1. Introduction.

[no comment]

2. Policy Environment.

• (Page 4 of 20). Acknowledgement of the importance of the Competition Act is noted with appreciation.

• (Page 6 of 20). Strategic transport goal no. 4:

Comment: here and elsewhere in the White Paper there is a certain lack of clarity as between the concepts of competition and competitiveness. This makes it difficult to discern whether the policies refer to the degree of competition to be allowed in certain port operations, or whether the policies refer in a more general sense to the competitiveness of SA port tariffs, productivity, etc.

1. Vision for the National Commercial Ports Policy.

[No comment]

2. Goals of the National Commercial ports Policy.

• (Page 8 of 20). "To enable port users to access the port system in the most efficient way possible".

Comment: "To enable all port users…" might be preferred, to emphasise that equal access to ports as ‘essential facilities’ would be ideal, notwithstanding the general intention (on page 14 of 20) for the Port Authority to "prioritise the provision of infrastructure to those manufacturing sectors that government has identified as strategic".

1. Objectives of the National Commercial Ports Policy.

Comment: the emphasis on creating an affordable, effective, efficient, productive and internationally competitive port industry, which encourages fair competition, is laudable. As with other regulatory objective ‘wish lists’, however, there will be difficulty in simultaneously achieving the stated objective of shifting "the financial burden for port infrastructure system [sic] from South African taxpayers to users".

In this regard it might be noted that SA port fees are high and productivity is low; furthermore, there is a significant need for investment to upgrade port infrastructure. Therefore the balancing of conflicting regulatory objectives (such as affordability and efficiency) will be an extremely difficult task, especially if charges are to be shifted onto users, and so the penultimate objective is easier said than done: "establish an appropriate regulatory framework that is also flexible and responsive".

2. Basic Principles for a National Commercial Ports Policy

[No comment]

Section 3: National Commercial Ports Policy Statements.

1. Institutional Arrangements and Governance of the Commercial Ports System.

Comment: (page 9 of 20) the fourth fundamental policy guideline reads "promoting low cost, high level of service, and shipper choice in the port operations by creating a competitive environment in the commercial ports system. Government will reduce its direct involvement in operations to allow for a more competitive environment". These statements are very general and it is felt that more detail should be provided about what services are to be thrown open to competition. Furthermore, it would be desirable for the policy to indicate:

• whether the state would grant monopolies for the rendering of certain services (‘competition for the market’ rather than ‘competition in the market’)
• who would control core port functions?
• who would control employment of the labour force at the port?

The next sentence in the White Paper goes on to say (page 9 of 20) "Government, through the Port Authority, will ensure … control of market access where this is necessary, and to regulate excessive [the word excessive should be omitted: tariffs should be regulated, whereas excessive tariffs should be prohibited] tariffs in cases of monopolies". Several points should be raised on this general point of regulation of competition:

• These appear to be areas where the Competition Commission would exercise jurisdiction or at least concurrent jurisdiction (according to section 3(1A)(a) and (b) of the Competition Act, Act No. 89 of 1998). To that end, some mention of the role of the Competition Commission should be considered for insertion into this section.

• The Competition Act, 2000 (Act No. 39 of 2000) provides for the regulation of competition in the economy, through a prohibition of Restrictive Business Practices (PBPs) (Chapter 2 of the Act). Further, it provides for exemptions to be granted on justified public interest grounds (Section 10 of the Act). An exemption by the Commission affords the parties to whom it is granted an opportunity to engage in activities that are otherwise prohibited in terms of the Act. However, there must be an economically justifiable or public interest rationale for that exemption to be granted. The provision for market access to the ports can easily be dealt with by the Competition Authorities in consultation with the Ports Authority.

• The Commission submits that the specific powers of the Ports Authority must therefore be stated clearly, so as not to confuse them with those of the Commission.

• The Commission further submits that it would be desirable to move away from concurrent jurisdiction over competition matters, rather than to replicate it, as is being done in the Ports Draft White Paper. It might be noted that the move toward concurrent jurisdiction (from a position of being excluded from competition jurisdiction over regulated industries) was not ideal from the point of view of the Competition Commission. At the time of the removal of section 3(1)(d) from the Competition Act, that was really the only politically and legally viable option to have taken, given that certain key sectoral legislation already provided that certain sector regulators had jurisdiction over competition.

1. National Commercial Ports System.

Comment: (page 11 of 20) again, more detail would be desirable than the statement that "… Government will concession port operations to enable users of the system to have more say in how they work."

 

2. National Development Strategy for Commercial Ports.

Comment: (top of page 12 of 20) again, more detail would be desirable than "Government encourages beneficial intra-port competition between port operators within a port". Furthermore the statement seems to be a tautology.

3. Financial Elements of Port Usage

Comment: (page 12) It is stated that certain cost elements should not be paid for by users, and thereafter it is recommended that "The Government will, in the case of such infrastructure and services, strive to prevent any actions from distorting pricing." The relevance and meaning of this statement are unclear.

4. Construction of Commercial Ports and 6. Closure of Commercial Ports

[No comment]

5. Improving the Competitive Position of South Africa’s Commercial Ports.

Comment: (page 13) again, the distinction between the general competitiveness of SA ports and the extent of competition to be introduced into the operation of SA ports is not very clear. The statement "…government encourages beneficial intra-port competition but cautions against destructive competition" should be qualified, as to which services are amenable to intra-port competition, and which should be competed for.

8 to 13: [No comment].

Section 4: The Way Ahead.

1. Key Policy Recommendations.

Comment: (page 18) "11. The Government will allow a more competitive environment to ensure that efficiency is achieved …". Again, the policy recommendation is much too vague.

2. Implementation of this Policy.

Comment: (page 19-20) "The key objectives of the independent port regulator will be to ensure: … an avenue of recourse should the port authority be implicated in anti-competitive behaviour". Perhaps here the role of the Competition Commission should be noted, for referral of complaints/suspicion of anti-competitive behaviour.

 

 

(ii) General comments:

• In general, the policy draft seems too vague. Certain aspects that one would have expected to appear in the policy draft are not there. For example, more details on the role of the private sector in port operations and services. Also, as was noted in the ‘Moving SA’ study (p 69), there should be more indication of how monopoly aspects of the port system are to be regulated: "Certain customers of the port system may be captive either to the National Port Authority (eg shipping lines, cargo handlers) or to particular port operations (eg customers of dedicated terminals). In such cases regulatory mechanisms will have to be implemented to prevent monopoly providers from exploiting their power against weak customers. A number of tactical decisions regarding what to regulate (eg prices or returns) and how to regulate (eg direct price control or monitoring within an enabling framework) will have to be made."