Ditcclp2021d3 en

U N I T E D N AT I O N S C O N F E R E N C E O N T R A D E A N D D E V E L O P M E N T
THE COVID-19 PANDEMIC

IMPACT ON MICRO, SMALL
AND MEDIUM SIZED
ENTERPRISES
MARKET ACCESS CHALLENGES
AND COMPETITION POLICY
U N I T E D N AT I O N S C O N F E R E N C E O N T R A D E A N D D E V E L O P M E N T
THE COVID-19 PANDEMIC

IMPACT ON MICRO, SMALL
AND MEDIUM SIZED
ENTERPRISES
MARKET ACCESS CHALLENGES
AND COMPETITION POLICY
Geneva, 2022
© 2022, United Nations
This work is available through open access, by complying with the Creative Commons licence created for
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This publication has not been formally edited.
United Nations publication issued by the United Nations Conference on Trade and Development.
UNCTAD/DITC/CLP/2021/3
eISBN: 978-92-1-001311-6
The COVID-19 pandemic impact on micro, small and medium sized enterprises
ACKNOWLEDGEMENTS
Dr. Michael Schaper, International Competition, International Trade and Small and Medium Sized Companies’
expert, and former Deputy Chairman of the Australian Competition and Consumer Commission, and Ms. Rachel
Burgess, Competition law academic and consultant, who have authored this report at the request of the United
Nations Conference on Trade and Development (UNCTAD), would like to acknowledge the support of a few key
individuals and institutions who have assisted in the preparation of this report. In particular, thanks are extended
to Mr. Pierre Horna, Legal Affairs Officer, Ms. Elizabeth Gachuiri, Economic Affairs Officer from UNCTAD’s
Competition and Consumer Policies Branch (CCPB), who supervised the drafting, as well as Ms. Elona Lazaj,
and Ms. Sophie Hunter, Project Assistants to the UNCTAD team in this project.
Thanks go to the Economic Commission for Latin America and the Caribbean, the Economic Commission for
Europe, the Economic and Social Commission for Asia and the Pacific, the Economic Commission for Africa, and
the Economic and Social Commission for Western Asia, whose teams provided valuable advice, inputs, data,
and review of the document. Special thanks go to Mr. Kareem Hassan, Chief, United Nation-Economic Social
Commission for Western Asia (UN-ESCWA) Technology Center, Dr. Nibal Idlebi, Senior Programme Management
Officer, UN-ESCWA, Ms. Nathalie Khaled, Economic Affairs Officer, UN-ESCWA, Ms. Rouba Arji, Social Affairs
Officer, UN-ESCWA, Mr. Salim Araji, Economic Affairs Officer, UN-ESCWA, Mr. Adel Alghaberi, Economic Affairs
Officer, UN-ESCWA, Ms. Ban Pahlawan. Nadeen Suliman and Rawand Hidme, Research Assistants, UN-ESCWA
Technology Center
The final version of the report benefitted from the valuable review and inputs from other UNCTAD colleagues,
Mr Philippe Rudaz, Mr Marko Stanovic, Mr Selsah Pasali, SME and Entrepreneurship Branch, and Mr Alessandro
Vitale and Ms Sabrina Ielmoli, E-Commerce Branch; and from the overall guidance and revision of Ms. Teresa
Moreira, Head, Competition and Consumer Policies Branch, and the contribution of Mr Juan Luis Crucelegui,
Chief of Capacity Building, CCPB, UNCTAD. Ms. Jacqueline Bouvier assisted in its formatting and Ms. Magali
Studer was responsible for the cover.
*This report is prepared under the United Nations Development Account (DA) response to COVID-19 project on
Global Initiative towards post-Covid-19 Resurgence of the MSME sector (Project 2023W): Sector Component 2:
Cluster F on Access to Markets.
iii
TABLE OF CONTENTS
Abbreviations........................................................................................................................................... vi
Executive Summary ................................................................................................................................. vii
CHAPTER 1: INTRODUCTION ................................................................................ 1
CHAPTER 2: UNDERSTANDING THE NATURE OF MSMES ....................................... 4

2.1 Definitions and Size ................................................................................................................ 4
2.2 Key characteristics ................................................................................................................ 5
2.3 Market access ........................................................................................................................ 6
2.4 Regulatory knowledge and compliance .................................................................................. 6
2.5 Interaction with Public Agencies and Business Associations ................................................... 7
2.6 Informal sector MSMEs .......................................................................................................... 7
2.7 Sustainable Development Goals ............................................................................................ 8
CHAPTER 3: COMPETITION LAW AND MARKET ACCESS FOR MSMES PRIOR
TO COVID-19 .................................................................................... 10
3.1 Competition law and market access in developing economies ............................................... 10
3.2. Competition law: application to MSMEs ................................................................................. 11
3.3 Competition law: challenges for MSMEs ................................................................................. 13
3.4 Competition authorities: dealing with MSMEs ......................................................................... 13
3.5 The effect of informal MSMEs on competition ........................................................................ 14
CHAPTER 4: IMPACT OF COVID-19 ON MARKET ACCESS & COMPETITION
LAW FOR MSMES ............................................................................ 15
4.1 Overall global and regional impacts of COVID-19 on MSMEs ................................................. 15
4.2 Impacts on market access through global supply chains ....................................................... 17
4.3 Market access via digital markets ........................................................................................... 17
4.4 Gender and market access ................................................................................................... 19
4.5 Policy responses to support MSME market access ............................................................... 20
4.6 Competition issues arising during COVID-19 .......................................................................... 22
4.7 Competition policy responses................................................................................................. 23
CHAPTER 5: GLOBAL TRENDS ................................................................................ 25
Trend #1: Support for incumbent firms ............................................................................................ 25
Trend #2: Approval of co-ordinated economic activity ..................................................................... 27
Trend #3: Lockdowns continue to constrain market access ............................................................. 29
Trend #4: MSMEs are going online .................................................................................................. 30
Trend #5: Competition authorities and policymakers working with MSME agencies & associations ...... 32
Trend #6: The importance of informal sector MSMEs ....................................................................... 33
CHAPTER 6: POLICY RECOMMENDATIONS .............................................................. 35
6.1. Recommendations to competition authorities: ....................................................................... 35
6.2. Recommendations to Governments and MSME agencies: .................................................... 35
6.3. Recommendations to MSME agencies and competition authorities ......................................... 36
Endnotes ................................................................................................................................................. 37
v
ABBREVIATIONS
ASEAN Association of Southeast Asian Nations.
ECA United Nations Economic Commission for Africa.
ECE United Nations Economic Commission for Europe.
ECLAC United Nations Economic Commission for Latin America and the Caribbean.
ESCAP United Nations Economic and Social Commission for Asia and the Pacific.
ESCWA United Nations Economic and Social Commission for Western Asia.
GVC Global Value Chain/global supply chain.
IMF International Monetary Fund.
MNC Multinational Corporation.
MSME Micro-, Small and Medium-sized Enterprise.
OECD Organization for Economic Co-operation and Development.
SDG Sustainable Development Goals.
SME Small and Medium-sized Enterprise. Usually taken to also include micro-sized firms.
UNCTAD United Nations Conference on Trade and Development.
VAT Value Added Tax.
WTO World Trade Organization.
vi
EXECUTIVE SUMMARY
This report provides a snapshot of the current competition and market access challenges being faced
by Micro-, Small and Medium-sized Enterprises (MSMEs) around the world as they seek to deal with the
impact of COVID-19 on their operations. It focuses on the competition-related challenges caused by the
pandemic, ability to access existing and new markets, regulatory responses to the situation that especially
affect MSMEs, and related observable trends relevant to small and medium enterprises. It concludes with a
few recommendations for future action by national governments and international organizations.
Whilst examples are provided from a wide range of different nations around the world, the principal focus is
on developing countries and their MSME populations.
Many MSMEs today are on the cusp of closure or have already been forced to exit. Many those still trading
remain highly vulnerable. Surviving firms will also have to deal with a changed business landscape in the
future, with many patterns of sales, distribution and consumer behaviour having been substantially and
permanently altered.
Two intertwined critical issues in dealing with the current pandemic, and in the eventual recovery of national
economies from it, are that of market access and competition policy for MSMEs. Countries are taking a
variety of different responses to these two issues. In the competition arena, enforcers exceptionally relaxed a
few anti-competitive provisions, and many are now focusing for the first time on the impact these decisions
might have on MSMEs. A few different measures are being taken to assist MSMEs to retain or gain access
to markets and consumers.
Six principal trends can be identified that are common across most nations: governments are placing a
priority on propping up existing firms; substantially more co-ordinated economic activity is being approved
by competition authorities; market access is being hindered by inter- and intra-national restrictions on the
movement of people, goods and services; MSMEs are moving online and seeking to enhance their ability
to access markets using digital technology; more competition authorities are working directly with MSME
agencies and MSME associations; and informal sector MSMEs are increasingly being recognised as an
important factor in both competition and market access policy considerations.
Some recommendations are made for future action by governments and agencies of individual member
states, in some cases with the support of international organizations. These are a mixture of possible regulatory
measures, greater engagement with MSME representative organisations, training and capacity-building
activities, and other actions. Whilst some are focused on competition issues, steps are also suggested to
improve the ability of MSMEs to access both international and domestic markets.
vii
CHAPTER 1: INTRODUCTION
As in almost all other spheres of economic life, weeks following deconfinement, but the buying spree
COVID-19 has created immediate and significant is unlikely to be sustained. Many pre-existing patterns
changes to how MSMEs do business. Small businesses of production and demand, and of delivery and
around the world have been abruptly confronted with consumer preference, have changed in ways which
changed consumption patterns, demand, product cannot yet be fully measured. Recovery does not
distribution and consumer behaviour. Many firms mean a resumption of a pre-existing normal phase:
have lost access both to front-line customers, and it may mean a ‘new normal’ that is easier for some
their ability to source raw materials and inputs, as well MSMEs and harder for others.
as to export. In many cases, lockdowns and other The overall impact of COVID-19 on the MSME
movement restrictions have prevented key personnel sector is somewhat difficult to assess, as it fluctuates
and staff from working. Job losses elsewhere in based on the rate of infection and patient recovery,
the economy have also resulted in a drastic fall in the current movement restrictions put in place in
demand. Sales have declined. Many other businesses various regions, and of policy responses in different
in supply chains have ceased operating. Uncertainty countries. Comprehensive real-time global data on the
about the future course of the pandemic has led many state of the MSME sector is hard to come by, but the
individuals and businesses to spend more cautiously, COVID-19 crisis has sparked interest and incentivized
dampening further the demand for many of the goods such investigations on MSMEs.2
and services produced or supplied by MSMEs.
Policy responses from many arms of government,
The impact is being felt not only by individual firms, but dealing with diverse issues that affect MSMEs,
also within national economies and worldwide. The are needed. Many of these are already underway.
pandemic has already resulted in global disruptions However, policy makers must ensure that the two
of trade and travel across borders. Supply chains intertwined critical issues of competition policy and
have been severely disrupted as China, the European market access for MSMEs are not overlooked.
Union, and the United States - the largest exporters
and the biggest players in global value chains - have Competition policy and market access
closed some or all of their cross-border trade, or else Competition policy refers to the mix of policies, laws,
slowed it down. This has had major repercussions sectoral related regulations, and enforcement activities
on many MSMEs, both as exporters and as users of that are employed by a country to govern the process
imported inputs.1 of competition between firms.3 It can take various forms
but is generally focused on ensuring that markets can
Around the world, many MSMEs have already ceased
operate in such a way so as to ensure a level playing
trading, and many more are either on the cusp of
field for all with, ultimately, a net benefit to both society
closure or remain highly vulnerable. Surviving firms will
and the economy. A competition authority is generally
also have to deal with a
tasked with the implementation and enforcement of a
changed business landscape in future, with many old national or regional competition law.
patterns of sales, distribution and consumption having
Market access refers to the ability of a business to
been substantially and permanently altered. These
enter and operate within a domestic or international
changes pose challenges for the owner-managers of
marketplace. The capacity of a business to freely offer
such enterprises and these problems are particularly
its goods or services to consumers can be affected
acute in less developed economies with many micro
by a wide range of factors, including general and
and small businesses.
industry-specific policies enacted by a government,
There is also a degree of long-term uncertainty about by transnational trading regimes and the behaviour
what happens next, which is impacting both firms and of other firms. Without access to existing or potential
consumers. Experience to date suggests that when new customers, no firm can survive. It is therefore
lockdowns end, the ‘recovery’ phase that follows may an important issue for competition authorities and
lead to a short-term spike in economic activity in the policymakers.
1
Some competition authorities have responded to and Rules for the Control of Restrictive Business
COVID-19 by adapting the way in which they administer Practices (UN Set), approved by the United Nations
and enforce their laws, the exemptions they grant, General Assembly 35/63, of 5 December 1980.6 The
and the business behaviour which they authorise. objectives of the UN Set consist of promoting benefits
Competition authorities in numerous countries have which arise from competition law and policy and
been exceptionally relaxing the application of some strengthening the enforcement against anticompetitive
prohibitions., and some of these decisions might have practices worldwide. The UN Set is the only multilaterally
on MSMEs.4 agreed instrument on competition that provides a set
of recommendations for the control of anti-competitive
Market access issues are also being comprehensively
practices by member States, notwithstanding their
addressed through a variety of different measures.
level of development; that recognizes the development
These include public financial support (e.g., state aid)
dimension of competition law and policy and the special
mainly granted to alleviate the lack of liquidity and to
circumstances of developing countries; and establishes
maintain jobs in the face of the drastic reduction in
a framework for international cooperation and the
demand in many sectors of the economy (hospitality,
exchange of best practices.
tourism, transport, retail trade, automotive industry)
made up of MSMEs; support to begin trading online Each year, an UNCTAD Intergovernmental Group of
or expand their digital activities; permitted travel zones Experts on Competition Law and Policy meets to
between areas with low COVID-19 rates; and business follow the application and implementation of the UN
planning and strategic skills development.5 set, and every five years since the adoption of the
United Nations Set, a Review Conference has been
The interaction of competition policy and market
held, providing an occasion to discuss and renew
access will play an essential role in ensuring the
UNCTAD’s mandate through the consultations
survival of MSMEs, both during and after COVID-19.
between heads of competition authorities and senior
There is much more to do in these policies and areas,
officials of developed and developing countries,
and this report makes a few suggestions for further
including least developed countries (LDCs) and
action in both fields.
economies in transition.
The role of the United Nations
Under the UN Set, UNCTAD also provides technical
This report is part of an overall United Nations project assistance and capacity-building for interested
and its stated goal: to provide policy recommendations member States so that they are better equipped to
to address specific challenges faced by MSMEs use competition law and policy for development.
during the COVID-19 crisis, through the use of
Overview of the report
competition law and policy. This project is part of the
general strategic plan of the United Nations developed This paper provides a snapshot of the current
in response to a call by the General Assembly to challenges being faced by MSMEs around the world
coordinate a global response to COVID-19 that as they seek to deal with the impact of COVID-19
addresses its social, economic, and financial impacts on their operations. It focuses on the competition
through a dedicated taskforce (Resolution 74/27). and market access-related issues caused by the
The objective of this cluster (Access to Markets) is to pandemic, such as the ability of MSMEs to access
identify barriers to competitiveness and market access existing and new markets, competition authorities’
faced by MSMEs, especially in the developing world. responses to the pandemic that especially affect
MSMEs, and observable trends in the sector.
The United Nations Conference on Trade and
Whilst examples are provided from a wide range
Development (UNCTAD) has been the focal point for
of different nations around the world, the principal
work on competition law and policy within the United
focus is on developing countries and their MSME
Nations system since 1980. Its primary focus is to
populations.
address the needs of developing countries as well as
economies in transition in designing and implementing Chapter 2 provides a brief overview of the nature of
competition law and policy to achieve inclusive small business. What is an MSME, and how does
economic growth and sustainable development. The it differ from a larger enterprise? What are the key
mandate of UNCTAD in this field has been set by challenges and opportunities faced by MSMEs? How
the Set of Multilaterally Agreed Equitable Principles are such enterprises managed and operated, and
2
how do government agencies and multilateral bodies emerging globally as MSMEs, their representative
interact with MSMEs? It also discusses the role of associations, governments and competition authorities
industry associations and highlights the particular deal with COVID-19 and associated issues.
importance of informal MSMEs.
The report concludes in Chapter 6 with some
In Chapter 3, the interaction between MSMEs,
recommendations so that member States’
competition law and policy in general is examined.
governments and, in particular, competition
How does competition law and policy impact on
authorities, SMEs public bodies and other relevant
MSMEs, and what special provisions (if any) do various
governmental institutions can undertake to help
countries dispose of to take into account the different
MSMEs adjust to the new economic model
nature of smaller businesses?
confronting all enterprises. Further, what measures
Chapter 4 then examines the impact of COVID-19 on the can be taken by international organizations support
MSME sector to date, using a range of recently collected these efforts. These principally focus on providing
statistics and data to gauge what has been happening MSMEs with support to access new markets,
to smaller firms as they seek to survive, and to compete assistance to help them operate more effectively in
effectively in the marketplace. The range of government the digital economy, building institutional capacity
support measures to assist the sector is discussed, both through training and education that will improve
at a general level and especially in regard to competition the level of understanding of policymakers about
and market access-related issues. the MSME sector, and on improving the capacity
Chapter 5 distils some of the previous discussion into of policymakers to engage effectively with MSME
several broad themes and trends that appear to be associations and representative bodies.
3
CHAPTER 2: UNDERSTANDING THE

NATURE OF MSMES
2.1 DEFINITIONS AND SIZE which indicates the great range of variables that are
used when attempting to define this type of economic
MSMEs are the most common form of business
entity.
enterprise found throughout the world, yet their key
characteristics are not well understood. The lack of a uniform definition of an MSME also
What constitutes an MSME? In general, there are a means precise measurements of the global population
number of common characteristics of such enterprises: of MSMEs is hard to determine. These figures can vary
they are independent entities, and not part of a larger significantly depending on the definition employed, the
corporation; are typically founded and managed by the efficiency of data collection in different nations, and
owners, who also bear most (or all) of the risk involved whether informal enterprises are included in the count.
in the venture; they have a comparatively small Generally, it is reckoned that MSMEs represent about
number of employees (if any); usually only produce or 90 per cent of businesses and provide more than
sell a limited range of goods and services; have limited 50 per cent of employment worldwide.7 Their share of
market shares and a small customer base; and have the total number of firms, of employment and of GDP
limited access to support resources such as finance, can vary widely across countries and regions. Among
external advisers, government assistance and the like. APEC economies, for example, they account for over
There is no single, globally accepted definition 95 per cent of enterprises on average and, in some
of MSMEs, and their characterization can vary of its member countries, up to 99 per cent of firms
significantly between nations. Some countries use and over 80 per cent of total employment.8 MSMEs
a singular quantitative feature, such as the number account for more than 90 per cent of businesses
of employees or annual turnover of an enterprise. on African continent and are the primary drivers of
Others use more complex permutations, including innovation.9 Micro, small and medium enterprises
industry sector, capitalisation, asset base, staff and/ are central actors in the development of the Latin
or revenue. The issue is further confused by the American region, as they account for more than
tendency of different agencies even within the same 99 per cent of business and employ around 67 per
country to use different criteria – a taxation agency, for cent of the workforce.10
example, will often focus on the revenue or profitability Amongst WTO countries, MSMEs account for 95 per
of a firm when determining whether it is small, whilst cent of all firms, employ 60 per cent of the total
an employment ministry frequently measures firms by workforce and provide approximately 50 per cent of
employee numbers. Some jurisdictions include the value add in member economies.11 In the Arab world,
self-employed, whilst others exclude them; likewise, MSMEs are estimated to account for over 90 per cent
informal businesses are measured in some nations, of all businesses.12
but not in others.
Whilst found in all areas of economic activity, MSMEs
Terminology also varies. In some nations, such entities
tend to be most numerous in areas that are labour-
are referred to as “MSMEs”; in other jurisdictions, the
intensive, are primarily based around small markets,
more commonly used term is “Small and Medium-
where economies of scale do not provide major
sized Enterprise” (SME); whilst in yet others the simple
benefits, or where larger corporations are absent from
term “small business” is employed. Throughout this
the marketplace. These include (but are not limited
report, the terms are used interchangeably.
to) such industry sectors as personal services; retail
Unsurprisingly then, the classification of MSMEs varies and wholesale trade; small-scale agriculture; travel,
across countries according to the method used. A tourism, and hospitality; food services; and other
selection of official definitions in shown in Table 2.1, professional services.
4
Table 2.1: Overview of some MSME definitions to demonstrate their plurality
Bahrain13 Micro: Less than 10 employees and annual turnover under Bahraini dinar (BD)100,000. Small: 11-50 employees
(or up to 100 for the construction sector) and annual turnover of BD100,000-1M.
Medium: 51-250 employees (up to 400 for construction sector) and annual turnover of BD1m-5m.
Different criteria are applied to the manufacturing segment, where small companies are classified as those with a
capital investment of BD20,000-500,000, and medium companies as those with BD500,000-3m.
Georgia14 Small: average annual employees do not exceed 50 persons and average annual turnover Georgian lari (GEL) 12 million.
Medium: 50-249 average annual employees and average annual turnover GEL 12-60 million.
India15 Manufacturing sector – measured by investment in plant & machinery

