Prasa faces 10% turnover fine over alleged abuse of dominance
Companies / 11 February 2020, 07:30am / Edward West
CAPE TOWN – The passenger Rail Agency of South Africa (Prasa) faces a potential fine of 10 percent of its turnover after the Competition Commission on Monday referred the state-owned entity and its long-distance bus subsidiary, Autopax, to the Competition Tribunal for prosecution for abusing its dominance.
It found that Prasa had charged a 460 percent annual increase to another bus operator to use Park Station in Johannesburg. The referral to the tribunal, with a recommendation that Prasa desist from uncompetitive behaviour and pay a fine on its turnover, could not have come at a worse time. Prasa was placed under administration last month amid claims of corruption and maladministration.
Prasa generated revenue of R13.7 billion in its 2018/19 financial year, but expenses came to R15.5bn.
Autopax, which operates Translux and City-to-City coaches, last month struggled to pay its employees.
The commission in a statement on Monday said it had received separate complaints concerning the Pay-on-Use system, as well as access at Park Station, from bus operators African People Mover, Moolla’s Transport Services, Intercape, Eagle Liner and Eldo Coaches, between March 2017 and July 2019. An investigation was launched.
The commission found that Prasa was charging excessive prices to the bus operators for the use of Park Station. It also found that Prasa favoured Autopax in space allocation and had restricted or denied access to other Park Station bus operators.
Prasa is the owner and manager of intermodal terminal facilities in South Africa, including Park Station, which is an intermodal facility in Gauteng connecting different modes of transport to many passengers. “There is no alternative intermodal terminal facility in Johannesburg,” the commission said in a statement on Mnday.
The interprovincial operating licence requires long-distance bus operators to secure access to terminal facilities. Long-distance bus operators, apart from Autopax, provide an unsubsidised bus transportation service - the cost of access to an intermodal terminal facility is important to them.
Prasa introduced the Pay-on-Use system together with the hourly access fees per bus in December 2013 at Park Station.
“The system significantly increased the bus operators’ costs of access to Park Station, thus threatening their sustainability and expansion. For example, the annual increase to Intercape was 460 percent for 2014,” the commission said.
Prasa had not introduced the Pay-on-Use system at its other intermodal terminal facilities in Pretoria, Durban, and Cape Town.
The bus access fee is R480, excluding VAT, per hour per bus for access to loading bays at Park Station, and a penalty of R150 for every 15 minutes by which each bus exceeds the initial hour is charged.
“Apart from threatening the sustainability and expansion of Autopax’s competitors in a market, the commission is concerned that the costs of these increases are being passed on to consumers. In addition, the collapse of the other bus operators as a result of Prasa’s conduct will lead to the market being dominated by Autopax, which will be able to charge passengers excessive prices. Autopax is already charging customers more in routes where it is dominant,” the commission said.
The commission found that the Pay-on-Use system had substantially increased the costs of interprovincial bus operators, which threatened the ability of interprovincial bus operators to provide scheduled and affordable interprovincial travel in Johannesburg-linked routes to other cities.
The commission’s investigation found that Prasa also allocated a large exclusive area to Autopax at Park Station, while not providing access to loading bays at Park Station to several interprovincial bus operators that had applied for access. Autopax did not fully utilise the loading bays to which Prasa has granted it exclusive use.
Prasa also did not enforce payment against Autopax for the payment of the bus access fee and the rent payable for leasing office space at Park Station, despite Autopax being in default, but intended to evict other interprovincial bus operators that defaulted on making monthly payments due to the high and unaffordable access fee.