Competition Commission economist Nonkululelo Moeketsi says the commission has found various competition distortions and inefficiencies within the public passenger transport industry.

Moeketsi presented preliminary findings of the inquiry into the public transport industry at the Southern African Transport Conference, last week.

The commission is working on a provisional report with findings and recommendations, which is likely to be published for public comment within the next few weeks.

The Competition Commission conducted a market inquiry in the land-based (road and rail) public passenger transport sector to understand the general state of competition. The commission started public hearings in June last year and completed the market inquiry hearings across all provinces at the end of August last year.

Moeketsi said the commission had received more than 120 oral submissions from various stakeholders including bus operators and taxi associations during the hearings, which were held in all nine provinces.

The topics of discussion at the hearings included price setting mechanisms, price regulation, route allocation, licensing, entry regulations for different modes, allocation of operational subsidies, transport planning and transformation in terms of ownership patterns in the public passenger transport industry.

“The transport sector is one of the priority sectors for the commission. The poor spend a significant proportion of income on public transport, exacerbated by Apartheid spatial planning. Complaints received by the commission, coupled with previous studies in the transport industry, indicated some distortions in competition in the industry,” she said.

The market inquiry has five possible outcomes, including initiating a complaint and entering into a consent order with any respondent, initiating a complaint against any firm for further investigation, initiating and referring a complaint directly to the Competition Tribunal, taking any other actions within the commission’s power or taking no action.

The market inquiry, in terms of the bus and minibus (taxi) industry, found a number of inefficiencies in bus rapid transit (BRT) and integrated rapid public transport network (IRPTN) systems across the country’s metropolitan cities, including incorrect corridor choices, high and escalating costs, low ridership figures, a lack of capacity and mismanagement by bus operating companies.

Moeketsi said BRT and IRPTN in its current format may not be suitable for smaller cities that are likely to encounter similar challenges of low passenger numbers and high costs.

“In many cases, BRT and IRPTN have not resulted in the empowerment and transformation of the minibus taxi industry.”

Further, the current bus subsidy system prevents effective competition between commuter bus operators, with a lack of funding being a major contributing factor. “There are de facto monopolies on certain routes,” said Moeketsi.

“To get to a stage where we have an effective contracting system, we need three times the current allocated budget to effect a competitive tender process,” she added.

The commission found that there was a disproportionate allocation of subsidies between different provinces and between urban and rural operators within the same province.

Moeketsi noted the allocation of subsidies did not adequately take into account the challenges and high costs incurred by operators in rural areas.

Meanwhile, poor road infrastructure remains a major barrier in the provision of public transport. Moeketsi said small bus operators had not been able to operate in urban areas and been relegated to servicing rural communities, while the subsidy provision did not take into account the conditions for bus operators to service rural communities.

In terms of interprovincial bus services, the commission found that the relationship between the Passenger Rail Agency of South Africa, as custodian of key intermodal terminal facilities, and Autopax, as an active participant in the provision of interprovincial bus services, contributed to competition distortions.

The commission found that big interprovincial bus operators abused the objection process when provincial governments are assessing whether to grant small bus operators operating licences. This resulted in delays that discouraged small operators from entering the market.

Moeketsi said the provincial regulatory entities did not have proper capacity and resources to monitor and oversee the provision of interprovincial bus services.