Sun, 05 Apr 2020

Prasa breaks silence on competition watchdog report

22 Feb 2020, 22:13 GMT+10

Context is everything - this is the response from the Passenger Rail Agency of South Africa's administrator Makhosini Mgitywa, relating to provisional findings by the Competition Commission's market inquiry into the public passenger transport market.

The Competition Commission this week released its provisional report on the market inquiry, which made findings on Prasa and its subsidiary, Autopax, which operates bus services Translux and City to City. Prasa also manages bus terminals around the country through its division Prasa Corporate Real Estate Solutions (Prasa CRES). The fact that Prasa is involved in providing both interprovincial bus services and intermodal terminal facilities - terminals that link different modes of transport such as train and bus routes - is "undesirable," the Commission said.

Between March 2017 and July 2019, the Commission had received complaints from interprovincial bus operators relating to excessive access fees charged by Prasa for using loading bays at Park Station, Johannesburg, according to the report. Complainants also alleged that Prasa grants favourable trading terms to Autopax, such as extended payment terms and exclusive loading bays. "Such favourable trading terms create a competitive advantage for Autopax," the Commission noted.

The Commission earlier in February referred Prasa and Autopax to the Tribunal for alleged abuse of market dominance.

But on Friday, Prasa's Mgitywa said that the alleged "market dominance" should be observed within the "correct context" and the Prasa operating model. He said that Prasa is not the sole provider of intermodal facilities and that Prasa CRES is responsible for the operational management of Park Station. For this reason, Autopax is subject to the pricing and business decisions of Prasa CRES.

According to Mgitywa, in instances where Autopax defaulted on payments to Prasa CRES, the bus operator was denied bus access at Park Station, in Johannesburg and "stringent collection strategies of monies" was implemented.

READ | Split Autopax bus company from Prasa, report suggests

"According to PRASA CRES, all operators are subjected to a pay on entry fee of R480. In instances where some operators default, a payment plan is entered into as was the case with Autopax in August 2019," Mgitywa said.

'Constant bailouts'

According to the Commission's findings, however, Autopax has the largest debt compared to other bus operators. The Commission also found that efforts by Prasa CRES to recover outstanding amounts from Autopax were thwarted by Prasa's Exco who did not support it. "This indicates that the PRASA Group is involved directly in the affairs of the entities even if these entities have separate boards," the Commission said.

Furthermore, the Commission found that Prasa "constantly provides financial support and bailouts" to Autopax. "Prasa's provision of financial support to Autopax creates distortions in the competitive environment," the report read. The Commission added that Prasa "always tries to safeguard and protect the interest of Autopax even in instances where it is not economically justifiable to do so."

At Friday's briefing, Mgitywa instead diverted the spotlight to another bus operator - African People Mover (APM)- a bus operator which is indebted to Prasa CRES. Mgitywa suggested that other bus operators were "essentially carrying" APM with the fees they had paid.

APM was founded in 2013 by Tumisang Kgaboesele, a former Autopax executive. The Competition Tribunal in November last year dismissed an application by APM, which sought to stop Prasa from preventing it accessing Park Station over unpaid fees, Fin24 previously reported.

The Tribunal said evidence presented in the hearing showed APM owed Prasa "a significant amount of money, after it defaulted on its payments to the state-owned entity for use of the Park Station facilities". The Tribunal dismissed APM's application with costs.

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