Acting CEO of Passenger Rail, Zwelakhe Mayaba, Technical Advisory Team to Prasa Administrator and company spokesperson, Makhosini Mgitywa and Benedict Khumalo, senior manager of legal services at Prasa addresses the media on Friday. Prasa’s spokesperson Makhosini Mgitywa on Friday, however, denied the allegations of anti-competitive behaviour. Photo: Dimpho Maja/African News Agency (ANA)
Acting CEO of Passenger Rail, Zwelakhe Mayaba, Technical Advisory Team to Prasa Administrator and company spokesperson, Makhosini Mgitywa and Benedict Khumalo, senior manager of legal services at Prasa addresses the media on Friday. Prasa’s spokesperson Makhosini Mgitywa on Friday, however, denied the allegations of anti-competitive behaviour. Photo: Dimpho Maja/African News Agency (ANA)

Prasa denies abusing its market dominance after excessive fee complaints

By Siphelele Dludla Time of article published Feb 24, 2020

Share this article:

JOHANNESBURG – The Passenger Rail Agency of SA (Prasa) on Friday denied allegations of abusing market dominance in the bus terminals where it operates and will defend itself before the Competition Tribunal.

The rail agency manages most bus terminals in the country and provides access to these facilities through its division, Prasa Corporate Real Estate Solutions (Prasa Cres).

Between 2017 and 2019, the Competition Commission received five complaints from interprovincial bus operators who expressed concerns over the excessive access fees charged by Prasa Cres at terminal facilities, especially at Park Station in Johannesburg.

Prasa’s spokesperson Makhosini Mgitywa on Friday, however, denied the allegations of anti-competitive behaviour.

“It is important to clarify that the issue of the alleged market dominance is observed within the correct context and the Prasa operating model,” Mgitywa said.

“Prasa is not the sole provider of intermodal facilities as it is a function of local authorities who have several formal and informal intermodal facilities that can be used by bus operators.”

Bus operators also raised a concern that Prasa’s subsidiary bus company, Autopax,  was getting preferential treatment as it allegedly did not pay terminal fees and had been allocated exclusive loading and off-loading bays at Park Station.

As of February 2019, Autopax had the largest debt compared to other operators as it owed Prasa Cres R77.9 million nationally.

Prasa Cres tried to argue to the Commission that the reason Autopax had the highest debt was that it has the largest bus fleet compared to other operators.

But the Commission found that of the 519 buses Autopax had, only 160 were fully operational and in November 2017 only 90 were running.

But Mgitywa said Autopax was subject to the pricing and business decisions of Prasa Cres, including the collection of operating fees from all 19 bus operators in Park Station.

“In instances where Autopax had defaulted on payments to Prasa Cres, as was the case in August 2019, Prasa Cres issued an order to deny Autopax buses access to Park Station as well as implemented stringent collection strategies of monies owed to Prasa Cres” he said.

Mgitywa said all operators were subjected to a pay on entry fee of R480 at Park Station.

He said in instances where some operators default, a payment plan was entered into as was the case with Autopax in August 2019.

“Out of a total of 17 black-owned operators, only African People Mover (APM) has yet to sign a payment plan with Prasa Cres and has to date only made a total of three payments since 2017,” Mgitywa said.

“APM alone owes Prasa Cres in excess of R14 million despite Prasa Cres’s efforts to collect the money owed. This means that other black-owned bus operators are essentially carrying APM as Prasa Cres has payment agreements with all other operators.”

The Competition Commission last week said Prasa’s ownership of Autopax created perverse incentives as Prasa always tried to safeguard and protect the interests of Autopax even in instances where it was not economically justifiable to do so.

“The interprovincial bus services market is competitive and the continuous protection or bail out of Autopax seems unjustifiable,” the Commission said in its report.

“This concern is exacerbated by the fact that Autopax is inefficient and has been underperforming for years. Prasa’s protection of Autopax distorts, limits and/ or prevents fierce competition between Autopax and other bus operators.”

The Commission has referred the five complaints to the Competition Tribunal for determination.

Prasa said it would make further submissions to the Commission before 31 March, and would defend itself at the Tribunal.

BUSINESS REPORT

Share this article:

Related Articles