Micro: Does not exceed twenty-five lakh rupees
Small: More than twenty-five lakh rupees but does not exceed five crore rupees
Medium: More than five crore rupees but does not exceed ten crore rupees
Service sector – measured by investment in equipment
Micro: Does not exceed ten lakh rupees
Small: More than ten lakh rupees but does not exceed two crore rupees
Medium: More than two crore rupees but does not exceed five core rupees
Malaysia16 Small – manufacturing sector:

Sales turnover from Malaysian ringgit (RM) 300,000 to less than RM15 million OR full-time employees
from 5 to less than 75
Medium – manufacturing sector:
Sales turnover from RM15 million to not exceeding RM50 million OR full-time employees from 75 to not exceeding 200
Small – services & other sectors:
Sales turnover from RM300,000 to less than RM3 million OR full-time employees from 5 to less than 30
Medium – services & other sectors:
Sales turnover from RM3 million to not exceeding RM20 million OR full-time employees from 30 to not exceeding 75
Micro: any firm falling below either of the above-given “small” definitions
Peru17 Micro: 10 or less employees and annual sales limit of 150 tax units.
Small: 1-100 employees and sales limit of 1,700 tax units.
Medium: annual sales limit of 2,300 tax units.
Saudi Arabia18 Any enterprise with an independent commercial registration that has less than 249 employees, and less than Saudi
riyal (SAR) 200 million as revenue.
South Africa19 A total of 33 different definitions of micro-, small- and medium, based on a combination of turnover and employee
numbers
2.2 KEY CHARACTERISTICS to survive and grow; it also restricts the capacity of
MSMEs to access and utilise many of the tools that
As mentioned in the preceding section, MSMEs can be
larger firms have. A small business is not simply a
differentiated from larger firms not only by their size, but
large corporation shrunken down in size; it is indeed
also by some other, more qualitative characteristics.
a venture that operates on a very different basis
Smallness is central to their existence. In most to a large domestic competitor or multinational
cases this means that the firm is limited in its ability corporation (MNC).
5
Table 2.2: Common Differences Between MSMEs and Large Firms20

SMEs Large Firms
Number of business establishments Single Multiple
Legal structure Most commonly sole trader, partnership, or small Company structure
company
Geographical distribution Limited Limited or wide
Product/service range Limited, specialised Limited or wide
Market share Limited Significant
Customer base Small Numerous
Likelihood of business failure/exit High Low
Compliance cost burden Proportionately high Proportionately low
Knowledge of, and to access to, regulatory Limited; ad hoc Sophisticated; extensive
information
Access to technical experts and training Limited High

capabilities
Knowledge of, and to access to, marketplace Limited; ad hoc Sophisticated; extensive
information
Ability to access established supply sources Difficult Easy
Level of financial resources Typically, small and limited Substantial
Use of external legal and economic advisers Limited; ad hoc Systematic; structured
The consequence of these features is that many make them overly reliant on continued access to those
MSMEs are particularly vulnerable to exogenous buyers. For most MSMEs, these client customers are
shocks. Limited turnover and marginal profitability, usually located close by in the same domestic national
for example, can mean that many firms have not economy. Only a relatively small proportion of MSMEs
accumulated sufficient financial reserves that might trade internationally, and less than 15 per cent of all
give them the capacity to fall back on savings if firms are actively engaged in export-related trade.21
they need to weather a sudden drop in income. As When access to these (generally domestic) consumers
a group, MSME have a low survival rate, which can is foreclosed, many MSMEs can lose most or all of
easily be threatened by sudden unexpected shocks or their income. In many industry sectors where MSMEs
changes in consumer behaviour; not surprisingly, they are numerous (such as personal services, allied health
also typically have a much shorter lifespan than their services, travel, and tourism) these consumers need to
larger competitors. be physically close to the business; restricting physical
movement can effective deny MSMEs access to those
2.3 MARKET ACCESS
consumer markets. In contrast, larger firms often sell
As Table 2.2 above indicates, MSMEs also face a much wider range of products and services, to
particular challenges in regard to their markets. many more varied purchasers, are more likely to have
No business can survive without a viable source of international as well as domestic customers, and can
purchasers of its good or services, and whilst many survive localised shutdowns or consumer restrictions
small firms have made a virtue of their size by producing more easily.
niche offerings that larger corporations cannot or will
not supply, others suffer from their limited scale and 2.4 REGULATORY KNOWLEDGE AND
size. COMPLIANCE
MSMEs typically offer only a limited range of goods An emerging issue in many MSME studies has been a
and services, to a small group of customers, which can recognition that many smaller firms face the burden of
6
complying with competition and other laws but have in seeking information from bodies such as local
only a limited understanding of what is required and chambers of commerce, professional associations,
a restricted capacity to do so. Recent research into industry trade groups and the like. These are often
information-gathering behaviour amongst MSMEs seen as trusted sources of advice and information,
indicates that most such matters are still managed rather than government or other public entities. These
personally by the business owner-manager, who associations can play an important intermediary role
deals with regulatory compliance as just one of many in ensuring that information flows between the public
issues in their daily work. Few firms, except medium- and private sectors: they can help MSMEs access
sized enterprises with more funds, rely on legal or information about government support programs,
compliance specialists. Levels of knowledge about whilst at the same time providing valuable feedback to
legal frameworks is rudimentary, and compliance is policymakers about the relative effectiveness of their
typically done on a “just in time” basis.22 assistance measures.28
In the competition law sphere, a few studies have They also have an impact on competition policy and
shown that most MSMEs have very limited knowledge law. Trade associations can also play a key role in
of both their rights and obligations under relevant developing and embedding a culture of competition
laws, and even less inclination to use them to their law compliance within the business sector. They can
benefit, unless assisted by a trade association or do this in several ways, such as by explicitly embedding
similar body.23 competition compliance in their own internal codes of
This also applies when an MSME is the victim of a conduct. They can also disseminate information on
breach of a competition law by another firm. Many issues related to cartels and collusive conduct, provide
firms are unaware of such breaches; many have no training and general advice on how to comply with the
knowledge of the remedies that are available to them; law, help their members establish internal compliance
and even where MSMEs realize, they fail to have programmes, and assist firms to identify and avoid
the financial and time resources to access justice.24 illegal collusive conduct.29 Caution, however, must
Consequently, many MSMEs tend to suffer in silence. be exercised by business associations to ensure that
The result is, as one national agency has noted, that they do not engage in collusion through the sharing of
in most competition issues small firms are effectively sensitive commercial information, establishing norms
being denied access to justice.25 and standards aimed at excluding non-members,
or by recommending (fixing) prices and fees. There
2.5 INTERACTION WITH PUBLIC have been numerous cases in different countries of
AGENCIES AND BUSINESS illegal anti-competitive behaviour operating under the
ASSOCIATIONS aegis of business associations. For example, output-
restricting cartels in the poultry meat market (Chile and
Small businesses typically also have limited interaction
Turkey), price-fixing and the imposition of “route entry
with government. Indeed, firm size shows marked
charges” in the Kenyan transport sector, and price-
correlation with propensity to interact with government
fixing amongst Malaysian floriculturists.30
agencies, economic development bodies, competition
authorities and policymakers. Large corporation are 2.6 INFORMAL SECTOR MSMES
far more likely to engage with and utilise such services
than small firms. Moreover, the smaller the enterprise, One of the other major features of the MSME sector
the lower the likelihood that it will also receive is the high proportion of firms which operate within
assistance and support from government.26 the so-called informal sector or informal economy –
that is, outside the normal formal legal requirements
Many MSME operators instead show a marked
of governments. Globally, it is estimated that as many
preference to rely on business associations, family,
as 80 per cent of all business enterprises are informal
friends, and trusted business peers as their principal
enterprises. While the figure is low amongst developed
sources of assistance and information, rather than
countries (55.7 per cent), it is high within emerging
government bodies.27
and developing nations (82.5 per cent overall), with
In this context, the role of business associations Africa (92.4 per cent) and the Arab states (90.8 per
becomes especially significant. Business owner- cent) showing a particularly high proportion of informal
operators are more likely to also place their trust enterprises.31
7
Informal enterprises are those that typically are not power, and reduces the concentration of socio-
registered with any government agency or regulatory economic elites and decision-making. They provide
body which other firms are required to do. They often opportunities to many disadvantaged and vulnerable
do not have a clear legal structure or existence as groups, such as women, and those who otherwise
such, are often unknown to authorities, and frequently find themselves excluded from participation in the
do not comply with any applicable legislative and formal sector. So-called “necessity entrepreneurship,”
regulatory frameworks, including the laws governing wherein informal self-employment projects provide
business operations and competition. work that is not otherwise available, is a common
driver of small business creation across the developing
Informal enterprises tend to be greater in number
world, as well as a key source of employment and
in nations where the rule of law is weak or absent;
wealth creation.34
where there is a high level of corruption, or where
trust in the state is low; where opportunities For example, MSMEs often provide opportunities for
to participate in the formal sector (either as an women to overcome many of the challenges they
employee or as a business) are limited; and where have traditionally faced when attempting to enter and
there are large numbers of disadvantaged persons stay in the labour market, such as flexibility of working.
with limited capacity to operate in the formal According to a study made of the demographics of
economy (this latter group are sometimes referred MSMEs in Sri Lanka, the majority of the entrepreneurs
to as “subsistence entrepreneurs”32). There are who fall in the age category of 35 to 49 are young
marked differences in the patterns of informality: and MSMEs are male dominated in comparison to
in the Asia-Pacific region, for example, the level female entrepreneurs.35 MSMEs also allow young
has been decreasing over time, whilst in the Arab entrepreneurs to flourish by allowing them to operate
world it has grown in recent years (with countries independently of the constraints of an existing
such as Morocco and Tunisia experiencing notable business and are also increasingly becoming an
increases).33 opportunity for mature-age workers who wish to
remain in the workforce but face varying forms of age-
2.7 SUSTAINABLE DEVELOPMENT GOALS based employment discrimination (see Figure 1).
Apart from their economic significance, MSMEs are MSMEs development and entrepreneurship can
also important to nations for a variety of other reasons. contribute to implementation of the entire Agenda
A vibrant MSME sector promotes the broadening of 2030.36 MSMEs are important in at least three
wealth, economic opportunities, skills, and political of the Agenda 2030 Sustainable Development
Figure 1: Age-based employment discrimination - Age of primary decision maker by majority ownership type
All SMEs 15,8 25,1 46,8 12,3
Members of the same family 13,3 26,1 47,8 12,8
Persons with disabilities 9 42,8 29,9 18,3
Visible Minorities 19 13,1 41 6,8
Aboriginal People 14,6 24,3 48,4 12,7
Women 20,1 23,4 47,1 9,5
Women and men 15 26,3 47,4 11,4
Men 15,1 25,2 46,5 13,3
0 20 40 60 80 100
Younger than 39 40 to 49 50 to 64 Older than 64
8
Goals (SDGs): SDG 1 (“End poverty in all its forms served geographic areas. Also, increasing productivity
everywhere”); SDG 8 (“Promote sustained, inclusive of MSMEs can help bridge wage inequality. 37
and sustainable economic growth, full and productive
employment and decent work for all”); and SDG 10 The role of competition law and policy in supporting
(“Reduce inequality within and among countries”). sustainability is itself becoming a topic of wide interest
Individual MSMEs have the potential, through their in international fora which aim to address potential
business practices, to contribute to the SDG 1 using conflicts between competition and sustainability
new business models/solutions. The ambitious push goals.38 Since SMEs are highly prevalent in the
for eliminating poverty through the SDGs offers a economies of developing countries, the current push
new range of business models and opportunities towards sustainable economic growth, notably in
that are being tapped by the private sector, including the context of COVID-19, bears relevance to SMEs
MSMEs. To achieve SDG 8, MSMEs create jobs to enhance their competitiveness post crisis. Initial
and have the potential for promoting decent work research suggests that the tools already available
and entrepreneurship. MSMEs are relevant actors to to competition authorities are adequate to ensure
achieve SDG 10 because MSMEs promote economic competition policy and law does not stand in the way
inclusion and have the potential to regenerate under- of agreements designed to achieve sustainability39.
9
CHAPTER 3: COMPETITION LAW AND MARKET

ACCESS FOR MSMES PRIOR TO COVID-19
This chapter considers the features of competition There are three internationally recognised pillars of
law and policy that existed prior to the pandemic, competition law, each of which can play a role in
including those related to market access, for MSMEs. helping MSMEs operate effectively in the marketplace:
It also discusses the challenges still to be overcome
(i) prohibitions against anti-competitive agreements
to enable MSMEs to fully benefit from this important
(such as bid rigging in public procurement);
policy area.
(ii) prohibitions against abuse of a dominant market
3.1 COMPETITION LAW AND MARKET position (such as strategic withholding of
ACCESS IN DEVELOPING ECONOMIES supplies); and
Competition policy and law strives to achieve a (iii) the prevention of market distortions created by
level playing field for all firms – large and small anti-competitive mergers and acquisitions (such
– with the generally accepted ultimate goal as those that lead to large entities with significant
of achieving consumer welfare. In developing market power).
economies, competition laws often have additional
Anti-competitive practices are responsible for causing
policy objectives that include enhancing economic
appreciable harm in developing economies. A study46
efficiency,40 promoting economic development,41
expanding entrepreneurship42 and specifically based on more than 200 ‘hardcore’ cartels across more
promoting or protecting MSMEs.43 than 20 developing countries during the period 1995
to 2013 revealed that affected sales as a percentage
Competition law and policy can ensure that markets of GDP reached up to 6.38 per cent (South Africa)
function competitively and are conducive to business while the harm in terms of excess profits resulting
growth, including that of MSMEs, particularly when they from cartel conduct reached almost 1 per cent of GDP
are enforced by independent competition authorities. (Republic of Korea and South Africa). Cartels were
The achievement of a level playing field is an important investigated across an array of industries—from fruit
factor in facilitating market access. However, market processing through security services to cargo freight
access for MSMEs into both domestic and international in Africa;47 chocolate, milk, and rice to construction in
markets can be hampered by institutional and legal South America; and cement, yeast, and newspapers
hurdles (such as particular registration or licensing in the Middle East.48
requirements), specific industrial policies and by a
lack of awareness, promotion and implementation of Other distortionary practices have also been widely
competition policies and laws. documented. In the telecommunications sector, for
example, these include exclusive agreements and
There is no ‘one size fits all’ competition law and excessive pricing by Kenya’s Safaricom, bundling by
the policy objectives of developing countries in this
Mauritius Telecom and abuse of dominant position by
area are substantially different to those in developed
South Africa’s Telkom.
economies.44 Additionally, although competition law
and policy is well established in developed economies, In developing countries, markets can be particularly
it is a relatively new policy in developing economies. vulnerable to anti-competitive and abusive practices
This can have its advantages: for example, when there arising naturally from local market structures and
is no pre-existing jurisprudence, national laws can be conditions. These typically include inadequate business
developed in a way that best suits the needs of that infrastructure (such as poor distribution channels,
particular economy. While many developed economies inefficient transport and logistics, and lack of equality
focus on considerations of efficiency in enforcing their in access to essential inputs), regulatory constraints,
competition regimes, young agencies of developing pronounced information asymmetries in product
countries have more flexibility to have regard broader and credit markets, and lack of public transparency.
societal challenges.45 This could include ensuring that Together, these factors have a particularly large impact
competition policy and law is inclusive of MSMEs. on MSMEs in both the formal and informal sectors.
10
Visibility of market access issues for MSMEs can also The challenge for competition authorities in developing
be difficult in developing economies as significant countries is to distinguish between those practices that
economic activity remains informal. The informality should be prohibited from those that can be allowed
makes regulation and monitoring harder, while on the grounds that they have pro-competitive effects
corruption weakens the enforcement of competition outweighing its restrictions on competition or that they
law. may contribute to a public interest goal : economic
efficiency, technological advancement, and indeed
Another issue is lack of regulatory experience and
enhanced competition, ultimately.56 This assessment
knowledge. In Africa, only 23 countries (less than
is difficult for new agencies as it requires a detailed
half of all African countries) have a competition law
economic analysis on a case by case basis.
in force and a functional competition authority.49 In
the ASEAN region, 6 out of the existing 9 competition
3.2. COMPETITION LAW: APPLICATION TO
authorities were only formed in the last 5 years.
MSMES
Young competition regimes face challenges that
may influence the attention granted to SMEs. To Competition policies around the world take various
mention a few: rudimentary competition culture approaches to the question of whether competition
among the business community, limited advocacy laws should apply to MSMEs. The approaches
to the government, media, and general public; lack broadly fall into three categories: blanket exemptions;
of dedicated and trained staff in small business;50 application of thresholds; and individual exemptions or
scant experience of dealing with jurisdictional overlap authorisation of conduct.
involving sector regulators or other public agencies
The first category provides blanket exemptions for
having mandates on SMEs, etc.51
agreements or conduct involving or benefiting MSMEs.
Some regional trends are also apparent. In Africa, For example, Indonesia’s competition law completely
for example, there is a growing trend towards exempts “entrepreneurs categorised as engaging in
consolidation52 in domestic markets, resulting from small scale business”, while in China, exemption is
increased diversification and vertical integration among granted to agreements entered into or implemented
large corporate groups in developing countries. This which have as an objective “improving operational
raises concerns of potential market concentration, efficiency for SMEs”.57
and future market access issues that may jeopardise
Some competition law jurisdictions have made
the economic survival of local MSMEs.
use of secondary legislation or guidelines to
In some parts of the globe, the existence of state- provide de minimis or ‘safe harbour’ thresholds for
owned or pre-existing monopolies and oligopolies agreements that are unlikely to affect competition
presents particular obstacles to market access. Where in the market. Generally, these thresholds do not
SOEs continue to exist, the competition law may be apply to hardcore (cartel) restrictions. This is useful
inapplicable either to the SOE or to the sectors where tool provides businesses with legal certainty, the
SOEs are prevalent which may interfere with SMEs means to conduct self-assessment and to devise
development. This seems to be a more marked issue internal voluntary compliance practices. A case in
in developing countries.53 Where SOEs have been point is Japan’s Small and Medium-Sized Enterprise
privatised, their market power remains due to the Cooperatives Act, which focuses on small and
presence of significant network effects and existing medium sized commercial, industrial, mining and
vertical integration, making entry into these markets transport businesses. It prescribes a “safe harbour”
difficult. Market access for MSMEs can be improved from the application of the Antimonopoly Act to
by the introduction of active policies that encourage juridical persons based on the size of the business
existing or former SOEs to work with MSMEs. For (assets/capital and number of employees). Likewise,
instance, SOEs in the banking industry can prioritize Malaysia and Singapore exclude from the application
lending to SMEs (Sri Lanka); deal with SMEs’ of competition law agreements (other than cartels)
nonperforming loans (Russian Federation);54 draft between entities that have a combined market share
supplier skills-development programmes to identify of less than 20 per cent (for agreements between
SME suppliers and provide coaching and assistance; competitors) and less than 25 per cent market share
and devising procurement rules that benefit SMEs each (for agreements between non-competitors).58
(South Africa)55 This is similar to the European Commission de
11
minimis notice which applies 10 per cent and 15 per medium-sized enterprises and large companies
cent market share thresholds, respectively.59 These with a distribution channel, platforms level the
market share thresholds are set on the basis that playing field between them and facilitate the same
agreements between these players will not have exposure to potential customers for both, thereby
a significant impact on competition. Incidentally, “democratizing markets”64 with potential threats
however, they provide MSMEs an almost de-facto to innovative SMEs. This can give rise to particular
exemption through self-assessment. The defining issues in digital markets where small strategic
feature of MSMEs is smallness, and their operations acquisitions by larger entities can have significant
cannot amount to significant market shares that impacts on competition in the market but may not
allows to behave independently of consumers and be subject to scrutiny. For example, an incumbent
suppliers in the market. digital platform might acquire, through merger, the
technology of a nascent or potential competitor
In other jurisdictions, individual exemptions or
because the technology complements or enhances
authorisations may be granted that exclude
the incumbent’s own technology. In August 2019,
agreements or conduct between MSMEs which
the DOJ challenged Sabre Corporation’s proposed
result in economic benefits that outweigh any
acquisition of Farelogix under Section 7.19 The DOJ
anti-competitive harm. In the United Kingdom,
alleged that the transaction would allow Sabre, the
businesses are required to satisfy themselves that
largest airline booking services provider in the United
the agreement meets the conditions for exemption.60
States, to eliminate a disruptive competitor that had
In contrast, the Australian regime allows parties to
introduced new technology to the travel industry and
apply to the ACCC for authorisation of potentially
that was poised to grow significantly.65
anticompetitive conduct on the grounds that any
detrimental effect on competition is outweighed by Where voluntary merger regimes exist, there is no
the public benefit.61 obligation to notify the relevant competition authority
of the merger. However, authorities generally still have
Looking at India, merger regulation under the
a right to investigate mergers they become aware of.
Competition Act 2002 ensures conducive operating
Investigation may be warranted where the acquisition
conditions for SMEs by regulating mergers that would
of a MSME represents the removal of a maverick firm.
create or strengthen market power and by excluding
In some jurisdictions, a hybrid approach is taken. For
SMEs from regulation through high thresholds.62
example, the Law on Business Competition of the
In South Africa, MSMEs are also afforded special
Lao People’s Democratic Republic exempts SMEs
treatment under the exemption provisions. If an MSME
from the requirement to lodge documentation, but
perceives that it is engaged in a prohibited practice,
the competition authority must still be notified of the
it can apply for exemption from being investigated
combination. Some countries also place an emphasis
based on the grounds that the objective of the practice
on MSME education in this area: South Africa, for
is to promote the ability of small businesses or firms
example, has issued guidelines that deal specifically
controlled by previously disadvantaged persons, to
with the requirements for notification of small mergers.66
become competitive.63
When assessing a merger to determine its effect
The case of mergers
on competition, some jurisdictions allow for
The requirement for mergers involving MSMEs to be public interest factors to be taken into account.
assessed by competition authorities varies around In South Africa, the public interest test includes
the world. Some jurisdictions have compulsory an assessment of the impact of the merger on a
merger regimes, under which all qualifying mergers particular industrial sector or region; employment;
must be notified to the competition authority for the ability of small businesses or firms controlled
review. The requirement to notify usually depends on by historically disadvantaged persons to become
such factors as the size of the parties to the merger, competitive; and the ability of national industries
which is often determined on the basis of sales or to compete internationally.67 Recent regulatory
revenue turnover in the preceding 12 months. Where reform in Indonesia has introduced additional
compulsory notification is required and notification scope for assessment of mergers encompassing
thresholds exist, mergers involving MSMEs usually consideration of “protection of small and medium
fall outside the regime. By providing both small and enterprises”.68
12
3.3 COMPETITION LAW: CHALLENGES improving business and management practices,

