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South Africa: Competition complaint against Uber 'unlikely to succeed' says expert

South Africa: Competition complaint against Uber 'unlikely to succeed' says expert.

A South African legal expert Maphanga Maseko believes the complaint by eight regional taxi companies and members of the South African Meter Taxi Association levelled against ride-hailing app Uber is unlikely to achieve the desired outcome.

Regional taxi companies have accused Uber of engaging in predatory pricing and other anti-competitive behaviour, and seek intervention from local trade authorities.

Maseko, an Associate in competition law at TGR Attorneys in Johannesburg, says the case may be more complex than the complainants anticipate.

"The Competition Act envisages markets in which consumers have access to, and can freely select, the quality and variety of goods and services they desire," says Maseko.

He explains that 'predatory pricing' as it is referred to in the Preamble to the Competition Act and Section 8(d)(iv) of the same Act, is premised on the dominant firm keeping prices so low for a certain period, which has the effect of driving its competitors out of the market as they cannot compete with such low prices.

"Upon exit by the competitors, the dominant firm then raises those prices presumably to recoup its investments preceding the exit of competitors. Predatory pricing is seen as exclusionary as it disincentives actual or potential competitors from entering or expanding into that market. The dominant firm can raise efficiency defences to rebut the allegation of predatory pricing. For the allegation of predatory pricing to be sustained, the complainants must provide evidence of actual harm to consumer welfare or prove that the exclusionary act is substantial or significant in terms of foreclosing the market to its rivals."

An uphill task

Maseko predicts that proving the allegation against Uber is likely be a tall order for the complainants because they first have to identify the geographic and product market in which the alleged contravention took place, as well as that Uber is the dominant firm in the relevant market identified - this before the Competition Commission looks into the merits of the predatory pricing argument.

"If the complainants are not successful with identifying the geographic and product market concerned, this should be the end of the matter when one regards case law. Even if the Commission refers the matter to the Tribunal for adjudication, by their nature, pricing abuses such as predatory pricing are difficult to prove and may take a long time to conclude, before a determination is made by the Tribunal."

Itumeleng Lesofe, Spokesperson for the Competition Commission of South Africa says it could take as long as a full year for the Commission to make a determination on the matter.

"In terms of the Competition Act, the Commission has a year to complete the investigation. During this period, the Commission will determine whether or not there has been a contravention of the Competition Act as alleged. Should the Commission's investigation find that there has been a contravention of the Act, the Commission would be required to refer the matter to the Competition Tribunal for adjudication. One of the allegations raised in the complaint is that Uber charges below costs. This allegation falls within the ambit of the Competition Act."

Uber has not responded to requests for comment on the investigation.

However, at the Innovation Live & Crowdsourcing Week Africa event held last week in Johannesburg, Taryn Morris, Operations and Logistics Manager for Uber South Africa and leader for Quality for Sub-Saharan Africa told ITWeb Africa that resistance by meter taxi drivers has led the company to change its approach to rollouts of its service across Africa.

"There has definitely been more engagement with local authorities, ministers of transport and local service providers. As we go into more countries and start deciding on our next launch cities we consider who we can work with better rather than compete."

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