Brief Summary

Competition — Restrictive practices — Consent agreement — Competition Commission alleging Airports Company South Africa Ltd (ACSA) engaged in restrictive vertical practices by granting exclusive access to ORTIATA for metered taxi services at OR Tambo International Airport — ACSA admitting contravention of section 5(1) of the Competition Act — Tribunal confirming consent agreement requiring ACSA to issue new tenders and allow competition from shuttle services — Agreement aims to restore competitive practices in the market.

Comprehensive Summary

Summary of Judgment

1. Introduction

These proceedings took the form of an application to the Competition Tribunal for the confirmation of a consent agreement as a Tribunal order. The application was brought in terms of section 49D, read with sections 58(1)(a)(iii) and 58(1)(b) of the Competition Act, 1998 (Act No. 89 of 1998).

The parties were the Competition Commission (as applicant) and Airports Company South Africa Ltd (ACSA) (as respondent). Although not a party to the Tribunal proceedings, the underlying complaint was lodged by Sisonke Taxi Association. The conduct investigated concerned an arrangement involving O.R. Tambo International Airport Taxi Association (ORTIATA, formerly the Johannesburg International Airport Taxi Association, JIATA) in relation to operations at O.R. Tambo International Airport (ORTIA), which is managed by ACSA.

The procedural history reflected in the record is that a complaint was received by the Commission on 3 March 2009 under Commission case number 2009Mar4320. Following investigation, the Commission and ACSA concluded a consent agreement in May 2013, and the matter served before the Tribunal on 5 June 2013. On 7 June 2013, the Tribunal issued an order confirming the consent agreement (together with an annexure and addendum) as an order of the Tribunal.

The general subject-matter of the dispute concerned an alleged restrictive vertical practice arising from an alleged exclusive arrangement governing access to provide metered taxi services (and, relatedly, the competitive positioning of shuttle services) for airline passengers departing from ORTIA to surrounding areas, including Johannesburg and Pretoria.

2. Material Facts

The material and largely uncontested factual background, as recorded in the consent agreement, was that the Commission received a complaint from Sisonke Taxi Association alleging that ACSA was engaged in a restrictive vertical practice. The complaint was linked to a vertical arrangement believed to exist between ACSA and ORTIATA in terms of which ORTIATA was afforded exclusive access to operate and offer metered taxi services at ORTIA.

A key factual allegation captured in the consent agreement was that ACSA had allegedly excluded other taxi operators from operating at ORTIA by not issuing a tender for metered taxi services since 2004, and by not allowing shuttle operators to operate in competition with metered taxi operators. The Commission’s investigation proceeded on the basis that this conduct had the effect of substantially preventing or lessening competition in the relevant markets and therefore implicated section 5(1) of the Competition Act.

The consent agreement recorded the Commission’s market delineation. The Commission identified the relevant product market as metered taxi services and shuttle services. Using a point of origin and point of destination approach for transport routes, the Commission concluded that the relevant geographic market concerned the provision of metered taxi and shuttle services to airline passengers from ORTIA to surrounding areas including Johannesburg and Pretoria.

The consent agreement also recorded that operators in these markets were required by law to operate through the authority of a permit or operating licence, and that metered taxi licences for ORTIA were issued by the Gauteng Operators Licensing Board (later referred to as the Gauteng Provincial Regulatory Entity) in line with the National Land Transport Act of 2009 and the applicable regulations. ACSA’s position, as reflected, was that the exclusive arrangement with ORTIATA was also attributable to legislative challenges in the issuing of metered taxi licences.

Chronologically, the Commission found that the arrangement between ACSA and ORTIATA originated in 1999, when ACSA first went out on tender for metered taxi service providers. The operators successful in that tender formed an association (later ORTIATA). In 2002, ACSA issued a second tender which was again awarded to operators who were members of ORTIATA, and contracts were entered into for a period of three years. The consent agreement recorded that, after the expiry of the 2002 tender, a further tender was expected in 2005, but that this did not materialise; instead, the arrangement with ORTIATA continued and was renewed on a monthly basis.

On the Commission’s assessment, the exclusive agreements between ACSA and ORTIATA resulted in a substantial lessening and/or prevention of competition, and no pro-competitive or efficiency grounds outweighing the anti-competitive effects were shown. Importantly for the outcome, ACSA admitted that it had contravened section 5(1) of the Act by entering into an exclusive arrangement with ORTIATA for metered taxi services to the exclusion of other competing firms.

3. Legal Issues

The central legal question before the Tribunal, as presented by the parties, was whether the Tribunal should confirm the consent agreement concluded between the Commission and ACSA as an order of the Tribunal in terms of section 49D, read with sections 58(1)(a)(iii) and 58(1)(b) of the Competition Act.