FOR MSMES and facilitating market access.75 To maximise these
potential benefits, MSMEs need to be aware of the
The inherent characteristics of MSMEs are limited
mechanisms available under competition law to
market share, few financial resources, smaller
exempt or authorise conduct.
customer numbers, and restricted product and
market ranges. MSMEs also face unfair competition Advocacy by business associations has a key role
from informal firms, particularly in developing to play. Although competition law and policy are
economies. These unique problems have led to a designed to protect competition in the market, and is
growing awareness that competition law and policy not usually focused on individual businesses, it can
cannot always be uniformly applied internationally. indirectly assist MSMEs. Even where MSMEs are
Additionally, some commentators have suggested aware of their legal rights, MSMEs may not report
that competition frameworks and enforcement conduct harming their performance due to the fear of
need to take into account the differences between reprisal from their more powerful market counterparts
large firms and MSMEs and adjust their processes or damage to reputation with respect to providers
accordingly.69 and consumers.76 When MSMEs want to pursue
their legal rights, there are significant impediments
Competition law and policy is a complex area,
to them doing so due to cost, time and information
requiring an understanding of both law and
asymmetry. The enforcement of competition law by
economics. In addition to the difficulties in the Authority, it is an important steppingstone for
advocating laws to this group, its complexity MSMEs to at first get acquainted with practices that
gives rise to real risks of MSMEs failing to properly may have harmed their economic activity. However,
understand its application, even where a basic compensation for damages (redress) incurred for
awareness of the law exists. For example, a 2014 business in general and MSMEs in particular does
study in Malaysia revealed that only 27 per cent of not rest with the competition authority but Courts.
the MSMEs surveyed were aware of the competition It is in this context, that business associations can
law; medium-sized businesses had more knowledge play an important role to ensure redress for the
(36 per cent), compared to small (27 per cent) and batch of MSMEs in a particular industry/sector and
micro (21 per cent).70 The Viet Nam Competition solve in turn the lack of incentive to seek redress
Authority has also noted in some of its annual eports on an individual basis. By bundling together claims
that national levels of awareness of the law are low and presenting a collective action on behalf of their
and has previously identified improved awareness members associations facilitate access to justice
as a priority action for the agency.71 that would otherwise be costly and procedurally
For developing economies where competition law cumbersome.
and policy may be new, trade associations have a Redress for injured parties is not a concern of the
pivotal role to play, both educating their MSMEs on competition authorities.77 Individual firms are not
the existence of competition law and assisting with likely to be able to draw these macro issues to the
compliance.72 Yet many associations can themselves attention of competition authorities; it instead requires
also fall foul of the law because MSMEs can businesses to have an association speaking on their
unknowingly become part of cartels while participating behalf.78
in trade association activity.
Although there is a risk of cartel-like behaviour 3.4 COMPETITION AUTHORITIES:
DEALING WITH MSMES
for unknowing or unsuspecting MSMEs, lawful
collaboration can result in improved access to For agencies faced with the challenge of enforcing
markets. Empirical research finds that horizontal competition law, there are a plethora of competing
ties enable collective resource use as well as joint priorities. Especially for young agencies (many
product innovation73 and provide a means to of whom exist in developing countries), the initial
circumvent scale and infrastructure limitation.74 task of understanding the meaning and scope of
Likewise, vertical links can provide effective ways their own competition laws and advocating for its
of upgrading domestic enterprises, facilitating support amongst the many stakeholders can be all
the transfer of technology, knowledge and skills, consuming. The agencies must then take steps to
13
enforce the law across (normally) the three pillars of 3.5 THE EFFECT OF INFORMAL MSMES
competition law – agreements, unilateral conduct, ON COMPETITION
and mergers - while at the same time trying to
ensure that other government policies do not work The informality aspect of MSMEs in developing
counter to the competition policy goals. economies, is an area that needs more research linking
it to competition policy and law enforcement. Since
When competition authorities do engage, further
many of these businesses may not be registered, it
challenges arise in trying to engage with individuals
is difficult to apply competition regulations in their
and collective groups (such as trade associations)
operations. As mentioned in Chapter 2, it is difficult
who may have limited knowledge and understanding
to accurately measure the size of these businesses,
of competition law. Improved education would help
even if MSMEs account for the majority of firms in
facilitate a mutual understanding of how competition
most countries (95 per cent on average), and for
law could work to improve market access for
the vast majority of jobs80. In developing countries it
MSMEs.
may amount to more than 60-70 per cent of formal
Some agencies are now beginning to recognise this employment. In sub-Saharan Africa alone, that figure
problem and develop strategies to deal with it. There rises to 80 per cent.81
is an evolving community of practice in different
From a competition authority perspective, the
parts of the world focussing on how to improve
existence of an unknown informal market makes
engagement between competition authorities and
access to market data and the complex task of
MSMEs. Agencies in Hong Kong (China), Mexico,
defining the market, identifying the market players,
South Africa, Australia, the Philippines, Singapore,
and understanding market power even more complex.
and Malaysia regularly engage with, and/or prepare
This makes market analysis difficult, if not impossible.
publications or advocacy sessions targeted at, the
SME sector.79 This exchange of information and Where the informal sector itself is infringing competition
best practice ideas is designed to improve the level law, it is unlikely that competition agencies will be in a
of knowledge and awareness of competition law in position to enforce the law against this group. Such
the MSME sector. Many more competition agencies enterprises are hard to locate and prosecute. They are
could benefit from these sorts of exchanges. often, in effect, outside the law.
14
CHAPTER 4: IMPACT OF COVID-19 ON MARKET

ACCESS & COMPETITION LAW FOR MSMES
This chapter focuses on the potential impact of the rate of infection and patient recovery, and of policy
COVID-19 on competition policy and market access responses. One important barometer is the number
for MSMEs, especially those in developing countries. of business closures, which attempts to measure the
For a contemporary wider overview of the global number of permanent and temporary exits from the
economic and social impact of COVID-19, UNCTAD’s marketplace (temporary closures are typically caused
recently published Trade and Development Report by lockdowns).
2020 is recommended82.
The estimated number of small firm closures across
the globe is not fully known and is likely to vary from
4.1 OVERALL GLOBAL AND REGIONAL
one country to another. However, as Table 4.1 shows,
IMPACTS OF COVID-19 ON MSMES
these are already substantial, and at least some seem
The ultimate impact of COVID-19 on the MSME sector to support early estimates at the start of the pandemic
is not yet ascertainable as the pandemic continues, that between a quarter and a third of all MSMEs could
with constant changes in circumstances, including close down permanently from the disruption.83
Table 4.1: Likely MSME Permanent and Temporary Closures

Nation Estimated Closures Estimate Date
LAC region 2.6 million SME/MSMEs 84
Brazil85 ‐ Individual Micro-Entrepreneurs (MEI) - 26,517 closures (A MEI’s revenue is limited to March to December 2020
Brazil Real (R$) 81,000.00 per year; The entrepreneur cannot participate as a partner,
administrator, or owner of another company; Hire at most one employee, who receives
exclusively 1 (one) minimum wage or the salary floor of the professional category;
‐ Micro-enterprises (ME) - 259,982 closures (A ME can be a 1-person individual company or
a legal entity with the following characteristics: annual gross revenue of up to R$ 360,000;
maximum of 19 employees if their activity is related to industry or 9 employees for
commerce and services;
‐ Small Enterprises (EPP) - 456.155 closures (An EPP is a company whose gross annual
revenue is greater than R$ 360,000 and equal to or less than R$ 3,600,000.0086
China 80% SME closed down in February; 18% from
February to May,87
Indonesia 49%88 April May 2020
Thailand 71%89 April May 2020
Lao People’s 41%90 April May 2020
Democratic
Republic
Philippines 61%91 April May 2020
Ecuador 70% of businesses owned by respondents had closed operations and 30% had partially June 2020
closed operations
13% of tourism businesses closed 92
Mexico 10,000 formal and 12,000 informal businesses closed down for good in April and May,
with 600,000 more companies at risk due to the pandemic 93
Philippines94 76% March-September 202095
South Africa96 60% of all firms July 2020
United Kingdom97 24% of all firms 41% 98 April 2020
India 47%99
Bangladesh 50%100
United States 1/5 of small businesses closed down temporarily, 1/3 expects to close permanently within May 2020101
2 months
Source: own compilation by authors
15
Each country and region are experiencing its own COVID-19. The results from the first-round survey
pattern. In Latin America, for example, ECLAC in April 2020 showed that African businesses had
estimates that the pandemic will force 2.7 million firms being severely impacted by the crisis. Four-fifths of
out of business, leaving 8.5 million workers jobless.102 the respondents indicated being significantly affected,
Micro-enterprises are estimated to be the biggest rating the effect as highly severe or severe. The principal
single group of closing firms, accounting for as concern of MSMEs was surviving the COVID-19
much as 96 per cent of all firm cessations. Most firm crisis.104 The services sector appears to have been
closures appear to be occurring in the wholesale and hit by the crisis less severely than the goods sector,
retail trade sectors, amongst hotels and restaurants, with some data suggesting that services firms were
real estate and related activities, social and personal actually operating at higher capacity, and reporting
services, and small-scale manufacturing. These that they had been affected to a much smaller degree
sectors generate about a quarter of the region’s GDP by the disruption in the supply of raw materials and
and absorb almost a third of the workforce. inputs.105
A case in point is Chile, where the impact of COVID-19 In a second-round survey undertaken in June-July
on SMEs has been quite strong in terms of employment 2020, ECA and IEC Ltd reported that cash flow was
level. 80 per cent of MSMEs have declared themselves still the top challenge for micro-sized enterprises
to have serious solvency problems because of (attesting of their difficulties to operate), while for other
confinement and social distancing. It is not yet known company sizes it was either reduced opportunities to
how many will survive, particularly in sectors such
meet new customers or drop in demand.106 Challenges
as tourism and construction.103
in logistics and shipping of products were significantly
In Africa, the United Nations Economic Commission higher for businesses operating in the goods sector
for Africa and the International Economics Consulting than services, particularly for MSMEs (as opposed to
Limited (IEC Ltd) undertook an online survey among large-sized companies). Market distortions were felt by
MSMEs on the continent to assess the impact of the majority of respondents, with price fixing between
Figure 4.1: Impacts on Small and Large Companies
100%
90%
80%
70% 64%
60%
60% 55%
51%
50% 43%
38%
40%
30% 31%
28%
30% 23%
17% 16%
20% 14% 12% 11%
10% 2% 2%
1% 1%
0%
Total Micro Small Medium Large
Not affected Slightly affected Moderately affected Strongly affected
Note: Repondents were asked ´How have your busines operations been affected by the corona virus (COVID-19)´ and ´How many
full time employees does the business have?´
Definitions: Microenterprises up to 4 employees; small firms, 5-19 employees; medium-sized firms, 20-99 employees; large firms,
100 or more employees. Data on 2170 businesses in 121 countries. Response rates vary across countries and regions
Source: ITC calculations based on ITC COVID-19 Bussiness Impact Survey. Data collected 21 April – 2 June 2020
16
competitors as the most recurrent issue. Market Global trade recovered somewhat in 2021 due to
allocation for sale of products and exclusive contracts COVID-19 pandemic worldwide mitigation measures
offered to competitors came as next important as well as a strong export performance of East
distortions for companies operating in goods and Asian economies, which experienced huge demand
services, respectively. Surprisingly, less than one third for COVID-19 related products such as masks and
of respondents had raised concerns with government medical sanitary products. According to UNCTAD’s
agencies dealing with competition issues.107 Nearly Global Trade Update report released on 19 May 2021,
half of the companies reported an intention to move world trade’s recovery from the COVID-19 crisis hit a
towards innovative solutions through collaboration/ record high in the first quarter of 2021, increasing by
partnerships. More MSMEs (50 per cent) than larger 10% over the same period last year.110 However, future
companies (40 per cent) reported an intention to prospects for world trade remain precarious given the
cooperate in relation to innovation for MSMEs, probably uncertainty caused by new variants of COVID-19 virus
due to having less capacity to innovate on their own. and prolonged effects of restricted business practices
and a rise in protectionist sentiment.
The ITC SME Competitiveness Outlook Report
2020 found that smaller companies tended to be This trend could have major repercussions on many
more strongly affected by COVID-19 than larger MSMEs, both as exporters and as users of imported
companies.108 (see Figure 4.1). inputs. According to the WTO,111 smaller firms in
the most affected industry sectors are relatively
4.2 IMPACTS ON MARKET ACCESS more likely to export than larger firms, and hence
THROUGH GLOBAL SUPPLY CHAINS will bear more of the brunt of rising protectionism
One important form of market access for many in these sectors. Likely sectors include agriculture,
manufacturing and production oriented MSMEs is the automotive and furniture sectors, amongst
belonging to one or another global or regional supply others. Importing firms in office equipment
networks. While participation in global value chains suppliers, electronics, chemicals, petroleum, and
(GVCs) can bring many benefits to participating plastic sectors are also affected. However, the
MSMEs (including greater profits, higher turnover, global value of trade in goods UNCTAD updates
learning from international best practices, and transfer in the first quarter of 2021 reported higher levels
of knowhow and technology), it also exposes them than pre Covid 19 period, especially for pandemic
to the dangers of economic dependence and power related products which remained strong.112 Trade in
imbalance in GVCs. These risks are compounded services remains substantially low.
during economic crises when large retailers and MSMEs tend to depend on a limited number of
producers cut back on their purchases. The smaller suppliers and are therefore more prone to supply
the SMEs’ client base, the more at risk it is of losing chain contagion. Many MSME participating in global
its business. Moreover, the cascading effects of falling or regional supply chains are also likely to find it
demand can very quickly travel to other suppliers difficult to rebuild connections once the pandemic
down the value chain, affecting many other MSMEs ends, as some former partners may have entered
directly or indirectly. new alliances with other larger, more stable firms. In
The pandemic has already resulted in global Africa, survey results indicated that African businesses
disruptions to supply chains, trade, and travel across switched suppliers due to border closures and turned
borders. Some of the world’s largest exporters mostly to national alternatives, rather than African or
and participants in global supply chains, such as non-African alternatives.113
the European Union, the United States and China,
4.3 MARKET ACCESS VIA DIGITAL
have restricted some or all of their cross-border
MARKETS114
trade. The net effect has been a 7.5% reduction in
the value of global goods exported which declined The pandemic has radically pushed the shift to “go
from around US$ 19.015 trillion in 2019 to US$ digital”. A recent survey published by UNCTAD
17.583 trillion in 2020. The global trade in services illustrates a greater shift to online shopping by
declined even more markedly with a 20% decline consumers in emerging economies than in developed
from approximately US$ 6.229 trillion in 2019 to countries, with this shift anticipated to continue in the
US$ 4.985 trillion in 2020.109 post COVID-19 future:115
17
Figure 4.2: Shifts in Online Shopping116
I totally agree I agree neither agree or disagree I disagree I totally disagree
SWITZERLAND (N=257) 9% 21% 33% 12% 24%
GERMANY (N=216) 11% 21% 34% 17% 17%
RUSSIAN FEDERATION (N=221) 14% 27% 23% 15% 21%
SOUTH AFRICA (N=233) 22% 20% 20% 13% 24%
ITALY (N=220) 15% 30% 15% 12% 14%
BRAZIL (N=1878) 31% 24% 27% 11% 7%
REPUBLIC OF KOREA (N=220) 14% 44% 27% 8% 7%
TURKEY (N=225) 37% 28% 10% 13% 12%
CHINA (N=227) 31% 47% 13% 7% 2%
TOTAL (N=3697) 25% 27% 25% 12% 11%
Source: UNCTAD (2020) ‘COVID-19 and E-commerce – Findings from survey of online consumers in 9 countries
Embracing digitalization can make MSMEs more MSMEs in developing countries face particular
resilient and more competitive, as well as facilitate their challenges. The quality of IT infrastructure and
access to international markets. However, the lack of related services in these regions puts their firms at
digital preparedness among many small businesses a competitive disadvantage relative to firms based
has come into sharp focus during COVID-19. There in industrial countries, and in comparison, to larger
is growing evidence that MSMEs that cannot shift to domestic companies which often have more online
online delivery modes have faced greater hardships resources. There can be uneven access to ICT
and may be at higher risk of failure than their more within the same country (i.e., last mile barriers),119
digitally savvy counterparts.117 power supplies are often unreliable and expensive,
When utilised effectively, digital tools can assist many managers and staff lack digital literacy, and
many firms to improve their market access. in some communities, there may be low levels of
E-commerce can allow MSMEs to reach more consumer familiarity with online tools. Cybersecurity
customers, including those in remote locations is another concern, and MSMEs typically are less
and in foreign markets. It also makes it possible for well protected from online attacks than their larger
MSMEs to source inputs and supplies competitively counterparts. The Economic Commission of Africa
from a growing number of online retailers. IT- survey revealed that revenues from e-commerce are
enabled services can be used to reduce costs still only 14 per cent (for goods), largely due to only
by outsourcing non-essential services, and can half of businesses having internet connections, as
give MSMEs a global presence, allowing them to well as issues with logistics, transport, and payment
compete directly into many more markets. gateways.120
However, most MSMEs, and in particular many micro- To counter this, certain countries are working on
enterprises, have been slow at adopting information implementing strategies: Costa Rica, for instance, has
and communication technology (ICT). The World stated that its post crisis objective is to achieve digital
Bank Enterprise Surveys, for example, show that transformation through the creation of a business
only 23 per cent of micro-enterprises have a website, innovation centre. Mexico, through its Competition
whilst 85 per cent of large companies do.118 Authority (COFECE), launched a digital strategy that
18
explains how to increase understanding and analyse pandemic. This has the potential to obstruct the
capabilities of digital markets. United Nations SDGs, especially those related to
poverty alleviation (SDG 1) and gender equality (SDG
It will be important to increase human and technological
5). The pandemic has also intensified the vulnerability
capacities and international collaboration in this
of women by increasing the inequitable distribution of
important area. Countries should aim to gain a
unpaid work within households, and further reducing
common understanding of the problems to be tackled
the elasticity of women’s labour.
to facilitate entry to digital markets and develop the
tools to assist in solving these problems for MSMEs.121 Under the current technical cooperation project, in
2021 UNCTAD organized training workshops for
4.4 GENDER AND MARKET ACCESS 122
women traders in border towns of Malawi, United
MSMEs operated by entrepreneurs from vulnerable Republic of Tanzania, and Zambia to better equip
groups, such as women, are being affected them to overcome the crisis.128 The training activities
disproportionately by market access problems. s focused on trade rules, traders’ rights and
The International Labour Organisation reports that obligations aiming to build entrepreneurial skills, in a
“globally, almost 510 million, or 40 per cent of all close link to Empretec, UNCTAD’s capacity-building
employed women, work in hard-hit sectors,” including programme designed to promote entrepreneurial
accommodation and food services; wholesale and potential.
retail trade; real estate, business, and administrative The rapid spread of new digital technologies
activities; and manufacturing.123 has created significant economic opportunities
This has occurred because some industries have for entrepreneurs, but these are not automatic
been more affected by COVID-19 than others. for women across regions and continents, who
Obvious examples include travel and tourism-related still face multiple obstacles to succeed as active
services that have declined as countries implement players in the digital economy. As MSMEs’
travel restrictions and keep frontiers closed;124 transition to digitalization and e-commerce is not
hospitality and accommodation; wholesale and straightforward, pre-existing gender inequalities
retail trade sectors; social and personal services; such as gender bias, lower participation in decision-
and small-scale manufacturing. Disruption in these making processes, limited digital skills, lack of trust,
sectors disproportionately affects women, with the and unequal access to funding, make it even more
ITC SME Competitiveness Outlook showing that difficult.
64 per cent of women-led firms have been affected
In response to these challenges, in 2019, UNCTAD
compared with 52 per cent of men-led firms. 125
launched the eTrade for Women initiative129 to
This is particularly concern in developing countries. advance inclusive and sustainable economic growth
Many smaller firms in the services sector in these by empowering women entrepreneurs in the digital
regions are female-led or employ high proportions economy, in line with SDG 5 and SDG 8. The
of women and are particularly vulnerable to the initiative provides critical support to women digital
pandemic. In Africa, for example, women represent entrepreneurs through four strategic action lines:
an estimated 70-80 per cent per cent of all informal advocacy, capacity-building, community-building,
traders, frequently across borders. The removal of and policy dialogue. Its objective is to support women
this source of income for women risks the reversal of entrepreneurs to thrive as business leaders, impact
gains in female empowerment.126 These entrepreneurs their ecosystems by leveraging digital tools, and
have been hard hit by lockdown measures, forcing emerge as influential voices in the public policy debate.
them to hold onto unsold goods — much of which is
Furthermore, online trading, digital banking and
ultimately wasted because of their perishable nature
fintech technologies such as online or mobile wallets
— and the inability of some customers to now pay
are effectively “gender blind”: they allow many more
for goods bought previously.127 The informal sector
women to register their own businesses online, and
may also be expected to rise as a result of increased
to open bank accounts and engage in online trade,
unemployment resulting from COVID-19.
without the personal scrutiny of males. In effect, the
Thus, there is the risk of widescale feminization of gender divide can be circumvented in some cases,
poverty as women bear the brunt of the ongoing as ESCWA has noted.130
19
4.5 POLICY RESPONSES TO SUPPORT such as the 2008-09 financial crisis. In responding
MSME MARKET ACCESS to such crises, governments have attempted to
assist MSMEs through a combination of short-
Policymakers across the world have responded
term measures, such as shifting MSMEs’ demand
swiftly with a panoply of measures to deal with the
inwards (e.g., ‘buy local’ campaigns), meeting
pandemic, and its effects on lives and livelihoods.
their needs for liquidity (such as providing debt
While public health has been the topmost priority,
waivers or loans), and by keeping workers on the
numerous measures have also been proposed to
support MSMEs. These include public measures to payroll (through wage support schemes). Similar
support economic recovery, such as loans, state but larger-scale policy measures have been taken
guarantees, subsidies, and funding support to help by governments around the world in responding to
firms continue to trade; support to begin trading the economic fallout of COVID-19.
online or expand their digital activities; and business A summary of some of these measures is shown in
planning and strategic skills development. Despite
Table 4.2 below and indicates that the range and
these efforts, the fall in per capita income resulting
number of measures implemented in each country
from the crisis will severely impact a large part of the
has varied significantly. Not all measures are shown
economic policy interventions.131
– for example, market access are absent from the
In large part, these measures have echoed list. The relative effectiveness of measures in each
previous response to major economic shocks, country has also not been measured.
20
Table 4.2: MSME Policy Responses in Selected Countries132

