could be evaluated).  Combining our deep understanding of Sasol’s business, with a meticulous evaluation of Sasol’s investment decisions and financial position, Genesis was able to offer an assessment which showed that export prices in this matter did not necessarily represent a reasonable benchmark to evaluate excessive prices.

Neither the Tribunal nor the Competition Appeal Court disputed the independent economic analysis offered by Genesis Analytics.  The Competition Appeal Court ultimately overturned an initial finding of excessive pricing against Sasol made by the Competition Tribunal.

Improving effectiveness of CSI programmes

Project name:
Improving effectiveness of CSI programmes

Service:
Shared value

Sector:
Manufacturing

Area of Expertise:
Shared value and inclusive business strategy

Client:
Samsung

Date:
2014

Country:
South Africa


The Shared Value team facilitated training and workshops for Samsung on improving the company's corporate citizenship in Africa.

Meet the Team

Areas of Service Expertise

  • Behavioural economics
  • Competition economics
  • Trade disputes and damages quantification
  • Regulatory economics

Projects

Project

Expert analysis on impact of Walmart-Massmart merger

Genesis was appointed to provide expert analysis on Walmart’s proposed acquisition of Massmart by affected trade unions, which were later joined by the Department of Economic Development. This was considered a seminal case regarding public interest issues related to mergers and acquisitions in South Africa.

View Project
Project

Trade-related analysis on poultry imports from USA

Genesis has become an important source of independent analysis and advice to the South African Poultry Association (SAPA) and, through these engagements, also to decision-makers in South Africa’s International Trade Administration Commission (ITAC), the Department of Trade and Industry (the dti) and the Department of Agriculture, Forestry and Fisheries (DAFF).

View Project

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Leading the team

James Hodge

Director and Managing Partner (Competition and Regulatory Economics)

James Hodge
Director and Managing Partner (Competition and Regulatory Economics)
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Stephan Malherbe

Chair and Partner (Competition and Regulatory Economics)

Stephan Malherbe
Chair and Partner (Competition and Regulatory Economics)
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Neil Lightfoot

Partner (Applied Behavioural Economics)

Neil Lightfoot
Partner (Applied Behavioural Economics)
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