The Competition Commission has launched a market inquiry into the public passenger transport sector following numerous complaints relating to transport across the country.
The Commission said that the scope of the inquiry will include price setting mechanisms, price regulation, transport planning, allocation of subsidies, route allocation, and licensing requirements, among other factors.
It identified road and rail public passenger transport as relevant for this inquiry including minibus, localised and metered taxis, app-based taxi services (such as Uber), Metrorail, and the Gautrain.
Notably, while it recognised that app-based taxi services such as Uber were not beholden to the Department of Transport as a public service, it recognised that the entry of Uber and related app-based transport service operators have in some respects increased competition – but also bypassed some of the regulations that traditional metered taxis adhere to.
“In essence, the Commission seeks to understand the market dynamics across the entire value chain,” it said in a statement.
“A market inquiry is a general investigation into the state, nature and form of competition in a market, rather than a narrow investigation of specific conduct by any particular firm.”
“This Market Inquiry seeks to address concerns that there may be features that prevent, distort or restrict competition in a sector that caters for the transport needs of between 70%-80% of the population.”
While the Competition Commission’s decision to investigate the sector has been in the pipeline for a number of months, the call for submissions arrives in a week marred by transport troubles.
Last Wednesday saw a nationwide taxi strike called off at the last second after Santaco reached an agreement on the increasing cost of Quantum minibus taxis.
In addition, the continuing violence between metered-taxi operators and Uber drivers saw its first victim when Uber confirmed that one of its drivers had died on Monday.
The Commission said it had to-date received and assessed ten complaints alleging anti-competitive conduct in the land based public passenger transport industry. It broadly categorised these as follows:
- Passengers complaining that short distance bus fares are excessively priced;
- Passengers complaining that long distance bus fares are excessively priced, especially during the peak periods. In other complaints, passengers submitted that they pay higher fares for the same long distance trip, especially during the December period;
- Service providers alleging that the selectivity of operational subsidies place them at a competitive disadvantage against other modes of public passenger transport that are recipients of operational subsidies; and
- Service providers complaining that they are not allowed to operate in specific areas.
During the investigations of the aforementioned complaints, it became apparent to the Commission that there are inconsistencies in regulation. The Commission specifically highlighted the allocation of subsidies and price regulation as a core part of its investigations.
Government currently provides operational subsidies to some modes of land based public passenger transport and not to others. As a result, operators who receive subsidies may be able to charge lower prices than their competitors who do not receive the subsidies.
During the investigation of one of the complaints, it also became apparent that prices are set differently and by different stakeholders within the land based public passenger transport industry, the Commission said.
For example, prices charged by metered taxis are set by the Department of Transport while those of competing modes of transport, such as Uber operators and minibus taxis, are set by the respective stakeholders outside the DOT. Uber operators’ charge prices set by Uber and minibus taxis charge prices set by the respective taxi associations.
“Having prices set by different stakeholders (some of which are regulating authorities) is likely to create an uneven playing field between the different types of land based public passenger transport, particularly if the transport types compete with each other,” it said.