Labour Deferral Financial Instruments Structural Policies
Direct lending to SMEs

Income/Corporate Tax
Rent/Utilities/coal Tax
pension contributions
Partial Redundancies
Grants and subsidies

Social Security and
Debt Moratorium
Loan guarantees
Value Added Tax
Wage subsidies
Self-Employed
redeployment
New Markets
Teleworking/
digitalization
Training and
Innovation
Country
East Asia & Pacific
China          
Fiji    
Indonesia  
Malaysia  
Thailand     
Viet Nam  
Europe & Central Asia
Georgia    
Romania     
Russian Federation    
Serbia  
Turkey           
Ukraine  
Latin America & the Caribbean
Brazil     
Colombia      
Costa Rica     
Jamaica  
Mexico   
Peru       
Middle East & North Africa
Egypt   
Morocco       
Tunisia       
South Asia
Bangladesh   
India  
Pakistan 
Sub-Saharan Africa
Botswana 
Kenya 
Mauritius    
Senegal  
South Africa   
Uganda       
21
PROFILE 4.1: FINANCIAL LIMITATIONS ON educating member businesses about social distancing
DEVELOPING COUNTRIES’ GOVERNMENTS and other infection-prevention tools. In Latin America
While most governments have taken prompt measures and the Caribbean, business chambers have called
on their members to participate in national solidarity
to address the health and economic impacts of the
campaigns to help mitigate the health effects of the
pandemic, the scale, quality, effectiveness and,
crisis by providing medical equipment to hospitals,
sometimes, timing of response has varied from
and food and sanitary products to vulnerable groups.
country to country. Overall, it appears that the size
Larger private firms have also assisted MSMEs – for
of stimulus packages, measured as a percentage of
example, commercial banks in Africa have attempted
GDP, is bigger in richer countries.133 Thus, MSMEs in
to meet a significant part of MSMEs’ need for
developed countries are likely to have received a higher
liquidity and have often responded more quickly than
level of support than those in developing countries
government agencies to small firm needs. In Egypt,
— a fact that has implications for post-COVID-19
an initiative funded by the Central Bank of Egypt
competition in international markets. While the ITC
was designed to support entrepreneurs including
survey suggests that governments’ policy responses
in the promotion of their products via e-commerce
were largely consistent with the needs of the business
channels.138
community, focused surveys from different regions
demonstrate some level of disappointments by 4.6 COMPETITION ISSUES ARISING
government’s response to the crisis.134 DURING COVID-19
One factor limiting the ability of developing countries The changed market environment, together
to provide financial support to MSMEs is according to with government policy responses, raises some
a recent UNCTAD study their pre-existing high levels competition law issues that competition authorities
of debt.135 This burden, which can be exacerbated by and policymakers around the world have been
depreciating currencies, has resulted in heavy servicing grappling with. Some of these (e.g., dominance in
costs that drain government budgets. Over half of the digital markets) existed prior to the pandemic but have
countries in Africa, for example, had fiscal deficits in been exacerbated by recent events. Others have
excess of 3 per cent in 2019, and 22 countries had been brought into focus by government responses
debt-to-GDP ratios above the 60-per cent prudential (e.g., financial aid packages). These problems are not
threshold recommended by the IMF.136 unique to developed countries but are also in a number
Support to MSMEs has come not only from individual of developing countries such the Philippines,139 Egypt,
countries. There have also been several initiatives by Kenya, Nigeria, South Africa, Tunisia,140 Peru, Haiti, and
international, multilateral, and regional organizations. El Salvador.141 The successes or failures of businesses
International support to business includes a mix of during the period also raises varying competition
financial aid, program funding, and policy-related issues, from price gouging to a likely increase in the
assistance. The International Finance Corporation, for number of mergers, to cooperation between players
example, has proposed a $8 billion fast-track package who would be otherwise competitive. Competition
to support businesses and preserve jobs; some of this authorities have a key role in monitoring behaviour to
funding will be for the benefit of MSMEs in developing ensure that the economic recovery can take place on
countries.137 The World Bank and the IMF are also a level playing field.
tracking the MSME policy support provided by
Access to digital platforms is vital for the diversification
national governments. Some United Nations regional
of MSMEs and has become vital for competition
commissions are doing the same at their respective during (and after) the pandemic. The increasing
regional level. For example, the United Nations reliance on digitalisation raises competition concerns
Economic Commission for Africa is undertaking a in different facets. Enforcement of existing laws may
survey among SMEs to assess the effectiveness of be problematic because conventional measures of
policy responses. market power based on firm size may not reflect the true
In many countries, the private sector has cooperated nature of online competition. In an online environment,
with the government in observing lockdown measures it is possible for a firm with few assets (i.e., ‘small’ in
and ensuring orderly conduct of business while the traditional sense) to have a large customer base.
enforcing social distancing and other sanitary rules. Some digital providers have also instituted policies that
Industry associations have played an important role in restrict the freedom of participating business to also
22
deal with competitors, or which institute unreasonable provisions due to difficulties in ascertaining what is
fees and conditions.142 fair and reasonable. In other jurisdictions, price control
legislation addresses this issue.149 In the context of
There is a danger that some of the support mechanisms
COVID-19, the question of price gouging has arisen
provided may distort markets, limit market access
for high demand goods (food; health and safety
for some firms, and reduce the competition
goods, such as personal protection equipment150) and
dynamic where those support mechanisms are not
services UNCTAD has called for firm action to protect
offered on an equivalent basis. State aid issues
consumers in these times.151
typically arise where a government gives a benefit
to a specific company or certain industries, but not With the challenges facing many industries, the
others. For example, during the 2008 financial crisis, pandemic is also likely to give rise to an increasing
China offered favourable lending to state-owned number of mergers and acquisitions. Competition
enterprises that continued to operate with losses.143 authorities may be faced with difficult policy decisions
The European Union regulates state aid that distorts regarding whether changes to the ‘normal’ tests for
competition under the Treaty on the Functioning of assessing mergers and acquisitions and more lenient
the European Union. In response to the pandemic, application of the failing firm defence will be required.
the European Commission issued a Communication In addition, the need for businesses to cooperate to
on the “Temporary Framework for State Aid Measures ensure that the supply of essential goods and services
to Support the Economic in the Current COVID-19 can be maintained, has risen during the pandemic.
Outbreak,” which sets out how its state aid rules Cooperation between entities that would otherwise
are to be applied during the pandemic144. Support compete gives rise to obvious competition issues.
mechanisms designed to assist MSMEs have already
These issues are not unique to any one jurisdiction
been approved under the Temporary Framework.145
or region, and joint and coordinated actions between
Similar assistance in the form of grants and subsidies
competition authorities and policymakers across
has also been provided in developing countries
regions will be needed to ensure the appropriate
(see Table 4.2 above). In Myanmar, for example, the
competition policy responses to both protect the
government created a COVID-19 fund and Economic
competitive market and tackle cross-border anti-
Relief Plan (CERP), which includes measures to offer
competitive practices.152 Some competition scholars
relief to businesses. Whether support of this nature
have called on competition authorities in developed
will distort competition will depend on factors such
countries not to support a nationalistic approach,
as the “amounts of aid involved, its objective, type of
as to do so will create an even greater divide with
measures, and recipients – for example, the size and
developing countries.153
sector of beneficiaries”.146 Where there is no formal
state aid regime, consideration will need to be given
to ways in which government can ensure the funding 4.7 COMPETITION POLICY RESPONSES
is provided in a non-discriminatory way.147
Competition authorities have responded to COVID-19
It is likely that competition policy and law will have by introducing changes to the way in which they
an increased role to play in ensuring a level playing administer and enforce their laws, the exemptions they
field. At least one competition authority has publicly grant, and to the activities which they authorise. These
noted that some government stimulus measures, responses are discussed in further detail in Chapter 5.
for example, may lead to the favouring of particular
These measures can often work to assist MSMEs but
firms and industry sectors which receive more aid
are not without potential drawbacks. Market access
than others.148 Competitive neutrality may also be
for MSMEs can also be potentially limited under some
compromised.
of these competition-related measures. For example,
Another issue is price gouging, the practice of collaborative arrangements between large firms can
increasing prices of goods or services to a level ensure the free flow of important public goods like
that is considered unfair or unreasonable. Although health care products, but at the same time reduce the
some competition laws do prevent price gouging capacity of other firms to enter or compete in such
(usually in the form of a prohibition against exploitative markets. So-called ‘crisis cartels’ — agreements
abuse of dominance), many competition authorities among competitors to restrict production to improve
have historically shied away from enforcing those profitability and avoid exit during a crisis — can arise
23
and cause much harm to MSMEs, which may have pandemic. Its significance is now heightened. For
neither the resources nor the networks to fight back. example, in Latin America, the question of whether the
existing competition legislation needs to be adjusted,
However, such collaborations also have some
or whether it can be combined with specific regulations
potential to benefit MSMEs. The Brazilian competition
to address the concerns, is still being discussed. As
authority, CADE, authorised an agreement between
this is a global issue, a global response is likely.156
large manufacturers of fast-moving consumer goods
(including Coca-Cola, Nestle and PepsiCo) in relation As countries prepare for the recovery from the
to a project designed to assist small retailers in the pandemic, competition authorities will have a unique
sector to recover.154 The argument of the companies opportunity to influence the design and implementation
was that, given the deep effects of the crisis, isolated of recovery aid packages, which are already being
actions would not have the capacity to produce prepared by governments with considerable public
effective results and on the scale required to assist funds. They will be able to influence that decisions are
the small retail outlets to resume their activities. pro-competitive and that they consider all sectors of the
The CADE court, unanimously, recognized that the economy. As part of this role, competition authorities
companies had adopted the antitrust risk prevention must ensure that support funding provided does not
protocols, safeguarded their prerogative to review their distort competition, particularly in jurisdictions that do
position at any time, and recognized that among the not have a regime for regulating and/or monitoring the
companies there was concern about the restoration of allocation of such aid.
competitiveness and normality in the sector.155
As noted at the recent UNCTAD/ECLAC joint event,
Market concentration may also increase when competition policy is essential for the maintenance
regulators approve emergency rescue mergers - the of employment, and the repositioning of the
taking over of firms on the verge of bankruptcy by competition of companies as part of industrial policy
more powerful firms on the ground of the ‘failing firm post COVID-19. However, this is only possible with
defence.’ CADE noted that the pandemic sparked an the creation of strong institutions that accompany
important discussion on the possibility of the authority industrial and competition policy.157 Whatever policy
recognizing failing firm defence transactions. In certain choices are adopted, ensuring that a competitive
situations, it may be less damaging for a company in market exists is essential for effective COVID-19
crisis to merge with or be taken over by its competitor, recovery – too few players post COVID-19 will result
thereby ensuring job retention, tax collection, and
in increases in concentration and the consequentially
consumer and creditor satisfaction.
for increased anti-competitive conduct. Cooperation
The ability of existing competition laws to address during the pandemic must not be allowed to continue
the competition issues arising in the digital economy for longer than necessary so as to ensure that some
was being considered around the world prior to the competitive rivalry can be maintained.
24
CHAPTER 5: GLOBAL TRENDS
This chapter identifies the broad global trends that are Direct financial support has taken the form of grants,
affecting MSMEs, insofar as these relate to competition rental subsidies, partial payment of employee wages,
issues and market access matters in the COVID-19 and has been a common policy response, found
era. The chapter draws together and synthesises the throughout much of the world. For example, in Chile,
individual elements which have been noted in previous a salary guarantee has been provided for those who
chapters, and then identifies some possible responses cannot attend work, together with bond payments for
for policy makers. Many of the suggestions form the those without formal work, affected MSMEs and those
recommendations provided in Chapter 6. in the informal sector. In Cambodia, the government
has committed to meeting two-thirds of the minimum
As time has passed and the impact of COVID-19
wage paid by firms in the local garment sector.
has played out around the world, some identifiable
economic patterns and trends are emerging in the However, there is a marked contrast between
MSME sector. These are likely to continue into the era different parts of the globe. According to the World
of tentative post COVID-19 recovery: Bank, only eight nations in Africa (Cabo Verde, South
Africa, Morocco, Egypt, Algeria, Botswana, Namibia,
1. Many governments are propping up existing
and Mauritius) have offered any kind of employment
firms as a policy priority.
support and, where it has been offered, it has been
2. Substantially more co-ordinated (and subject to restrictions. For example, in Mauritius, the
potentially anti-competitive) economic scheme relates to a payment of 50 per cent of salary
activity is being approved by competition for one month only; in Botswana, the payment is only
agencies. available to registered businesses; while in Namibia it
3. Market access is being reduced by inter- extends to the self-employed but only where registered
and intra-national restrictions on both to pay tax.
people and on the movement of goods and A second category of assistance has been the provision
services. of debt-based support, including loans and deferrals
4. MSMEs are moving to digital tools quickly of payments (such as tax) owing to government. Tax
wherever possible. deferral is a commonly employed mechanism. Many
of the Latin American, African, and Asian nations
5. Competition regulators and MSME policy
providing MSME support are offering some form of
agencies are now engaging directly with
tax relief (whether by way of delayed payment, as has
MSME representative groups; and
occurred in nations such as Mexico, South Africa,
6. The role of firms in the informal sector is and Malaysia) or expedited tax reimbursements (e.g.,
being addressed by some governments, but Guatemala and Indonesia). Relief measures directed
not all. at existing or new loans are generally available. Many
countries are offering delayed repayments (e.g., Brazil,
TREND #1: SUPPORT FOR INCUMBENT Mexico, and Thailand), while in Kenya this is the only
FIRMS158 assistance offered to MSMEs. In some nations (such
Concern has repeatedly been expressed that as Brazil, Chile, and Argentina), governments have
offered credit guarantee schemes to enable firms to
COVID-19 will lead to a long-term decline in the
secure more private debt financing from banks and
number of trading businesses, and as a result will also
other lending institutions.
induce large-scale unemployment. To address these
issues, governments have rolled out a number of Many governments are also making money available
measures to assist businesses; these in turn have had to loan to SMEs (e.g., Argentina, Chile, and Viet Nam)
an impact on both competition dynamics and market although access to funds is sometimes linked to
access. The support measures generally fall into three certain sectors. In El Salvador, money is available for
broad categories: direct financial support, debt-based use in sectors such as agriculture, tourism, transport,
support, and advisory support. communications. A COVID-19 Fund has been
25
established in Myanmar to provide loans to businesses Finally, these measures are usually only geared towards
in the apparel, hospitality, and tourism sectors, as well existing businesses; new and nascent businesses are
as MSMEs owned by Myanmar nationals. Argentina often ineligible for funding. As a result, government
has imposed mandatory obligations on its banks to support to businesses often flows to larger firms, not
loan to MSMEs at a rate less than inflation. smaller ones, in the name of promptly re-activating the
economy once COVID-19 has passed.
Government support of this kind (financial or debt-
based) raises competition issues in the form of state Although many jurisdictions have expressly adopted
aid. Although state aid that distorts competition measures directed at the self-employed and informal
in the market is prohibited under the Treaty on the sectors, there are limitations to this support. Often it is
Functioning of the European Union (Article 107), not restricted to one-off payments, which can have limited
all jurisdictions have express legislative provisions effectiveness. For example, Argentina has offered a
dealing with this issue. The burden of ensuring that single payment to informal self-employed workers to
a level playing field is retained may fall to competition assist with expenses during quarantine; Malaysia has
regulators, subject to having the appropriate legislative provided a once-only payment to e-hailing drivers.
mandate. In some other countries, self-employed persons and
A third form of assistance has been the provision of micro-businesses are excluded from such schemes,
advice, mentoring and counselling services to help as are enterprises in the informal sector. This often
managers develop strategies to deal with the effects occurs because support is only extended to formally
of COVID-19. This is less well promoted and used, but registered enterprises, fails to regard self-employment
nevertheless is found in countries such as China (where as a form of business activity, or imposes turnover or
advice is provided to SMEs to better utilise online tools, employee number threshold hurdles before a firm can
thereby accelerating digital transformation) and Costa qualify for assistance.
Rica (where businesses are being offered support for These measures also impacted competition. Easier
development services to assist in a return to economic access to credit, debt moratoriums, and other forms
activity). of financial support have led to many businesses
Are these measures likely to help MSMEs?159 remaining operative even when they are no longer
viable. These so-called “zombie” businesses remain
These policy responses are welcome but have actively trading in the market. Whilst this has helped
limitations and potential problems for the MSME preserve jobs, it also has other, more negative,
sector. consequences for market competition and access.
Direct financial grants are a useful form of practical As The Economist has noted, “zombification” leads to
assistance but are usually limited in size and nature markets which are less-contested, poorer services for
since public funds for such measures are finite. This consumers, and blocks the entry into the market of
support has usually only been provided as a short- new, more efficiently run small firms.160
term, stop-gap measure to help businesses survive These “tide over” and stimulus measures can also
the very worst point of the pandemic. But since lead to a business environment in which existing
COVID-19 has shown itself to be a pandemic that is large-scale enterprises are more likely to receive
likely to last for an extended period of time, these “tide support than smaller or new rivals. This does not
over” tools may not be enough to keep businesses occur because policymakers deliberately set out to
afloat in the medium to long term. support large firms at the expense of smaller ones.
Access to debt financing is also sometimes problematic Rather it happens because policymakers are often
for MSMEs. It is often contingent upon applicant unfamiliar with the true size of the informal and formal
businesses having a solid, long-term financial record, MSME sector, how it operates, the characteristics
which biases lenders to support larger enterprises of such firms. Alternatively, policymakers are often
with substantial market share and proven reserves. unaware that most MSMEs are founded using
Debt financing also has the drawback of deferring (not owner’s capital and operate on thin margins, and often
removing) the need to repay, which MSME operators have an aversion to increasing their debt load. This
on marginal incomes may be unwilling to sign up to; provision of stimulus to some but not all firms may
few entrepreneurs wish to incur a long-term legacy of have a chilling effect on competition. As the chairman
debt which they may not ultimately be able to repay. of the Philippine Competition Commission, Arsenio
26
Balisacan, noted in July 2020, stimulus packages has consistently shown that MSMEs are less likely
and policy initiatives can often interfere with fair and to be aware of government support programs,162and
healthy market competition.161 recent research conducted by the International
In addition, MSMEs may be less aware of the Trade Centre across the globe shows that this
support that is available from their government. A continues to be the case in the COVID-19 period
significant body of pre-existing academic research (see Figure 5.1).
Figure 5.1: MSME Access To Government Information163
100%
15% 10%
90% 17% 18%
80%
32%
70%
36%
60% 43% 42%
50%
40% 38%
11% 32%
30% 20%
20%
25%
10% 17% 14%
14%
0% 4% 3% 3% 6%
Micro Small Medium Large
Very easy Easy Standard Difficult Very difficult
Note: The respondents were asked ‘How easy it is to access information and benefits from government COVID-related SMEs
assistance programmes‘ and ‘How many full-time employees does your business have’. Data on 3920 businesses in 127 countries.
Response rates vary across countries and regions
Source: ITC calculations based on ITC COVID-19 Business Impact Survey. Data collected from 21 April – 2 June 2020
TREND #2: APPROVAL OF CO-ORDINATED of existing supply chains and the ability to provide
ECONOMIC ACTIVITY basic required services to a population. Competition
agencies have been quick to recognise that consumer
Existing enterprises in several industries have been
interests (which is frequently the common overriding
given implicit and explicit endorsement by competition
policy objective of competition law) may be best
authorities in many countries to engage in potentially
served during the pandemic by partial relaxation of
anti-competitive behaviour. Price fixing agreements,
competition rules. This relaxation of competition rules
sharing of information and collaborative production
needs to be balanced against the need for ongoing
or distribution are some of the many ways in which
enforcement, an issue which has been highlighted
this is taking place. Necessary formal authorisations
by various international organisations, including
and other oversight processes are also being sped
UNCTAD, OECD, ICN and ASEAN.164Competition
up in some nations. For example, the ACCC has
authorities around the world have responded with
utilised its interim authorisation process and reviewed
various approaches driven largely by the enforcement
applications within days. This is a process that would
tools and resources available to them.
normally take one to two months pre-COVID.
Some examples of these include:
Approvals have commonly been given where co-
operation is needed to ensure the supply of essential Published guidance on acceptable collaborations.
goods and services (such as in healthcare, food supplies Several competition agencies have issued explicit
and energy), or where lockdowns threaten the viability guidelines as to when such collaboration will
27
(or will not) be provided. For example, in April benefit to consumers outweighs anti-competitive
2020, the European Commission make public a harm) to permit almost thirty different collaborations
Temporary Framework165 which outlined the types needed to ensure continuity of supply to consumers.
of collaborations that would not be an enforcement The ACCC also has exercised its power to issue
priority, provided such collaboration measures interim authorisations, thereby allowing it to respond
were primarily focused on improving supply of within days of receiving a request.173
particular products. The Competition and Consumer
Wider communications. Some competition agencies
Commission of Singapore in July 2020 published a
have been proactive in providing information to MSMEs
Guidance Note which confirmed that the CCCS “will
and other stakeholders regarding their approach to
not generally investigate collaborations” provided
COVID-19. For example, the Philippine Competition
certain conditions were met.166 Likewise, the Brazilian
Commission has published a FAQs as part of its
Competition Authority (CADE) published a Provisional
COVID-19 resources.174 To improve accessibility and
Informative Note on collaboration amongst companies
outreach, the PCC has been publishing extracts from
in June 2020.167 The Competition Commission of India
the FAQs regularly on its Facebook page. Likewise,
has published an Advisory to Businesses in Time of
the Fiji Competition and Consumer Commission has
Covid-19 acknowledging that businesses may need
issued regular statements on its position in relation to
to coordinate activities (such as sharing information COVID-19. For example, as early as 17 March 2020,
on stock levels, sharing distribution networks and the FCCC issued a statement warning against the
infrastructure, transport logistics, R&D) to ensure raising of prices during the Coronavirus emergency.175
continuity of supply and fair distribution. The CCI More generally, the ACCC operates a Small Business
notes that there are provisions in the competition law Information Network of several thousand Australian
that allow this type of coordination where it leads to MSME subscribers who it emails regularly with
efficiencies.168 information on relevant issues as well as its Small
Informal guidance for businesses on proposed Business and Franchising Consultative Committee.
collaborations. In addition to its guidance on This Committee has been utilised during the pandemic
enforcement priorities, the European Commission to get messages to, and receive information from, the
has renewed its practice of offering ad hoc Australian MSME community.
‘comfort letters’ to businesses that wish to obtain Are these measures likely to help MSMEs?
legal certainty regarding proposed collaborative
This development poses both opportunities and
arrangements. Similarly, the United States Federal
challenges to MSMEs. Collaborative behaviour
Trade Commission and Department of Justice have
between well-established existing market players
issued a joint statement169 confirming their intention to
tends to be approved when the entities in question are
provide ‘expeditious guidance’ on whether proposed
large domestic and/or multi-national corporations.
collaborations comply with federal antitrust laws
These organisations have greater capacity to
within 7 days of receiving all relevant information; this
influence decision-makers, and their dominance
is designed to ensure that businesses can respond
of supply chains exerts an additional pressure on
rapidly to the pandemic. The statement also outlines
regulators to wave such behaviour through. When
collaborations that are unlikely to give rise to antitrust
this occurs, the anti-competitive detriment may be
concerns.
overlooked or discounted. These larger firms then
Statutory exclusions for certain sectors. The United tend to reinforce their market dominance and, as a
