PRASA derails the wheels on APM’s buses

On 11 November 2019, the Competition Tribunal (Tribunal) dismissed an application for interim relief by Africa People Mover (APM) where it sought to interdict the Passenger Rail Agency of South Africa (PRASA) from refusing APM access to the bus terminal at Johannesburg Park Station. What initially appeared to be a potential abuse of dominance by PRASA, later proved to be a breach of an access agreement by APM. As a result of the breach, PRASA terminated the access agreement without which APM was not allowed to access Park Station.

APM is an emerging bus operator predominantly in the long-distance travel industry that entered into an agreement with PRASA to use Park Station for the collection and drop-off of its passengers. However, PRASA prohibited APM from accessing the Park Station bus terminal, after APM defaulted on certain payments to PRASA. PRASA therefore persists that their decision to refuse access is nothing other than rational business behaviour, as opposed to an abuse of dominance, as alleged by APM.

In its application to the Tribunal, APM argued that PRASA was failing in its mandate, as a public entity, to ensure that its facilities were accessible to all bus operators. APM contended that PRASA was abusing its dominant position, as contemplated in section 8 of the Competition Act (the Act), by charging prices that APM could not afford. This was particularly significant, given that Park Station is the only bus terminal in Johannesburg where APM can legally load and off-load passengers. From a cursory glance, it appears that the Tribunal was asked to make an interim order to grant APM access to the Park Station bus terminal, pending a hearing into the allegations relating to section 8(b) and (c) of the Act, which relates to refusal of access to an essential facility, and a “margin squeeze” at the hands of PRASA.

Section 8 of the Act is essentially a set of rules that dominant players, like PRASA, typically need to adhere to. PRASA not only owns Park Station, but also competitors to APM in the long-distance transport market, like Autopax which operates Translux and City-to-City. According to the Act, dominance can be established with reference to market share and market power, which is characterized by a player’s ability to control prices, exclude competitors, and to behave to an appreciable extent independently of other competitors, customers or suppliers. This means that PRASA, as a result of its dominance, would typically be precluded from charging a price that would prevent its competitors from being able to sustain themselves in a market. Furthermore, PRASA as a result of its dominance, may also be forced to grant access to its facilities (for example, a bus terminal) when it is economically feasible to do so. However, in the present case it was found that even though there may be heightened obligations for PRASA to provide access to APM by virtue of its dominance, that this did not allow APM to default on payments owed to PRASA.

Although the Tribunal has not released the reasons for its dismissal of APM’s application, the decision affirms the position that the obligations imposed by the Act on dominant firms do not necessarily outweigh contractual obligations between parties. While the Act encourages competition by ensuring that dominant players share essential resources at a reasonable price, it is also fair in balancing legal obligations with a parties’ contractual obligations.

By

Jac Marais (Partner)

Mia de Jager (Associate)

Njabulo Mazibuko (Candidate Attorney)

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