Picture:SUPPLIED
Picture:SUPPLIED

It’s not yet clear what the Competition Commission will be focusing on in the inquiry into the public transport market it announced last week.

But there can be no question that pricing and competition in this market affect the lives of tens of millions of South Africans. They are crucial for economic outcomes too, given that 70% to 80% of the workforce relies on public transport, so its cost and availability affect wage pressures and productivity.

The commission has so far flagged issues such as the gap between subsidised bus services and unsubsidised minibus taxis, as well as responding to complaints that taxis, Uber operators, most buses and the Gautrain set prices without consulting the Department of Transport.

The commission, which expects the probe to last two years, may not find it easy. There are some aggressive operators within the often conflict-ridden industry. The commission needs to pursue its investigations without fear or favour.

It will have to show it has the capacity to do so, along with all its other merger and investigation work, and that the benefit of the exercise is greater than the cost in time and expense.

Since the law was changed to enable the commission to launch market inquiries of its own accord, rather than as a response to complaints, it has launched a number of such inquiries, designed to establish what, if anything, is preventing competition in the relevant market and what might be done about it. The newer inquiries follow a much earlier one into banking, chaired by Thabani Jali, which was concluded in 2008 after a long and costly process.

The inquiry into the liquefied petroleum gas market, launched in 2014, reported back at the end of March.

The probe into the private healthcare sector, launched almost four years ago and chaired by retired judge Sandile Ngcobo, is still going strong after public hearings were held in 2016.

The inquiry continues to involve a great deal of research — and legal challenges.

Then there is the inquiry into the grocery retail market, chaired by University of Cape Town law professor Halton Cheadle, which was launched in 2016 and has already demanded a significant amount of information from the sector’s established players and recently called for submissions from all interested parties.

It is a somewhat random list of sectors and it’s not clear to what extent any of them have been or will be made more competitive by the inquiries.

The process itself is perhaps the most important part of the equation because the submissions and public hearings open up these industries to public scrutiny and provide a comprehensive and transparent picture of market structure

That’s not to say the reports of the inquiries to date were bad: on the contrary, the reports on the banking and liquefied petroleum gas inquiries were extremely comprehensive and well written.

The process itself is perhaps the most important part of the equation because the submissions and public hearings open up these industries to public scrutiny and provide a comprehensive and transparent picture of market structure. However, it comes at great cost, to the commission and ultimately the taxpayer, as well as to the large companies that come under scrutiny and spend much time and money providing information and briefing lawyers.

No prosecutions came out of the banking or liquefied petroleum gas inquiries, but recommendations were made and the banking inquiry resulted, for example, in some customer-friendly changes to ATM charges. Whether this justified the time and effort by all involved is a question.

An alternative model has emerged recently that might provide a much better and more cost-effective way of increasing competition and transformation in key industries. In the automotive aftermarket, the commission is working with the industry to agree on a code of conduct aimed at doing just that. It’s a promising approach.

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