Kingdom government170 has passed legislation to result, may exclude small rival firms from effectively
relax its competition rules on the grounds of public competing.
policy to facilitate a response to COVID-19.171 To
The “fast track” approvals can also impact on the
date, exclusions have been granted in relation to the
ability of smaller firms to maintain access to their
supply of groceries, dairy products, health services
existing markets and clients. When preferential inter-
and transport (maritime crossings).172
company arrangements are given legal standing,
Authorisations for specified agreements. The Australian other competing firms suddenly find themselves in a
Competition and Consumer Commission has used much weaker position than would otherwise be the
its authorisation power (which allows the ACCC to case. They may have reduced access to inputs and
approve agreements or conduct where the potential to consumers. To reduce the risk of excluding smaller
28
players, competition agencies need to consider the At its most extreme, however, lockdowns can involve
impact on MSMEs in the same market. This was the near-total cessation of free movement outside
recently the case in Australia, where an authorisation residential households for most of the population
granted by the ACCC to the large grocery retailers over many weeks, with rare exceptions being given
to coordinate activity so as to “ensure supply and only to a small workforce primarily operating essential
fair and equitable distribution of retail products to services (such as infrastructure, government,
Australian consumers” was also extended to other, healthcare, policing, and the like). This “hard line”
smaller grocery retailers that wished to gain the approach has seen many millions of people confined
same protection; these smaller firms did not need to their homes over several months, with residents
to undertake a lengthy approval process, but simply only able to move outside for a few limited reasons.
needed to inform the agency of their desire to be This has occurred throughout the world with very few
covered by the authorisation.176 exceptions (e.g., Sweden, Brazil, and parts of the
United States). Lockdowns have been enforced in
Whilst in theory MSMEs may also be able to come
different ways: in some parts of the world these have
together and seek collective approvals for similar
included a prohibition on leaving the house even for
behaviour, this is usually constrained by their limited
exercise (The Philippines), through to being allowed
legal and regulatory resources. Some MSMEs use
out for a limited time (such as one hour per day in
their local representative business association (such
the United Kingdom). In El Salvador, only one family
as their sectoral industry body or local business
member could leave the house to purchase essential
chamber177) for assistance, but in many cases these
items,180while in Chile, a 5-year prison sentence could
associations themselves do not have a good working
be imposed on those breaking quarantine and curfew
knowledge of competition law and how to apply for
rules.181
regulatory approval. Helping upskill associations, by
educating them in how and when MSMEs can work These steps have had the biggest single impact
together, is a simple yet effective way to help remedy on market access for MSMEs. Many firms in non-
this problem. essential industries have simply been ordered to cease
trading during lockdown. Without the free movement
TREND #3: LOCKDOWNS CONTINUE TO of people, consumers have become sharply restricted
CONSTRAIN MARKET ACCESS in what they can buy, when and where. Business
operators are also limited in their ability to sell to their
Lockdowns involving the restricted movement of
customers. Some goods and services are no longer
individuals have become a hallmark feature of public
able to be transported or delivered at all, whilst many
policy responses to COVID-19 around the world.
others continue to do so at sharply reduced speeds
Designed to contain or limit the spread of the virus,
and in lesser quantities.
they typically involve substantial limitations on ordinary
daily life and commercial activity. So widespread Small-scale retail trade has been especially badly
have lockdowns become that only a small number hit by this restriction, as small business operators
of isolated, COVID-19-free island economies (such typically have been stopped from accessing much of
as several Pacific states) have been able to avoid their customer (market) base. Other industry sectors
these measures at all. Lockdown measures affected with many MSMEs have also felt similar pains, such as
many jurisdictions in various degrees. In Africa, the professional services and small-scale manufacturing.
constrained linkages with the global value chains, Many small enterprises are at risk of failure when sales
coupled with falling demand and commodity prices revenue collapses, given the thin margins on which
contributed to low levels especially in fuel and most MSMEs trade, their very limited financial reserves
horticulture exports.178 (if any), and their limited access to debt financing.
At its mildest, this may involve little more than a This is the single greatest threat to the continued
small measure of restrictions on activity, such as economic viability of much of the entire MSME sector
a requirement to practice social distancing and – so much so that at least one observer has suggested
enhanced hygiene practices in public. This has been that COVID-19 has the potential to become a mass
the case in Sweden, which adopted an approach “extinction event”182 that may wipe out much of the
designed to engender national “herd immunity,” but existing MSME population globally. It is still too early to
this strategy has been heavily criticised.179 determine if this will be the case, as official counts of
29
MSMEs in most countries are usually not collected in other issues are all matters for which most MSMEs
real time but lag by many months or years. However, will need guidance from government.
anecdotal evidence in many nations suggests that it is
A third policy response is to accept the unfortunate
a very real possibility.
fact that many firms may close, and to make this
Ideally, this issue could be resolved by the removal of process as simple and low-cost as possible.
lockdowns. In practice, however, lockdowns appear Policymakers need to provide clear avenues for
likely to remain a major policy tool for containing the owners and employees of such enterprises to
outbreaks into the foreseeable future. The problem promptly access social services when their business
is further compounded by the fact that a country income is lost. The process of deregistration and
may experience several unpredictable waves of closure should be straightforward and easy. Several
lockdowns. The virus has shown itself capable of countries, such as Australia, have relaxed their
re-appearing suddenly and unexpectedly again in corporate laws to temporarily allow firms under
countries that have previously contained it (such as some circumstances to continue trading whilst
New Zealand and in parts of Europe), which has led to technically insolvent. In addition, policies to re-skill
further periods of lockdown. these owners and employees should be introduced
urgently, so as to allow them to re-enter the
Strategies for assisting MSMEs
workforce promptly.
One way in which policymakers can mitigate the effect
Also important will be the need for governments to
of lockdowns on MSMEs is to encourage smaller
retain a nation’s entrepreneurial culture. Preserving
firms to move online. This can allow them to reach
the desire to start a new business will be important.
new groups of potential customers, operate direct If large swathes of businesses are being wiped out,
sales and delivery services to existing customers, new ones will eventually have to be created to take
and develop alternate access to markets. Many firms their place. Policymakers should therefore seek to
have quickly embraced this option, such as those develop “relaunch” programs that can commence
in the food delivery, personal entertainment, and now and/or when the pandemic passes, and which
clothing sectors. will allow entrepreneurs to once again enter the
This measure, however, will not help every business. market as quickly as possible. Although there are
Many firms offer goods or services that are based on many policy measures designed to increase support
close physical contact and a localised geographic to existing MSMEs,184 consideration should also be
catchment, such as the numerous informal sector given to extending these to include new start-ups.
retail vendors found across much of the developing Several developed economy countries (such as
world. In many economies, consumers have limited France, Germany, and the United Kingdom) have
online access, which means the potential digital already announced measures specifically targeted
reach of an MSME to its local market may be small. at supporting prospective future start-ups.185
These limitations have also been recognised in a
recent OECD policy note, which found that “across TREND #4: MSMES ARE GOING ONLINE
non-OECD countries, jobs may be less readily One clearly evident trend amongst MSMEs globally
carried out remotely, whether because they are has been the large-scale movement of trading
in sectors which require physical presence or for activity to an online environment. Whether it be
other reasons (such as access to infrastructure or through webpages, social media, chat functions, or
skills)”.183 a combination of these, many businesses are now
Another step will be for policymakers to develop a using these communication tools to sell products
deeper understanding of the nature of MSMEs (which and services.
will allow them to better take the needs of small firms As discussed above, this is being driven by
into account when developing lockdown rules in lockdowns and restrictions on movement, which
their country), and to engage more comprehensively limits both businesses and consumers in their abilities
with business representative associations before to undertake traditional, physical purchases. Whilst
instituting lockdowns. Critical lockdown information, many small firms may already have had some form of
such as lockdown commencement dates, access to digital presence,186declining sales and revenue has
suppliers, enforcement mechanisms and a range of now led many more MSMEs to embrace digital tools
30
on a far greater scale than has previously been the More widespread, though, is a lack of relevant skills and
case.187 knowledge amongst small business employees and
owners. Limited understanding of how digital platforms
A variety of different approaches are being used.
work, low levels of participation in social media for
In some cases, small firms are creating or re-
business purposes, and few skills in constructing and
engineering websites to make them more attractive,
maintaining websites can all constrain the capacity of
and to permit direct purchases by consumers for
MSMEs to go online. There is a clear need to provide
the first time. Some are by-passing conventional
widespread, simple, and practical training in this area.
websites altogether and selling directly through
According to UNCTAD’s Entrepreneurship Framework
various social media platforms. In the Philippines,
use of the ‘online marketplace’ has increased (EPF), digital technologies offer opportunities to reach
dramatically – partly because the group chat feature customers across the world with ever-decreasing
of instant messaging and social-media platforms costs while enabling entrepreneurs to customize
allows MSMEs to conduct much of their business on global products and services to cater to local markets.
their smartphones.188 Yet other MSMEs are using the For instance, 17% of SMEs have started or increased
avenues provided by mass-scale aggregate platform online business activity during the pandemic as
providers such as eBay, Amazon, and the like as their opposed to 24% on large enterprises.194 Before the
primary sales tool. Some governments are actively pandemic, the gap between small and large firms in
supporting this. China, for example, is encouraging terms of having their own website was on average
platform businesses to lower entry fees. However, more than twofold, while this gap was much less
the success of these shifts may depend, to an extent, pronounced among developed economies.195 Without
on the competitiveness of the logistics or transport it, many MSMEs will continue to be effectively denied
sectors in the relevant markets. Results of the United market access. Some nations are already tackling
Nations Economic Commission for Africa’s business this problem. China, for example, has adopted various
survey undertaken in July 2020 revealed that 58 per policies to encourage MSMEs to use online tools
cent of the businesses found challenges in relation to for remote working, help them.196 In the Philippines,
shipping and logistics of products, compared to only Congress is proposing a bill with a range of measures
30 per cent for services.189 designed to stimulate the economy and promote
business continuity, including acceleration of online
This movement has had a number of positive commerce.197 In Bahrain, the Ministry of Industry,
effects for MSMEs – principally in terms of allowing Commerce and Tourism has launched an e-platform
them to continue to trade, and sometimes to aimed at supporting small firms to expand their,198
expand their market access into new regions.
whilst Enterprise Georgia also has several schemes to
Online trading has been a major enabler of access
build the digital skills of owner-operators.199
to new and existing customer markets for small-
scale entrepreneurs. A final potentially problematic area relates to equal
access to digital trading. Existing larger firms often
However, in many developing economies, access
have the capacity to gain access to the online
to the digital marketplace is constrained by a lack
environment in a way that smaller businesses do
of suitable communication infrastructure.190 Poor
not. For example, larger businesses may employ
access to the internet and limited wi-fi capacity, as
a strategy of securing multiple URLs and search
well as older telecommunication technology, can
engine optimization so as to prevent access by
make it difficult for MSMEs to develop a presence
other businesses - a strategy that is not illegal but is
and to trade. This is a significant issue in Africa
unlikely to be available to small business without the
where, in 2017, only 7 per cent of households had
financial resources or time to carry out this activity.
subscribed to high-speed internet services191 and,
to a lesser extent, Latin America, where only two- Several platform providers have also been accused of
thirds of the population have internet access (with employing allegedly anti-competitive practices which
a significant digital divide issue).192 UNCTAD data injure smaller firms.200 For example, the European
indicates that only one in five people in the world’s Commission fined Google EUR 2.42 billion in 2017 for
least developed countries have internet access abusing its dominant position by allegedly preferring
and less than 5 per cent of people in developing its’ own comparison-shopping site on its search
countries buy goods online.193 engine. The appeal by Google is awaiting judgment
31
from the General Court.201 In Australia in 2016, the Many also do not understand the different types of
online travel agent giants Expedia and Booking.com business representative bodies, how they work, and
agreed to amend their standard contract terms, which who they do (or do not) represent.204 For example,
had required that accommodation providers always there are a wide variety of different organisations
offer them the lowest price and best availability. which exist in most countries to represent the needs
This prevented better deals being offered directly to and concerns of the private sector. These typically
consumers or other competitors.202 Large platforms include business chambers (which usually represent
may also have access to considerable proprietorial a broad spectrum of different firms, and are centred
databases which give them an advantage over around a particular geographic location), professional
smaller rivals or have accrued advantages from associations (which speak for both firms and
economies of scale that preclude MSMEs. individual practitioners in professions as diverse as
law, medicine, healthcare, architecture, engineering,
TREND #5: COMPETITION AUTHORITIES accounting and many more fields), industry groups
AND POLICYMAKERS WORKING WITH (the organised body for businesses operating in a
MSME AGENCIES & ASSOCIATIONS
particular trade or industry sector) and bilateral trade
An encouraging trend amongst many competition groups (which represent businesses trading across
authorities and SMEs and other public bodies has borders).205 Each of these groups can have different
been a degree of increased interaction with the memberships, operate differently, and deal with
various business representative organisations that different cohorts of MSMEs.
speak on behalf of the MSME sector. A variety of
At the same time, many MSME representative
different government bodies are now seeking to
organisations do not fully understand how government
communicate with the business community as they
works. These representative associations are often
develop interim measures to assist firm survival
very small and poorly resourced, with limited capacity
during the pandemic, and in planning for post
to provide input into public policy decisions at short
COVID-19 recovery.
notice and to suggest better outcomes.
For example, the Philippines Competition
In many cases, policy responses are formulated either
Commission has conducted numerous webinars
by board members or staff who have little experience
between March and August 2020, at least two of
themselves working within the policy process within
which were targeted directly at educating industry
associations, individual MSMEs and cooperatives on government; these individuals have no prior in-depth
their rights under competition law in the Philippines. experience of working within public agencies.206
This has been provided in recognition of ‘the market In contrast, most large firms and multi-national
disruptions impacting small and medium businesses corporations have a sophisticated, well-developed
amid the pandemic’.203 Likewise, competition capacity to lobby government, and to have their views
agencies in countries such as Singapore, Australia heard directly. This imbalance in ability to influence
and the United Kingdom regularly consult with and work with government can have a deleterious
industry associations as part of their advocacy work effect on policy outcomes, especially in a time (such as
and recognise that ongoing consultation will be the COVID-19 pandemic) when decisions frequently
important in the post-pandemic era. need to be made promptly and on the basis of limited
However, numerous other agencies are not fully information. Those with immediate or pre-established
familiar with MSMEs and their industry associations. lines of communication to government are likely to
Staff and commissioners of most competition be favoured over other organisations which do not.
agencies and other like regulatory bodies traditionally For example, a recent United Nations Economic
have come from a professional background in the law, Commission for Africa survey showed that less than
economics and/or public services. Few of them have one third of the small businesses surveyed raised
had direct experience of what it is like to operate a competition concerns with the relevant authorities,
small firm, and have little knowledge of the real-world despite market distortions (in the form of price fixing
constraints, problems, and issues that MSMEs must and market allocations) being felt by 64 per cent of
face on a daily basis. respondents.207
32
Both policymakers and MSMEs are therefore Regulators and policymakers know much more about
potentially losing out from the information asymmetry the formal economy than they do about its informal
that currently exists between the small business counterpart; it is also much easier for them to reach
sector and government in many countries. formal entities. As a result, both MSME assistance
measures and regulatory responses operate at sub-
If business organisations representing MSMEs
optimal efficiency in the informal sector.
can be provided with greater knowledge about
how to work with government, and if public Most informal sector firms have not received
officials can be given a better understanding of government support to deal with the impact of
the practical world of the typical MSME in their COVID-19. In most nations, these support measures
country, then higher quality policy outcomes for individual businesses are largely geared towards
should be expected. These outcomes will ideally registered legal entities, and informal enterprises
be ones which exhibit a detailed, sympathetic are excluded. For example, in Botswana, only
understanding of the world of the small-scale businesses that are registered for tax are eligible
entrepreneur and the business he or she operates. to receive wage support for their employees. In the
It will also allow policymakers to develop better- Philippines, the Magna Carta for Small Enterprises (in
targeted, more effective strategies to improve operation prior to COVID-19) makes it mandatory for
market access for MSMEs. all lending institutions to allocate 5 per cent of their
lending portfolio to SMEs under certain conditions,
Some multilateral bodies are already undertaking this
one of which is that only formally registered MSMEs
process. For example, the United Nations Economic
are eligible to apply.210
Commission for Latin America and the Caribbean
has reviewed the degree of engagement between This has important implications on the ability of small
public policymakers and industry associations, informal firms to survive and to obtain reasonable
and noted that whilst “… business associations market access. Formal support from government,
play a relevant public role by contributing to the such as training, access to free advisory services,
formulation of policies or programmes to promote development of digital literacy skills and other
the productive sector … in the vast majority of assistance measures discussed earlier, are likely to be
countries in the region, the information available limited. Financial assistance is usually particularly rare
on the reality of these organizations is fragmentary, for informal businesses, as governments cannot locate
partially and poorly updated.”208 or contract with such entities. This in turn constrains
the capacity of informal ventures to access “tide over”
TREND #6: THE IMPORTANCE OF funds to keep the business going. Registration of
INFORMAL SECTOR MSMES business URLs is also difficult, as the website provider
One of the biggest single groups of MSMEs, both at is not dealing with a recognised business entity.
a global level and within most developing economies, Regulation of the informal sector is also problematic,
is the informal sector. These business enterprises are as was pointed out earlier in this paper. Informal
usually very small in size and turnover, and operate enterprises can often compete with an unfair
outside the conventional regulatory framework, but advantage over legitimate firms, since they do not
collectively can be very significant. As was mentioned conform to the law nor bear the compliance costs
in Chapter 2, figures for this group of enterprises can that apply to regulated entities. Enforcement actions
often only be approximated, but a recent ILO report against informal firms are also rare.
estimated that they were likely to account for around
How can governments reach individual
90 per cent of all firms in the developing economies,
entrepreneurs, employees, and businesses that
and to generate more than 60 per cent of employment
(by definition) they do not know about? There are
in most developing economies.209 Whilst several
several ways to deal with this difficult issue. One is to
countries have attempted to actively shrink the size
seek out local, individual knowledge and networks.
of their informal sector, in many regions it continues to
For example, in Malaysia, state governments
flourish and grow.
such as Perak have enlisted local municipalities
Because they operate outside of the formal sector, to deliver support to informal business operators,
many policy responses to COVID-19 have overlooked as local council employees have a more detailed
this very significant segment of the MSME community. and intimate knowledge of individuals in an area.
33
In Singapore, the National Trades Union Congress Public policymakers need to know much more
is being used to provide some financial support to about the informal sector – how big it is, what it
self-employed union members as part of a broader consists of, and the barriers and triggers to the
member support program.211 formation and operation of informal enterprises. To
This is an important issue. The ILO, for example, this end, the provision of training for public officials
has recently argued that providing more support to on the nature and characteristics of the informal
informal businesses may be a crucial pivot point in sector can be useful. Providing policymakers,
bringing them into the formal economy, and that for regulators, and delivery arms of government with a
this reason governments should pursue this as a better understanding of this type of MSME may well
priority212. It is also important because they can often encourage them to give more consideration to this
unfairly impede the survival of formal MSMEs. sector when framing policies.
34
CHAPTER 6: POLICY RECOMMENDATIONS
This report concludes with recommendations These guidelines should include the setting of
addressed to competition authorities and MSME thresholds below which agreements or conduct
agencies. It provides specific recommendations to entered by MSMEs are not considered to raise
each of these entities individually and jointly. competition concerns to improve legal certainty and
predictability that allows firms to make future decisions
6.1. RECOMMENDATIONS TO without fear that they may break the law. For example,
COMPETITION AUTHORITIES: Malaysia has introduced a “safe harbour” threshold
which presumes that agreements or conduct entered
Recommendation 1: Support to and by MSMEs with market shares below 20 per cent are
engagement with SMEs unlikely to affect competition in the market. (Serious
Competition law usually applies only to significant cartel activities, such as price fixing, remain offences).
restrictions of competition in the market, thereby In addition, Competition Authorities may exempt
presupposing the existence of anti-competitive certain agreements which although restricting
business conducts or abuses of market power of competition may achieve efficiencies that are taken
a certain dimension. Therefore, SMEs’ behaviours into account in the overall analysis: this is the case
may not infringe competition provisions but since of joint purchasing agreements of commodities
micro and small enterprises have an important role or components, that allow SMEs to acquire these
in the developing countries’ economies, Competition products in better conditions and compete with larger
Authorities should engage with them and their companies in the markets, in areas such as public
business associations to raise their awareness to the procurement.214
competition regime and to support them within the
applicable legal framework. 6.2. RECOMMENDATIONS TO
Although during the COVID-19 pandemic many GOVERNMENTS AND MSME
competition authorities have exceptionally accepted AGENCIES:
some level of cooperation between competing
Recommendation 3: Monitoring financial
businesses to ensure the security of supply, particularly
support schemes to MSMEs
for health and consumer needs, for instance, during a
certain period of time, it is crucial to familiarise SMEs Governments and public bodies responsible for
with competition law and policy, while Competition supporting SMEs should monitor the impact of the
Authorities will also benefit from better understanding financial support provided to MSMEs, to ensure
how SMEs operate and what challenges they face. that public funds are used efficiently to financing
investments to promote growth and innovation and
Further, it is necessary to unequivocally inform
are not artificially maintaining the so-called “zombie
SMEs that exceptional decisions are temporary by
firms”, that are not viable in the medium to long term,
nature and that exemptions will be reviewed to allow
in the marketplace, distorting competition.215
competition to resume between market players once
the pandemic recedes. At the same time, MSMEs should be fully aware that
public resources are limited and therefore, they should
Recommendation 2: Provide guidance to SMEs
design exit strategies from dependence on public
It is important to provide SMEs with concrete support through innovation and new methods of
guidance in a clear and unambiguous manner. Several doing business.
authorities have issued guidance for small firms during
Recommendation 4: Promoting MSMEs access
the COVID-19 period (such as Singapore’s “Guidance
to digital market
on COVID Business Collaboration”,213 which helps
firms know when they can share production lines or COVID-19 has seen a large scale, almost global,
inputs), and other authorities should be encouraged movement of business and consumer transactions
to do the same. into the digital marketplace, where business can
35
continue to operate and undertake transactions with Recommendation 5: Increased engagement

