Wednesday, October 20, 2021

Bots, SA govts probed over breach of competition rules

The question put to the Gaborone Container Terminal (Gabcon) was simple and straightforward enough: Would you accept the assertion that Gabcon is in competition with private hauliers? When it came, the Gabcon response didn’t provide a direct answer, prompting request for clarity. To little avail. The closest the supplementary response came to addressing the question was via assertions that “Shareholders have invested in the infrastructure (plant, equipment and machinery) to enable the handling of all types of containerized cargo” and “Gabcon’s core mandate is to conduct the business of the Joint Venture Agreement on sound commercial profit-making principles. The 75 percent reserved for Gabcon is meant to facilitate going concern of the business as per the business plan.”

It is not too hard to discern why Gabcon could not provide a simple ‘yes’ or ‘no’ answer. An affirmative response would amount to admission that the company is fully aware of its dual player-referee role and a negative one would have been plain ridiculous in the face of all the affirmative signs. While Gabcon, which is a joint venture between the Botswana and South African governments through their respective rail authorities, may not want to address the competition issue, the authority that deals with competition issues has taken an interest in the company’s dealing with private hauliers.

“I wish to confirm that the Authority is making an inquiry on this issue. The matter is still at an early stage but is being addressed,” says Ernest Bagopi, the Manager of Investigations and Research Analysis at the Competition Authority.

The competition dimension is as follows: in addition to handling shipping containers at its dry port, Gabcon is also involved in the road haulage business through which it competes with private hauliers. This business is said to be highly lucrative and some businesspeople solely rely on it for livelihood. Following a recently unveiled strategy that was introduced last month, Gabcon has reserved 75 percent of the market for itself. Supposing the Authority asks Gabcon a similar question, the latter wouldn’t have the option of equivocating as it can so freely do with the media. Then again, there may be no need for such question because the Authority can independently make its own conclusion.

With the Competition Authority understandably saying very little at this stage, it is unclear what provision in the Competition Act the investigation is based on. However, Section 30 ÔÇô which deals with “abuse of dominant position” appears to be the likeliest. This provision says that “Any conduct on the part of one or more enterprises is subject to prohibition by the Authority if, following an investigation by the Authority, such conduct is determined to amount to an abuse of a dominant position in any market.” “Dominant position” is itself defined as “a situation in which one or more enterprises possess such economic strength in a market as to allow the enterprise or enterprises to adjust prices or output without effective constraint from competitors or potential competitors.” Beyond making rules that are detrimental to the commercial interests of its competitors, Gabcon also happens to own the pitch on this battle is being fought. 

Gabcon’s new strategy is crafted within the context of what the Managing Director, Lesedi Moakofhi, has described as “citizen empowerment” in a letter that she wrote private hauliers. Oddly enough, the citizens that the company says it is empowering contest that they are actually being disempowered. One says that prior to the introduction of this strategy, hauliers had access to way more than 25 percent of the market. The citizen empowerment component of this strategy will be reviewed against statutory conception of such empowerment. The Competition Act says that in determining whether an abuse of dominant position has occurred, “the Authority may have regard to whether the agreement or conduct in question occurs within the context of a citizen empowerment initiative of Government, or otherwise enhances the competitiveness of small and medium sized enterprises.”

RELATED STORIES

Read this week's paper