The Economic Regulation of Transport Bill, 2018

1. The Economic Regulation of Transport Bill, 2018 By Tony Norton

2. Publication for Comment • On 12 February 2018 it was published for comment in government gazette 41437 under government notice 106 • Comments were to be directed to the department of transport within 30 days of publication, being by 14 March 2018

3. Essence of the Bill • to replace the Ports Regulator and other transport industry regulators with regulation by the Transport Economic Regulator, Transport Economic Council and the Minister

4. Categories of Regulated Entities • Named public entities in terms of section 4(1)(a) • Persons concessioned by SANRAL in terms of section 4(1)(b) • “any other market, or any entity, facility or service, irrespective whether privately or state owned, that has been declared by the Minister to be subject to the application of this Act, ….”

5. Section 4(1)(a) Entities • National Ports Authority • Transnet Port Terminals • Transnet Freight Rail • ACSA • The Air Traffic and Navigation Services Company • The Passenger Rail Agency of South Africa • SANRAL

6. Section 4(1)(b) – SANRAL CONCESSIONS “any authorized person contemplated in section 28 of the South African National Roads Agency Limited and National Roads Act, 1998 (Act No. 7 of 1998), in respect of a concession agreement concluded by SANRAL on or after the effective date of this Act, but only to the extent that such a concession agreement expressly provides for the authorized person to be subject to this Act; …”

7. Section 4(1)(c) – Declared entities “any other market, or any entity, facility or service, irrespective whether privately or state owned, that has been declared by the Minister to be subject to the application of this Act, in terms of subsection (2).”

8. Whose power • The Minister in consultation with the Regulator by notice in the Gazette • If the Minister has determined that:

9. Section 4(2) declaration “any of the following circumstances apply- • the facility or service is provided by only a single operator; or • the entity, market, facility or service is not functioning competitively; and • economic regulation can adequately address the economic consequences resulting from the non-competitive nature of the market.”

10. Process of determination (1) • Minister must receive and consider: • A report from the Regulator on the basis of research conducted by or for the Regulator; or • On the basis of an opinion from the Competition Commission after conducting a market enquiry or on the basis that the Commission has determined that anti-competitive abuses have occurred within the relevant market • On the basis of a report from an independent expert appointed by the Minister or Regulator

11. Process of determination (2) • Must gazette opinion or report with notice that declaration being considered and invite submissions • Schedule 2 item 2 exemptions – currently none

12. Minister’s oversight • Minister appoints members of the Board of the Transport Economic Regulator • Minister appoints members of the Transport Economic Council • Minister may direct the Regulator to request a market enquiry or investigate and consult with regard to investigation

13. Cost of Regulator and Council • Paid for by regulated entities • By annual fee determined by Minister in consultation with Minister of Finance

14. Regulation – Price Control (1) • Every regulated entity subject to price control by: • Tariff; • Limit on revenue; • Limit on return; • Any other appropriate pricing method • Proposal by regulated entity • Consideration in consultation with interested parties

15. Regulation – Price Control (2) • Determination with or without conditions such as service standards and published in the gazette • Differentiated terms but lodged with the Regulator

16. Regulation : Information • Information, forecasts, plans, etc to be provided to Regulator • Accounting and disclosure requirements

17. Regulation – Complaints (1) • For where it- • has unreasonably or improperly refused to issue a license or amended licenceto the complainant; • has unreasonably or improperly taken a decision that adversely affects the rights of the complainant; • has failed to provide access to transport facilities or services in a nondiscriminatory, fair and transparent manner; • treats its own operations, or those of its subsidiary, more favourably than, and derives an unfair competitive advantage over, other providers of services; • has failed to meet the service standards attached to a price control;

18. Regulation – Complaints (2) • impedes the efficiency of inter-modal transport operations; or • has engaged in prohibited conduct. • Regulator may: • Refer to the Council if it does not raise issues of general economic or public policy, in which event the Council considers it as an appeal against the decision concerned of the relevant regulated entity and confirm, vary or set it aside in which latter event entity may abandon it or reconsider the matter afresh • Consider it and- • Issue a notice of non-referral if frivolous or vexatious or no grounds for remedy

19. Regulation – Complaints (3) • Refer to another regulatory authority with jurisdiction • Direct an inspector to investigate and • Issue a notice of non-referral • Refer the matter to the national prosecuting authority if offence • Propose a draft consent order which, if agreed, may be made an order by the Council and may include a price control reduction and an award of damages • Issue a compliance notice setting out the non-compliance, the steps to be taken to comply and any penalty that may be imposed, which may be appealed to the Council • Direct a price control reduction, the financial cost of which is not more than 10% of annual turnover

20. Regulation – Appeal / Review • Minister or person affected may appeal or review any decision of the Regulator in respect of- • Determination of price control • A complaint • A directed price control reduction

21. Remaining provisions • Procedures of Council • Establishment of Regulator and Council • Provisions relating to Regulator’s functions – section 37 • Enforcement of the Act • CEO appoints inspectors • Search and seizure – dawn raid powers • Confidential information • Powers of Courts • Offences and Penalties

22. THE END