customers without fear of infection that arises from with the informal MSMEs
person-to-person contact. Digital access is now often
Often overlooked, informal small firms are in fact
tantamount to market access. However, many online
important factors in both competition regulation
marketplaces contain anti-competitive mechanisms
(where their presence can distort the market) and
that disadvantage many MSMEs, and competition
in market access ability (where they may have an
authorities often do not have suitable legal tools for
unfair advantage over legitimate firms). Yet the level
dealing with such matters.
of knowledge about this sector is limited, notably
Given this accelerated process of digitisation, due to the various degrees of informality, as is their
it is essential that developing countries have an engagement with informal enterprises. Measures to
instrument to provide greater clarity, transparency formalize the economy, i.e., streamlined business
and security to MSMEs access to and dealings registration, licensing, and compliance; increased
with digital platforms, particularly with regard to social security coverage and reduced taxes or
e-commerce and means of payment and financing, as other financial obligations; upgrading access to
recommended by the UNCTAD-led study “COVID-19 finance and business development services; can
and e-commerce: a global review” (2021), 216 which provide for a healthier ecosystem for SMEs. 219
amongst others, highlights financing for e-commerce Governments should support SME bodies’ efforts
through Governments and business organizations to implement incentives for informal SMEs to
support to improve access to investment as well as register.
exploring alternative funding models as a priority;
while underlining skills development in an inclusive 6.3. RECOMMENDATIONS TO MSME
manner through training in e-commerce adjusted to AGENCIES AND COMPETITION
local markets and business experience and through AUTHORITIES
the strengthening of national IT sectors to support Recommendation 6: Promoting joint dialogues
their digital transformation, within other measures, as and capacity building activities between MSME
another priority. associations and regulatory bodies
MSME agencies should also organise training on the It is of the utmost relevance to improve the dialogue and
key emerging issues in digital markets that affect MSME cooperation between the MSME sector representatives
economic recovery in the wake of COVID19 to facilitate and Governmental bodies representatives at national
their access.217Mainstreaming digital, financial, and and regional levels, considering global markets,
marketing skills into business development services is namely with the support of international and regional
a critical policy objective that should be prioritized with organizations.
a view to increase adoption and use of ICT through
mobile applications from accounting to inventory These meetings may allow parties to share ideas and
management, from marketing to accessing finance. policies and exchange of experiences, as well as
Specifically, existing training curricula should be to discuss concrete measures for adoption. At the
strengthened to address the needed skills in utilizing regional level, the United Nations regional economic
digital technologies for accessing markets as well as commissions have an important role to facilitate such
alternative forms of finance. After all, even domestic discussions, while UNCTAD has an important part
public procurement practices are moving into digital at the global level namely for technical cooperation
platforms. Mentoring and training programmes activities. Indeed, capacity building initiatives bringing
instituted by chambers of commerce can solidify together competition and SMEs experts as other
such trainings into long-term capacity building for regulatory bodies’ representatives, will improve
entrepreneurs and MSMEs. In doing so, specific awareness on competition law and market access
attention must be paid to entrepreneurs and MSMEs issues to MSME associations. MSMEs can also
from vulnerable backgrounds who are particularly substantially benefit from peer learning under the
affected by the digital divide.218 umbrella of trade associations.
36
ENDNOTES
1
UNCTAD (2020) Impact of the COVID-19: Pandemic on Trade and Development, Transitioning to a new normal -https://unctad.
org/system/files/official-document/osg2020d1_en.pdf and UNCTAD (2020) COVID-19 and e-commerce: Impact on businesses
and policy responses https://unctad.org/system/files/official-document/dtlstictinf2020d2_en.pdf.
2
UNCTAD (2020) COVID-19 and E-commerce: Impact on Businesses and Policy Responses 2020, United Nations Conference on
Trade and Development.
3
UNCTAD (2015) The role of competition policy in promoting sustainable and inclusive growth /(TD/RBP/CONF.8/6) - https://
unctad.org/system/files/official-document/tdrbpconf8d6_en.pdf.
4
See Concurrences Antitrust Publication and Events, Bulletin Competition Law & Covid-19 - “COVID-19 Global Impact: A World Tour
of Competition Law Enforcement” (4 “Tracker Maps”), Dave Anderson and Philip Apfel , Bryan Cave Leighton Paisner (Brussels)
23 Jul 2020.
5
World Bank (2020) World Bank Group’s Operational Response to COVID-19 - https://www.worldbank.org/en/about/what-we-do/
brief/world-bank-group-operational-response-covid-19-coronavirus-projects-list.
6
Available at https://unctad.org/system/files/official-document/tdrbpconf10r2.en.pdf.
7
UNCTAD (2020) The International Day of Micro, Small and Medium Enterprises - https://unctad.org/en/pages/SGStatementDetails.
aspx?OriginalVersionID=262 (accessed on 25 June 2020).
8
APEC (2015) SMEs, Competition law and Economic Growth [online] https://www.apec.org/Publications/2015/09/SMEs-
Competition-Law-and-Economic-Growth (accessed on 28 June 2020).
9
UNCTAD (2020) Micro, Small and Medium Enterprises as drivers of post COVID-19 economic recovery in Africa https://unctad.
org/meeting/micro-small-and-medium-enterprises-drivers-post-covid-19-economic-recovery-africa.
10
European Commission (2014) https://ec.europa.eu/international-partnerships/system/files/final-ad-aap-2014-alinvest-5-0_en.pdf.
11
WTO (2020) MSMEs Day 2020 [online] https://www.wto.org/english/tratop_e/msmesandtra_e/msmesday20_e.htm (accessed on
28 June 2020).
12
IMF.
13
Oxford Business Group (n.d.) Government Support for SMEs Demonstrates Their Importance to Bahrain [online] https://
oxfordbusinessgroup.com/analysis/small-and-medium-large-government%E2%80%99s-support-smes-demonstrates-
recognition-their-importance (accessed 11 October 2020).
14
OECD (2019) Monitoring Georgia’s SME Development Strategy [online].http://www.oecd.org/eurasia/competitiveness-programme/
eastern-partners/Monitoring-Georgia%27s-SME-Development-Strategy-2016-2020.pdf (accessed 12 October 2020).
15
Ministry of Micro, Small and Medium Enterprise, Government of India (2020) What Are Micro, Small and Medium Enterprises?
[online] http://www.dcmsme.gov.in/ssiindia/defination_msme.htm (accessed 13 October 2020).
16
SME Corporation, Malaysia (2020) SME Definition [online] https://www.smecorp.gov.my/ (accessed 13 October 2020).
17
Asia Pacific Foundation of Canada (2020) 2020 Survey of Entrepreneurs and MSMEs in Peru, Vancouver: APFC, p.12.
18
SME Authority, Saudi Arabia (2020) Defining Establishments [online] https://www.monshaat.gov.sa/ (accessed 13 October 2020).
19
BusinessTech (2019) “These are the New Definitions for Micro, Small and Medium Enterprises in South Africa,” 24 March [online]
https://businesstech.co.za/news/business/305592/these-are-the-new-definitions-for-micro-small-and-medium-enterprises-in-
south-africa/ (accessed 27 October 2020).
20
Schaper, M. (2010) “Competition Law, Enforcement and the Australian Small Business Sector”, Small Enterprise Research, Vol. 17
No. 1, p.10.
21
World Bank (2020) Enterprise Surveys – Trade [online].https://www.enterprisesurveys.org/en/data/exploretopics/trade (accessed
10 October 2020).
22
Blackburn, R.; Kitching, J. & Saridakis, G. (2015) The Legal Needs of Small Businesses: An Analysis of Small Businesses’
Experience of Legal Problems, Capacity and Attitudes, London: Small Business Research Centre, Kingston University for the
United Kingdom Legal Services Board.
23
Schaper, M. (2016) “Small Business, The Law and Access To Justice: Issues and Challenges” in Clark, D.; McKeown,
T. & Battisti, M. (eds) (2016) Rhetoric and Reality: Building Vibrant and Sustainable Entrepreneurial Ecosystems, Melbourne:
Tilde Press, pp. 21-35.
24
OECD (2015) Equal Access To Justice, OECD Expert Roundtable Background notes; Blackburn, R.; Kitching, J. & Saridakis,
G. (2015) The Legal Needs of Small Businesses: An Analysis of Small Businesses’ Experience of Legal Problems, Capacity and
Attitudes, London: Small Business Research Centre, Kingston University for the United Kingdom Legal Services Board.
25
Australian Small Business & Family Enterprise Ombudsman (2018) Access To Justice: Where Do Small Businesses Go? Canberra:
ASBFEO; Burgess, R. (2016) “SMEs and Private Enforcement of Competition Law: Achieving Redress” Global Competition Law
Review, No. 3, pp. 85-88.
26
Blundel, R. (2013) Quarterly Survey of Small Business in Britain, Vol. 29 No. 3, Milton Keynes: Open University Business School.
27
Blundel, R. (2013) cited above.
28
Doner, R.F., & Schneider, B.R. (2000) “Business Associations and Economic Development: Why Some Associations Contribute
More Than Others” Business and Politics, Vol. 2 No. 3, pp. 261-288.
37
29
ITC (2012) Combating Anti-Competitive Practices https://www.intracen.org/Combating-Anti-Competitive-Practices/ ; WTO (2018)
Competition Policy, Trade And The Global Economy: Existing Wto Elements, Commitments In Regional Trade Agreements, Current
Challenges And Issues For Reflection https://www.wto.org/english/res_e/reser_e/ersd201812_e.pdf.;.
30
UNCTAD (2013) The Impact of Cartels on the Poor [online] - .https://unctad.org/meetings/en/SessionalDocuments/ciclpd24rev1_
en.pdf (accessed 25 September 2020). For a discussion of other breaches by members of trade associations in Malaysia, see
Dorai Raj, Shila and R. Burgess (2016) “SMEs and Malaysia’s New Competition Law: Experiences to Date” in Michael T Schaper
and Cassey Lee (eds), Competition Law, Regulation & SMEs in the Asia-Pacific - Understanding the Small Business Perspective,
Singapore: ISEAS.
31
ILO (2020) “Informal Economy” [online] https://www.ilo.org/global/topics/%20employment-promotion/informal-economy/lang--
en/index.htm (accessed 10 October 2020).
32
UNCTAD (2001) The “missing middle” in LDCs: why micro and small enterprises are not growing : Growing Micro And Small
Enterprises In Ldcs UNCTAD/ITE/TEB/5 https://digitallibrary.un.org/record/452413?ln=en and Schoar, A. (2010) “The Divide
between Subsistence and Transformational Entrepreneurship” in Lerner, J. & Stern, S. (eds) Innovation Policy and the Economy,
Vol. 10, pp. 57-81.
33
United Nations Economic and Social Commission for Western Asia (2017) “Informality in the Arab Region: Another Facet of
Inequality,” Social Development Bulletin, Vol. 6, No. 4.
34
Bosma, N. & Kelley, D. (2019) Global Entrepreneurship Monitor: 2018-2019 London: Global Entrepreneurship Research Association.
35
Ismail, M. B. M. (2012), “Demographic Profile of Micro, Small and Medium Entrepreneurs in South Eastern Region -SER- of
Sri Lanka” Paper presented at International Research Conference- 2012 (JUICE- 2012), University of Jaffna, Sri Lanka, Held on
20th & 21st July, 2012, p.40.
36
UNCTAD (2020) Global Initiative towards post-Covid-19 resurgence of the MSME sector - https://unctad.org/project/global-
initiative-towards-post-covid-19-resurgence-msme-sector
37
UNDESA Report on MSMEs and the Sustainable Development Goals https://sustainabledevelopment.un.org/content/
documents/26073MSMEs_and_SDGs.pdf
38
WTO Trade and Environment Week – November 2020 and OECD Forum on Competition and Sustainability – December 2020.
39
Holmes, Simon (2020) “Climate change, sustainability, and competition law” Journal of Antitrust Enforcement, Volume 8, Issue 2,
pp 354-405, available at https://doi.org/10.1093/jaenfo/jnaa006 (accessed 27 October 2020).
40
See section 2 (Declaration of Policy) Philippine Competition Act
41
See section 3 (Objective) Myanmar Competition Act which states that the objectives of the competition law include “to protect and
prevent acts that injure the public interests … for the purpose of development of the national economy”.
42
The preamble to the Malawi Competition Act states: “An Act to encourage competition in the economy by prohibiting anti-
competitive trade practices; to establish the Competition and Fair Trading Commission; to regulate and monitor monopolies and
concentrations of economic power; to protect consumer welfare; to strengthen the efficiency of production and distribution of
goods and services; to secure the best possible conditions for the freedom of trade; to facilitate the expansion of the base of
entrepreneurship and to provide for matters incidental thereto or connected therewith”.
43
South Africa’s Competition Act includes as an objective ensuring “that small and medium-sized enterprises have an equitable
opportunity to participate in the economy” (section 2(e)).
44
See Fox, E. M. (2016) “Competition Policy: The Comparative Advantage of Developing Countries” Law and Contemporary
Problems, Vol. 79 No. 69, pp. 69-84
45
Ibid.
46
Ivaldi, Marc, et al. (2014) Cartel Damages to the Economy: An Assessment for Developing Countries Working Paper. Toulouse
School of Economics.
47
ECA, African Union, AfDB and UNCTAD (2019) Assessing Regional Integration in Africa (ARIA IX): Next Steps for the African
Continental Free Trade Area https://www.uneca.org/sites/default/files/PublicationFiles/aria9_report_en_4sept_fin.pdf (accessed
5 August 2020).
48
Ivaldi, Marc, et al. (2014) Cartel Damages to the Economy: An Assessment for Developing Countries Working Paper. Toulouse
School of Economics.
49
See n. 17.
50
UNCTAD (2011), “Foundations of an effective competition agency” - https://unctad.org/system/files/official-document/ciclpd8_
en.pdf .
51
Competition Commission of India (2017), “Challenges faced by young and small competition agencies in the design of merger
control” Submission to the Intergovernmental Group of Experts on Competition Law and Policy https://unctad.org/system/files/
non-official-document/ciclp16th_c_India_en.pdf.
52
https://blogs.afdb.org/fr/blogs/afdb-championing-inclusive-growth-across-africa/post/mergers-and-acquisitions-in-africa-10163
53
OECD (2018), “Competition Law and State-Owned Enterprises’, Global Forum on Competition, Background note by the Secretariat,
30 November 2018, DAF/COMP/GF(2018)10 .
54
World Bank Group (2020), “State Your Business! An Evaluation of World Bank Group Support to the Reform of State-Owned
Enterprises, FY08-18” - https://ieg.worldbankgroup.org/evaluations/state-your-business/state-owned-enterprise-challenges-and-
world-bank-group-reforms.
55
The Human Science Research Council (2013), “Lending a hand: state-owned enterprises can assist small business development”
- http://www.hsrc.ac.za/en/review/hsrc-review-march-2013/lending-a-hand .
56
Barbados Fair Trading Commission (2009) “Competition and Small Business” Business Monday.
38
57
The Anti-Monopoly Law of the People’s Republic of China] (promulgated by the Standing Comm. Nat’l People’s Cong., Aug. 30,
2007, effective Aug. 1, 2008). 2007 STANDING COMM. NAT’L PEOPLE’S CONG. GAZ. 68, art. 13–15; Wang, J (2017) A Maze
Of Contradictions: Chinese Law And Policy In The Development Process Of Privately Owned Small And Medium sized Enterprises
In China, Michigan Law Review Vol. 25.3.
58
See Malaysia’s Guidelines on Chapter I Prohibition and Singapore’s Guidelines on Section 34 Prohibition.
59
See European Commission Notice on agreements of minor importance which do not appreciably restrict competition under
Article 101(1) of the Treaty on the Functioning of the European Union (De Minimis Notice) C(2014) 4136.
60
Section 9 Competition Act 1998.
61
Section 90 Competition and Consumer Act 2010.
62
Competition Commission India Presentation on MSMEs under Competition Act 2002 -.https://www.cci.gov.in/sites/default/files/
presentation_document/msme_august_20090213110539.pdf?download=1.
63
Kampel, K and Ridge, L (2007) Leveraging Competition Policy for SME Development and Shared Prosperity https://www.
researchgate.net/publication/237371747_The_Role_of_South_African_Competition_Law_in_Supporting_SMEs.
64
World Economic Forum (2019) Platform for Shaping the Future of Trade and Global Economic Interdependence, White Paper,
Competition Policy in a Globalized, Digitalized Economy.
65
OECD (2020) Start-ups, killer acquisitions and merger control – Note by the United States - DAF/COMP/WD(2020)23.
66
Competition Commission of South Africa, Competition Act: Guideline on Small Merger Notification, Notice 386 of 2009.
67
Angumuthoo, M. et al, (2020) “Public Interest in Mergers: South Africa” Antitrust Bulletin, Vol. 65 No. 2, pp. 312-332.
68
KPPU Regulation No. 3 of 2019, Assessments of Mergers or Consolidations of Business Entities or Acquisitions of Shares in
Companies Which Might Result in Monopolistic Practices and/or Unfair Business Competition.
69
See, for example, Schaper, M.T. & Lee, C. (eds) (2016) Competition Law, Regulation and SMEs in the Asia-Pacific: Understanding
the Small Business Perspective, Singapore: Institute of South East Asian Studies-Yusof Ishak Institute.
70
Burgess, R. and Raj, S. (2016) “Competition Law in ASEAN” Australian Journal of Competition and Consumer Law, Vol. 24, p. 258.
71
Ibid.
72
Burgess, R. Trade Associations: Competition Law Advocates or Offenders? in Schaper, M. and Lee, C. (eds) (2016) Competition
Law, Regulation and SMEs in the Asia-Pacific: Understanding the Small Business Perspective, Singapore: ISEAS – Yusof Ishak
Institute.
73
Mesquita, L. & Lazzarini, S. (2009) Horizontal and Vertical Relationships in Developing Economies: Implications for SMEs’ Access
to Global Markets in New Frontiers in Entrepreneurship, Springer, pp. 31–66.
74
Markusen, A. (1996) Sticky Places in Slippery Space: A Typology of Industrial Districts. Economic Geography, Vol 72, No. 3,
pp. 293-313.
75
UNCTAD (2008) Creating business linkages https://unctad.org/en/Docs/diaeed20091_en.pdf (accessed on 28 June 2020).
76
Reserve Bank of India (2019) Report of the Expert Committee on Micro, Small and Medium Enterprises https://www.rbi.org.in/
Scripts/PublicationReportDetails.aspx?UrlPage=&ID=924 (accessed on 20 July 2021).
77
For further discussion on the challenges for SMEs in privately enforcing competition law, see Burgess, R. (2016) “SMEs and Private
Enforcement of Competition Law: Achieving Redress” Global Competition Law Review, Issue 3.
78
ITC (2016) Sme Competitiveness: Standards And Regulations Matter, Some Competitiveness Outlook 2016 https://www.
intracen.org/uploadedFiles/intracenorg/Content/Redesign/Projects/SME_Competitiveness/Part%20I.pdf. ; https://www.accc.
gov.au/business/industry-associations-professional-services/industry-associations.
79
See for example, FAQs for SMEs published by the Hong Kong Competition Commission (https://www.cedb.gov.hk/citb/doc/en/
publication/faq.pdf); the Malaysia Competition Commission has designed an e-learning course specifically targeted at compliance
by SMEs; the South African Competition Commission has published a brochure “Competition Act – A Guide for SMEs: http://
www.compcom.co.za/wp-content/uploads/2017/11/SME.pdf; Mexican Federal Economic Competition Commission (COFECE)
published a brochure on SMEs and Economic Competition (https://www.cofece.mx/cofece/images/Documentos_Micrositios/
PyMESyCompetenciaEconomica_250815_vf1.pdf)
80
WTO (2016) World Trade Report 2016: Levelling the trading field for SMEs https://www.wto.org/english/res_e/booksp_e/world_
trade_report16_e.pdf.
81
UNCTAD (2017) Integrating SMEs into value chains can boost development - https://unctad.org/news/integrating-smes-value-
chains-can-boost-development.
82
UNCTAD (2020) Trade and Development Report 2020 - https://unctad.org/webflyer/trade-and-development-report-2020.
83
McKinsey (2020) Which Small Businesses Are Most Vulnerable To COVID - And When https://www.mckinsey.com/featured-
insights/americas/which-small-businesses-are-most-vulnerable-to-COVID-and-when (accessed on 28 June 2020).
84
CEPAL (2020) Sectors and businesses facing COVID-19: emergency and reactivation.
85
Reuters (2020) Coronavirus Lockdowns Shutter 522,700 Brazil Businesses in Two Weeks https://www.reuters.com/article/us-
health-coronavirus-brazil-bankruptcy-idUSKCN24H2XR (accessed on 28 June 2020).
86
SEBRAE (2020)
87
The Impact of COVID-19 on Small and Medium-sized Enterprises: Evidence from Two-wave Phone Surveys in China – Center for
global development
88
ADB Navigating Covid-19 In Asia And The Pacific September 2020
89
ADB NAVIGATING COVID-19 IN ASIA AND THE PACIFIC September 2020
90
39
91
92
CESO (2020) Socioeconomic impacts of COVID-19 Latin America and the Caribbean September 2020
93
OECD (2020) https://www.oecd.org/coronavirus/policy-responses/coronavirus-covid-19-sme-policy-responses-04440101/
94
Manilla Bulletin (2020) Closure of 26% of PH Businesses Alarms DTI https://mb.com.ph/2020/07/16/closure-of-26-of-ph-
businesses-alarms-dti/ (accessed on 28 June 2020).
95
ADB (2020) COVID-19 Impact on Micro, Small, and Medium-Sized Enterprises and Post–Crisis Actions Six-month after the
outbreak in the Philippines, p.4.
96
McKinsey (2020) How South African SMEs Can Survive and Thrive Post COVID-19 https://www.mckinsey.com/featured-insights/
middle-east-and-africa/how-south-african-smes-can-survive-and-thrive-post-COVID-19# (accessed on 28 June 2020).
97
Statista (2020) Share of Businesses That Have Closed or Temporarily Paused Trading in the United Kingdom due to Coronavirus
(COVID-19) as of April 2020, By Sector https://www.statista.com/statistics/1114406/coronavirus-businesses-closing-in-the-uk/
(accessed 24 September).
98
99
https://data.humdata.org/dataset/future-of-business-survey-aggregated-data
100
https://data.humdata.org/dataset/future-of-business-survey-aggregated-data
101
102
ECLAC (2020) Recovery Measures for the Tourism Sector in Latin America and the Caribbean present an opportunity to promote
sustainability and resilience https://www.cepal.org/en/publications/45767-recovery-measures-tourism-sector-latin-america-and-
caribbean-present-opportunity (accessed on 28 June 2020).
103
ECLAC report on the “Dialogue between competition authorities and MSMEs regulatory institutions on post COVID 19 recovery”
held on 5 August 2020 and hosted by ECLAC and UNCTAD.
104
ECA & IEC (2020). Insights on African businesses’ reaction and outlook to COVID-19’s. IEC: Mauritius & ECA: Addis Ababa.
30 April, available at https://www.uneca.org/sites/default/files/PublicationFiles/eca-iec_survey_COVID-19_africa_english_final.pdf
(accessed 16 October 2020)
105
ECA personal communications with the authors, August 2020.
106
ECA & IEC (2020). Reactions and Outlook to COVID-19 in Africa. IEC: Mauritius & ECA: Addis Ababa. August 2020, available
at https://www.uneca.org/sites/default/files/PublicationFiles/COVID-19_africa_impact_survey_july_2020-en-final.pdf (accessed
16 October 2020)
107
16 October 2020)
108
ITC (2020) SME Competitiveness Outlook: COVID-19: The Great Lockdown and its Impact on Small Business, available at https://
www.intracen.org/uploadedFiles/intracenorg/Content/Publications/ITCSMECO2020.pdf (accessed on 28 June 2020).
109
www.data.wto.org
110
https://unctad.org/news/global-trades-recovery-covid-19-crisis-hits-record-high
111
https://www.wto.org/english/tratop_e/covid19_e/msmes_report_e.pdf
112
https://unctad.org/system/files/official-document/ditcinf2021d2_en.pdf
113
16 October 2020)
114
For a more comprehensive analysis, please refer to this report “COVID19 and E-Commerce: A Global Review dtlstict2020d13_
en.pdf (unctad.org) Some updated figures on online sales volume, see the report cited here Global e-commerce jumps to $26.7
trillion, COVID-19 boosts online sales | UNCTAD
115
UNCTAD (2020), ‘COVID-19 and E-commerce – Findings from survey of online consumers in 9 countries’, 8 October 2020,
available at https://unctad.org/news/COVID-19-has-changed-online-shopping-forever-survey-shows (accessed 18 October
2020)
116
UNCTAD (2020), ‘COVID-19 and E-commerce – Findings from survey of online consumers in 9 countries’ 8 October 2020, available
at https://unctad.org/news/COVID-19-has-changed-online-shopping-forever-survey-shows (accessed 18 October 2020)
117
ITC (2020) SME Competitiveness Outlook: COVID-19: The Great Lockdown and its Impact on Small Business, available at https://
www.intracen.org/uploadedFiles/intracenorg/Content/Publications/ITCSMECO2020.pdf (accessed on 28 June 2020).
118
WTO (2016) Enterprise Surveys https://datacatalog.worldbank.org/dataset/enterprise-surveys (accessed on 28 June 2020).
119
“The last mile on average makes up nearly 30% of transport costs. And it is very hard to bring those down” (Brittan Lad, Amazon
executive, quoted from ITC (2008: xxi).
120
16 October 2020)
121
122
See also UNCTAD “BORDERLINE: Women in informal cross-border trade in Malawi, the United Republic of Tanzania and Zambia”
(United Nations, 2019) available at: https://unctad.org/system/files/official-document/ditc2018d3_en.pdf
40
123
ILO, ‘ILO Monitor: COVID-19 and the world of work’. Fifth edition Updated estimates and analysis, 30 June 2020, available
at https://www.ilo.org/wcmsp5/groups/public/@dgreports/@dcomm/documents/briefingnote/wcms_749399.pdf (accessed 16
October 2020)
124
See UNCTAD (2020), ‘COVID-19 and Tourism – Assessing the Economic Consequences’, available at https://unctad.org/system/
files/official-document/ditcinf2020d3_en.pdf (accessed 16 October 2020)
125
ITC SME Competitiveness Outlook.
126
UNECA (2020), ‘Facilitating Cross-Border Trade Through a Coordinated African Response to COVID-19’, July 2020 available
at https://www.uneca.org/sites/default/files/PublicationFiles/facilitating_cross-border_trade_through_a_coordinated_african_
response_to_COVID-19_fin_4aug.pdf (accessed 16 October 2020).
127
UNCTAD (2020) What future for women small-scale and informal cross-border traders when borders close? https://unctad.org/en/
pages/newsdetails.aspx?OriginalVersionID=2362 (accessed on 15 June 2020).
128
See “Helping cross-border women traders navigate COVID-19 crisis | UNCTAD, 9 March 2021”, UNCTAD news item.
129
https://etradeforall.org/et4women/.
130
Ayman El-Sherbiny, Chief of ICT Policies Section, UN-ESCWA at UNCTAD Ecommerce Week 2020: Digital payments and trade for
MSMEs: Encouraging inclusion and growth through digital transformation (28 April 2020).
131
132
Compiled using data from OECD (2020) and the World Bank’s Map of SME-Support Measures in Response to COVID.
133
ITC (2020) COVID19 and its impact on SMEs -https://www.intracen.org/uploadedFiles/intracenorg/Content/Publications/
ITCSMECO2020.pdf (accessed on 28 June 2020).
134
ECA and IEC (2020) Insights on African Businesses’ Reactions and Outlook to COVID-19 https://www.uneca.org/sites/default/
files/PublicationFiles/eca-iec_survey_COVID-19_africa_english_final.pdf(accessed on 9 June 2020).
135
The Least Developed Countries Report 2019 https://unctad.org/webflyer/least-developed-countries-report-2019.
136
ECA (2019) Economic Report on Africa 2019 https://www.uneca.org/publications/economic-report-africa-2019 (accessed on 15
June 2020).
137
World Bank (2020) Factsheets https://www.worldbank.org/en/news/factsheet/2020/02/11/how-the-world-bank-group-is-
helping-countries-with-covid-19-coronavirus (accessed on 15 June 2020).
138
https://www.egypttoday.com/Article/3/85449/Nilepreneurs-launches-new-initiative-to-boost-SMEs-exports-via-e
139
https://www.dof.gov.ph/dof-says-covid-19-emergency-subsidy-largest-social-protection-program-in-phl-history/
140
Clifford Chance (2020) Coronavirus: Government Financial Aid To Business An African Guide - www.cliffordchance.com › dam ›
briefings › 2020/0
141
https://www.statista.com/statistics/1117254/covid-19-economic-relief-package-latin-america-country/
142
One example is the default setting of many contactless payment systems in favour of credit cards (which often charge small firms
a significant fee for such transactions), instead of other systems which are cheaper for an MSME to operate (sometimes known as
a “least-cost-routing” option).
143
Pop, G and A. Amador (2020) “State aid and COVID-19: Support now, but bear in mind long-term effects”, Private Sector
Development Blog, available at https://blogs.worldbank.org/psd/state-aid-and-covid-19-support-now-bear-mind-long-term-
effects
144
Available at https://ec.europa.eu/competition/state_aid/what_is_new/TF_consolidated_version_amended_3_april_8_may_29_
june_and_13_oct_2020_en.pdf (accessed 27 October 2020)
145
See, for example, the three Italian schemes totalling €6billion to support SMEs approved by the European Commission in July
2020: available at https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1440 (accessed 27 October 2020).
146
Pop, G and Amador, A. (2020) “State aid and COVID-19: Support now, but bear in mind long-term effects”, Private Sector
Development Blog, available at https://blogs.worldbank.org/psd/state-aid-and-covid-19-support-now-bear-mind-long-term-
effects.
147
The World Bank has suggested aspects that should be kept in mind when designing state aid programs, including ensuring public
awareness, minimizing undue effects on market outcomes, abide by principles of transparency and neutrality and addressing the
primary needs of the economy. See Pop, G and Amador, A. (2020) “State aid and COVID-19: Support now, but bear in mind long-
term effects”, Private Sector Development Blog, available at https://blogs.worldbank.org/psd/state-aid-and-covid-19-support-
now-bear-mind-long-term-effects
148
A Balisacan, Chairman of Philippine Competition Commission, speaking at an academic seminar on July 8th 2020 identified
several provisions in the stimulus package bills that could interfere with fair and healthy market competition. Philippines News
Agency (2020) PCC flags anti-competition provisions in stimulus bills https://www.pna.gov.ph/articles/1108377 (accessed on
7 August 2020).
149
See for example, the Price Control and Anti-Profiteering Act 2011 and Control of Supplies Act 1961 in Malaysia that are used
to regulate the price of goods in periods of high demand: https://law.unimelb.edu.au/centres/clen/engagement/other-clen-
engagement/competition-law-and-COVID-19-in-asia/malaysia
41
150
Competition Policy International (2020), ‘NY Accuses Top Hillandale Farms of Price-Gouging During COVID’, available at https://
www.competitionpolicyinternational.com/ny-accuses-top-hillandale-farms-of-price-gouging-during-COVID/ (accessed on
18 October 2020).
151
UNCTAD (2020) COVID-19: Firmer action needed to better protect consumers, available at https://unctad.org/news/covid-19-
firmer-action-needed-better-protect-consumers (accessed 1 December 2020).
152
153
Fox, R. (2020) “Developing Countries, Markets, and the Coronavirus: Two Challenges” Journal of Antitrust Enforcement, No. 8,
pp. 276–279.
154
CADE (2020), ‘Cade authorizes collaboration among Ambev, BRF, Coca-Cola, Mondelez, Nestlé and Pepsico due to the new
coronavirus crisis’, available at http://en.cade.gov.br/cade-authorizes-collaboration-among-ambev-brf-coca-cola-mondelez-
nestle-and-pepsico-due-to-the-new-coronavirus-crisis (accessed 18 October 2020).
155
156
Ibid.
157
Ibid.
158
References to specific country examples have been taken from World Bank (2020) Map of SME-Support Measures in Response
to COVID https://www.worldbank.org/en/data/interactive/2020/04/14/map-of-sme-support-measures-in-response-to-COVID
(accessed 25 August 2020).
159
References to specific country examples have been taken from World Bank (2020) Map of SME-Support Measures in Response
to COVID https://www.worldbank.org/en/data/interactive/2020/04/14/map-of-sme-support-measures-in-response-to-COVID
160
The Economist (2020) “Why COVID-19 Will Make Killing Zombie Firms Off Harder,” 26 September [online] https://www.economist.
com/finance-and-economics/2020/09/26/why-COVID-19-will-make-killing-zombie-firms-off-harder (accessed 13 October 2020).
161
UNCTAD (2020) Impact of the COVID-19: Pandemic on Trade and Development, Transitioning to a new normal https://unctad.org/
system/files/official-document/osg2020d1_en.pdf
162
Schaper, M. (2014) “Is Anybody Listening? Improving Government Information and Communication To Small Business” in Kotey,
B.; Mazzarol, T.; Clark, D.; Foley, D. & McKeown, T. (eds) Meeting The Globalisation Challenge: Smart and Innovative SMEs In A
Globally Competitive Environment, Melbourne: Tilde, pp. 132-149.
163
International Trade Council (2020) SME Competitiveness Outlook 2020: COVID The Great Lockdown and its Impact on Small
Business, ITC: Geneva, p 40.
164
UNCTAD, for example, recommends that governments take five key actions, which are explained in the publication UNCTAD
(2020) Defending Competition in the Markets During COVID.
165
European Commission (2020) Temporary Framework for assessing antitrust issues related to business cooperation in response
to situations of urgency stemming from the current COVID outbreak https://ec.europa.eu/info/sites/info/files/framework_
communication_antitrust_issues_related_to_cooperation_between_competitors_in_COVID.pdf (accessed on 7 August 2020).
166
CCCS (2020) CCCS Issues Guidance Note on Collaborations between Competitors in Response to the COVID-19 Pandemic
https://www.cccs.gov.sg/media-and-consultation/newsroom/media-releases/business-collaboration-guidance-note-20-july-20
167
CADE (2020) Note on the collaboration among competitors http://en.cade.gov.br/cade-discloses-an-informative-note-on-
the-collaboration-among-competitors-to-face-the-COVID-crisis/provisional-informative-note-on-the-collaboration-among-
companies-to-face-the-COVID-crisis.pdf (accessed 25 August 2020).
168
CCI (2020) Advisory to Businesses in Time of Covid-19. Available at https://www.cci.gov.in/sites/default/files/whats_newdocument/
Advisory.pdf (accessed 1 December 2020)
169
FTC (2020) Public Statement on COVID19 https://www.ftc.gov/system/files/documents/public_statements/1569593/statement_
on_coronavirus_ftc-doj-3-24-20.pdf (accessed 25 August 2020).
170
Butler, S. (2020) “UK Relaxes Trading Rules So Food Stores Can Work Together,” The Guardian, 20th March online edition.
171
For a discussion of the CMA’s response, see Odudu, O. (2020) “Feeding the Nation in Times of Crisis: The Relaxation of Competition
Law in the United Kingdom” Competition Law Journal, Vol. 19 No. 2.
172
A list of the Public Policy Exclusion Orders and related notifications can be found at https://www.gov.uk/guidance/competition-
law-exclusion-orders-relating-to-coronavirus-COVID
173
https://www.accc.gov.au/public-registers/authorisations-and-notifications-registers/authorisations-register
174
PCC (2020) COVID19 Questions https://phcc.gov.ph/wp-content/uploads/2020/07/PCC-COVID-Resources-Frequently-Asked-
Questions.pdf (accessed 25 August 2020).
175
FCCC (2020) FCCC Warns Against Raising Prices During Coronavirus Emergency, available at https://fccc.gov.fj/wp-content/
uploads/2020/03/PR-FCCC-Warns-Against-Raising-Prices-During-Coronavirus-Emergency-1.pdf (accessed 1 December 2020).
176
ACCC (2020) Draft Determination - Application for Authorisation AA1000477 lodged by Coles Group Limited on behalf of itself and
participating supermarkets in respect of engaging in coordinated activities to ensure the supply of Retail Products to consumers
during the COVID pandemic. https://www.accc.gov.au/system/files/public-registers/documents/Draft%20Determination%20
-2015.07.20%20-%20PR%20-%20AA1000477%20Coles_0.pdf (accessed on 15 July 2020).
177
A number of examples exist in Australia e.g. the Australian Retailers Association applied for authorisation on behalf of itself and
its current and future members to collectively negotiate with landlords regarding the support to be provided to retail tenants
42
who are adversely impacted by COVID; See https://www.accc.gov.au/public-registers/authorisations-and-notifications-registers/