Embedded in the consent agreement (and forming the basis for the remedial obligations sought to be made an order) was the substantive competition-law issue that ACSA’s exclusive arrangement with ORTIATA constituted a restrictive vertical practice prohibited by section 5(1), on the basis that it substantially prevented or lessened competition in the relevant market(s) and was not justified on pro-competitive or efficiency grounds outweighing its anti-competitive effect.

The dispute, as resolved, was not a contested factual trial. Rather, it primarily concerned the application of law to the recorded facts (including the admission of contravention) and the appropriateness of making agreed forward-looking behavioural remedies an enforceable Tribunal order through the consent mechanism provided for in the Act.

4. Court’s Reasoning

The Tribunal’s order, as issued, reflected that the Tribunal confirmed the order as agreed to and proposed by the Commission and ACSA, annexed as “A” and supplemented by an addendum marked “B”. The decision therefore proceeded on the basis of the statutory mechanism that permits the Commission and a respondent to conclude a consent agreement and apply for its confirmation as an order of the Tribunal.

The legal framework applied was the remedial and settlement architecture in the Competition Act, specifically the Commission’s ability to seek confirmation of a settlement in terms of section 49D and the Tribunal’s authority to make orders of the kind contemplated in sections 58(1)(a)(iii) and 58(1)(b). The Tribunal’s confirmation gave binding effect to the obligations undertaken by ACSA regarding future conduct in relation to tendering and access conditions at ORTIA.

While the Tribunal’s reasons were not separately elaborated in the text provided, the content of the confirmed consent agreement reflected the operative competition-law premise accepted by the parties: that an exclusive vertical arrangement that results in a substantial prevention or lessening of competition, without demonstrated countervailing efficiency justification, constitutes prohibited conduct under section 5(1). The remedial measures adopted were accordingly directed at introducing competitive tendering for metered taxi operators and enabling shuttle services to compete more directly with metered taxi services through access-enhancing facilities and consumer-facing information points within the terminals.

The confirmation also incorporated the addendum regulating the duration and structure of the contemplated tender. The addendum specified that the new tender would be for a period of five years and would be issued to individual metered taxi operators, rather than in a manner confined to an association.

5. Outcome and Relief

The Tribunal confirmed the consent agreement between the Competition Commission and Airports Company South Africa Ltd as an order of the Tribunal, including its annexure and addendum.

As confirmed, ACSA undertook to issue a new tender (or at least an invitation to tender) for metered taxi operators within six months from the date of confirmation, and to introduce specified measures to enable shuttle services to compete more directly with metered taxi services at ORTIA within 30 days from confirmation. The addendum further provided that the tender would run for five years and would be issued to individual metered taxi operators.

No costs order is recorded in the text provided, and no administrative penalty is reflected as forming part of the confirmed order on the face of the material.

Cases Cited

No cases are cited in the text provided.

Legislation Cited

Competition Act, 1998 (Act No. 89 of 1998), as amended.

Airports Company Act of 1993, as amended.

National Land Transport Act of 2009.

National Land Transport Regulations (as referred to in the consent agreement, without a specific citation in the text provided).

Rules of Court Cited

No rules of court are cited in the text provided.

Held

The Tribunal made an order confirming, in full, the consent agreement concluded between the Competition Commission and Airports Company South Africa Ltd in relation to conduct admitted by ACSA to contravene section 5(1) of the Competition Act through an exclusive arrangement governing metered taxi services at ORTIA.

The confirmed order bound ACSA to implement a competitive tender process for metered taxi operators within a defined period, to implement access and information measures facilitating competition by shuttle service providers within terminals at ORTIA, and to refrain in future from engaging in prohibited conduct, including by undertaking to follow a competitive tendering process. The addendum formed part of the order and specified that the contemplated tender would be for a five-year term and would be issued to individual metered taxi operators.

LEGAL PRINCIPLES

A consent agreement concluded between the Competition Commission and a respondent may be presented to the Competition Tribunal for confirmation as an order in terms of section 49D of the Competition Act, read with the Tribunal’s remedial powers under sections 58(1)(a)(iii) and 58(1)(b). Once confirmed, the undertakings contained in the consent agreement become enforceable as a Tribunal order.

An exclusive vertical arrangement that has the effect of substantially preventing or lessening competition in the relevant market, in the absence of pro-competitive or efficiency grounds outweighing the anti-competitive effects, constitutes prohibited conduct under section 5(1) of the Competition Act, as applied in the consent framework reflected in the confirmed order.

Behavioural remedies aimed at restoring or promoting competition may include obligations to implement competitive tendering and to introduce practical measures that enable rival or alternative service providers to compete on more equal terms, including through improved consumer access and information availability within a key facility such as an airport terminal.

Competition Commission v Airports Company South Africa Ltd (016725) [2013] ZACT 46 (7 June 2013)