authorisations-register/australian-retailers-association.
178
https://unctad.org/system/files/official-document/aldcmisc2020d3_en.pdf
179
For a discussion of the pros and cons of the Swedish approach see Savage, M. (2020) Did Sweden’s Coronavirus Strategy
Succeed or Fail? https://www.bbc.com/news/world-europe-5349813 (accessed on 15 July 2020).
180
Kaplan, J. (2020) Briefing – Our Ongoing List of How Countries Are Reopening, And Which Ones Remain Under Lockdown https://
www.businessinsider.com.au/countries-on-lockdown-coronavirus-italy-2020-3?r=US&IR=T (accessed on 25 July 2020).
181
Aljazeera (2020) Chile Tightens Lockdowns as Coronavirus Cases Surpass 200,000 https://www.aljazeera.com/news/2020/06/
chile-tightens-lockdowns-coronavirus-cases-surpass-200000-200617171310811.html (accessed on 18 June 2020).
182
Mulye, P. (2020) “India’s Small Business Are Facing A Mass Extinction Event In The Wake of COVID,” Quartz India, https://qz.com/
india/1883935/COVID-a-mass-extinction-event-for-india-small-businesses/ (accessed on 15 July 2020).
183
OECD (2020) Leveraging Digital Trade to Fight the Consequences of COVID https://read.oecd-ilibrary.org/view/?ref=119_119680-
di6h3qgi4x&title=COVID-19_SME_Policy_Responses (accessed on 7 June 2020).
184
For example, Chile that has made a capital injection of US$ 500 million to fund loans to SMEs and individuals until July 2020.
185
https://www.economie.gouv.fr › web-dp-indus-ang https://www.oecd.org/coronavirus/policy-responses/coronavirus-covid-19-
sme-policy-responses-04440101/
186
Sensis (2018) Yellow Social Media Report 2018, Melbourne: Sensis.
187
Karr, J.; Loh, K. & Wirjo, A. (2020) “Supporting MSME Digitalization Amid COVID,” APEC Policy Brief, No. 35, July, Singapore:
APEC Secretariat.
188
Asuncion, A. (2020) “Anatomy Of A Competitive Online Marketplace,” Business Mirror https://businessmirror.com.ph/2020/07/15/
anatomy-of-a-competitive-online-marketplace/ (accessed on 15 July 2020).
189
United Nations Economic Commission for Africa (2020) Reactions and Outlook To COVID-19 in Africa: African Business Survey
Results, July [online] https://www.uneca.org/sites/default/files/PublicationFiles/COVID-19_africa_impact_survey_july_2020-en-
final.pdf (accessed 13 October 2020).
190
ICT infrastructure and services are one of the key challenges identified by the UNCTAD-led study “COVID-19 and e-commerce:
a global review (UNCTAD/DTL/STICT/2020/13), March 2021, (https://unctad.org/system/files/official-document/dtlstict2020d13_
en_0.pdf). See also United Nations Economic Commission for Africa (2020) Reactions and Outlook To COVID-19 in Africa: African
Business Survey Results, July [online] https://www.uneca.org/sites/default/files/PublicationFiles/COVID-19_africa_impact_survey_
july_2020-en-final.pdf (accessed 13 October 2020).
191
Songwe, V. (2019) “A Digital Africa Technology Can Be A Springboard for Faster, More Inclusive Growth,” Finance and Development
https://www.imf.org/external/pubs/ft/fandd/2019/06/pdf/digital-africa-songwe.pdf (accessed on 15 July 2020).
192
Maloney A. (2020), Could Coronavirus Lockdown Help Close Latin America’s Digital Divide?, World Economic Forum https://www.
weforum.org/agenda/2020/05/could-lockdowns-help-close-latin-americas-digital-divide (accessed on 15 July 2020).
193
UNCTAD (2020) The COVID Crisis: Accentuating the Need to Bridge Digital Divides https://unctad.org/en/PublicationsLibrary/
dtlinf2020d1_en.pdf (accessed on 15 July 2020).
194
UNCTAD estimates based on follow-up COVID-19 surveys collected in May-September 2020 from 23 countries by the World
Bank. (www.enterprisesurveys.org).
195
UNCTAD estimates based on World Bank Enterprise Surveys collection from 38 countries in 2018-2019.
196
World Bank (2020) Map of SME-Support Measures in Response to COVID, https://www.worldbank.org/en/data/
interactive/2020/04/14/map-of-sme-support-measures-in-response-to-COVID (accessed 25 August 2020). Furthermore,
regarding China, its National Centre for Enterprise Management Development has organized training webinars in June-July 2020
targeting the issue export management during volatility. While the trainings aim to stabilize the MSMEs in the short-run, there is also
a long-term agenda to improve their international competitiveness. (www.intracen.org).
197
Aquende, E. (2020) “Balancing Competition Law and the Preference for Filipino Businesses” Business Mirror.
198
Bahrain News Agency (2020) “Industry Ministry Launches mall.bh Platform” 23 April [online] https://www.bna.bh/en/
IndustryMinistrylaunchesmall.bhplatform.aspx?cms=q8FmFJgiscL2fwIzON1%2bDuPTZ%2bz18SpWpOJ%2b82PsRMA%3d
(accessed 13 October 2020).
199
Entreprise Georgia (2020) Annual Report http://www.enterprisegeorgia.gov.ge/en/public-information/annual-report
200
European Parliament (2020) “Regulating digital gatekeepers - Background on the future digital markets act” Briefing EPRS |
European Parliamentary Research Service - Author: Tambiama Madiega Members’ Research Service - PE 659.397 – December
2020 - ECLAC (2020) Free competition in the post-pandemic digital era The impact on SMEs https://repositorio.cepal.org ›
S2100019_en
201
Google LLC and Alphabet Inc. v. European Commission (Case T-612/17), case pending
202
ACCC (2016) Expedia and Booking.com agree to reinvigorate price competition by amending contracts with Australian hotels,
Media Release - 2 September.
203
PCC (2020) Facebook post https://www.facebook.com/competitionph/posts/3420606798003815 (accessed 25 August 2020).
204
For a more detailed discussion of these, see Doner, Richard F, & Schneider, Ben Ross (2000) “Business Associations and Economic
Development: Why Some Associations Contribute More Than Others” Business and Politics, Vol. 2 No. 3, pp. 261-288.
205
A more detailed explanation of these types can be found in Schaper, M. (2020) “Advocacy in a Time of Change: Business
Associations and the Pakatan Harapan Government in Malaysia, 2018–20” Trends in Southeast Asia, Issue 9 (TRS 9/20),
Singapore: Institute of South East Asian Studies-Yusof Ishak Institute.
43
206
Schaper, M. (2020) “Advocacy in a Time of Change: Business Associations and the Pakatan Harapan Government in Malaysia,
2018–20” Trends in Southeast Asia, Issue 9 (TRS 9/20), Singapore: Institute of South East Asian Studies-Yusof Ishak Institute.
207
United Nations Economic Commission for Africa (2020) Reactions and Outlook To COVID-19 in Africa: African Business Survey
Results, July [online] https://www.uneca.org/sites/default/files/PublicationFiles/COVID-19_africa_impact_survey_july_2020-en-
final.pdf (accessed 13 October 2020).
208
ECLAC (2020) The Contribution of Business Associations to the Development of Productive Policies: Elements for the Development
of an Analytical Framework, February, [online] https://www.cepal.org/es/publicaciones/45203-la-contribucion-asociaciones-
empresariales-al-desarrollo-politicas-productivas (accessed 13 October 2020).
209
International Labor Organization (2019) Small Matters: Global Evidence On The Contribution To Employment By The Self-
Employed, Micro-Enterprises and SMEs, Geneva: ILO, p.2.
210
Grecia-de Vera, G. & Burgess, R. (2018) “The Philippine Competition Act and the Small Business Sector Framework for
Development” Philippine Law Journal, Vol. 96, pp. 566-568.
211
Schaper, M. (2020) “COVID Doesn’t Just Take Lives. It Also Takes Livelihoods” ISEAS Commentaries, No. 2020/34 https://www.
iseas.edu.sg/media/commentaries/COVID-doesnt-just-take-lives-it-also-takes-livelihoods/(accessed 25 August 2020).
212
ILO (2020) The Impact Of The COVID On The Informal Economy in Africa And The Related Policy Responses, April, ILO Brief,
14 April, Geneva: International Labor Organization. https://www.ilo.org/wcmsp5/groups/public/---africa/---ro-abidjan/documents/
briefingnote/wcms_741864.pdf (accessed 25 August 2020).
213
Competition & Consumer Commission of Singapore (2020) Collaborations Between Competitors in Response To the COVID
Pandemic https://www.cccs.gov.sg/-/media/custom/ccs/files/legislation/ccs-guidelines/COVID19-business-collab-guidance-
note-20-jul-20/cccs-guidance-note-on-the-collaborations-in-response-to-the-COVID-20-july-2020.pdf?la=en&hash=95EB090C
890AB8604F651B3A65918BF157C15887 (accessed 25 August 2020).
214
In El Salvador, for example, the law regarding acquisitions and contracts of Public Administration (LACAP - Ley de Adquisiciones y
Contrataciones de la Administración Pública) in its article 39-B expressly allows MSMEs to associate and organize themselves to
submit joint bids in public procurement and contracting procedures, according to the economic activity they carry out.
215
Competition authorities can make recommendations or issue guidelines to ensure that public money is used efficiently and that
zombie (inefficient) companies do not remain in the market artificially, thanks to public support.
216
Quoted earlier (UNCTAD/DTL/STICT/2020/13), available at https://unctad.org/system/files/official-document/dtlstict2020d13_
en_0.pdf.
217
Major accelerator in bringing SMEs to digital market will be the investment carried out by the government in ICT and legislative
reform to keep the digital infrastructure open and accessible for each market player. Virtual marketing and marketplaces allow
small businesses to overcome many of the difficulties in accessing markets that they have faced in the past. An important tool in
the COVID-19 and post-COVID world will be the capacity of MSMEs to operate in the online marketplace. To do this, they need
necessary skills and knowledge, which many currently lack. Support should be given to provide simple, quick training to MSME
staff and owner-operators UNCTAD (2020) The International Day of Micro, Small and Medium Enterprises - https://unctad.org/en/
pages/SGStatementDetails.aspx?OriginalVersionID=262 (accessed on 25 June 2020).
218
UNCTAD (2020) COVID-19 and E-commerce: Impact on Businesses and Policy Responses 2020, United Nations Conference on
Trade and Development.
219
ILO (2017) Enterprise Formalization https://www.ilo.org/wcmsp5/groups/public/---ed_emp/---emp_ent/---ifp_seed/documents/
publication/wcms_544828.pdf
44
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U N I T E D N AT I O N S C O N F E R E N C E O N T R A D E A N D D E V E L O P M E N T

THE COVID-19 PANDEMIC

THE COVID-19 PANDEMIC

CHAPTER 2: UNDERSTANDING THE NATURE OF MSMES ....................................... 4

ECA United Nations Economic Commission for Africa.

ECE United Nations Economic Commission for Europe.

GVC Global Value Chain/global supply chain.

IMF International Monetary Fund.

MNC Multinational Corporation.

MSME Micro-, Small and Medium-sized Enterprise.

OECD Organization for Economic Co-operation and Development.

SDG Sustainable Development Goals.

UNCTAD United Nations Conference on Trade and Development.

VAT Value Added Tax.

WTO World Trade Organization.

CHAPTER 2: UNDERSTANDING THE

Table 2.1: Overview of some MSME definitions to demonstrate their plurality

India15 Manufacturing sector – measured by investment in plant & machinery

Malaysia16 Small – manufacturing sector:

Table 2.2: Common Differences Between MSMEs and Large Firms20

Number of business establishments Single Multiple

Geographical distribution Limited Limited or wide

Product/service range Limited, specialised Limited or wide

Market share Limited Significant

Customer base Small Numerous

Likelihood of business failure/exit High Low

Compliance cost burden Proportionately high Proportionately low

Access to technical experts and training Limited High

Ability to access established supply sources Difficult Easy

Level of financial resources Typically, small and limited Substantial

All SMEs 15,8 25,1 46,8 12,3

Members of the same family 13,3 26,1 47,8 12,8

Persons with disabilities 9 42,8 29,9 18,3

Visible Minorities 19 13,1 41 6,8

Aboriginal People 14,6 24,3 48,4 12,7

Women 20,1 23,4 47,1 9,5

Women and men 15 26,3 47,4 11,4

Men 15,1 25,2 46,5 13,3

Younger than 39 40 to 49 50 to 64 Older than 64

CHAPTER 3: COMPETITION LAW AND MARKET

3.3 COMPETITION LAW: CHALLENGES improving business and management practices,

CHAPTER 4: IMPACT OF COVID-19 ON MARKET

Table 4.1: Likely MSME Permanent and Temporary Closures

Figure 4.1: Impacts on Small and Large Companies

Not affected Slightly affected Moderately affected Strongly affected

Figure 4.2: Shifts in Online Shopping116

I totally agree I agree neither agree or disagree I disagree I totally disagree

SWITZERLAND (N=257) 9% 21% 33% 12% 24%

GERMANY (N=216) 11% 21% 34% 17% 17%

RUSSIAN FEDERATION (N=221) 14% 27% 23% 15% 21%

SOUTH AFRICA (N=233) 22% 20% 20% 13% 24%

ITALY (N=220) 15% 30% 15% 12% 14%

BRAZIL (N=1878) 31% 24% 27% 11% 7%

REPUBLIC OF KOREA (N=220) 14% 44% 27% 8% 7%

TURKEY (N=225) 37% 28% 10% 13% 12%

CHINA (N=227) 31% 47% 13% 7% 2%

TOTAL (N=3697) 25% 27% 25% 12% 11%

Table 4.2: MSME Policy Responses in Selected Countries132