Effective promotion of competition in regulated markets: South African piped-gas industry

Like the Competition Act of 1998, the Gas Act of 2001 outlines the linkages between black economic empowerment and competition policy. Section 2 of the Gas Act makes it clear that promoting the participation of companies owned or controlled by historically disadvantaged South Africans (“HDSAs") by way of licence conditions so as to enable them to become competitive is one of the objectives to be upheld in developing the South African gas industry. This Gas Act provision complements the preamble to the Competition Act which recognizes that competition law has to specifically address the excessive concentration of ownership and control of the entire South African economy and the unjust restrictions on the full participation of black people in the economy which resulted from various apartheid laws. Despite the abovementioned provisions in both the Gas Act and the Competition Act, only one vertically integrated player still retains substantial ownership and control of the gas economy in South Africa. It is briefly against this background that this paper aims to look at ways to effectively and practically promote competition within the South African gas industry, particularly the competitiveness of HDSAs, using the competition law and policy as a yardstick to address some identified policy issues. In this report, I find that the promotion of the competitiveness of HDSAs is implemented ineffectively most probably as a result of the interpretational challenges yielded by the wording of section 2(d) when read together with section 21(1)(b) of the Gas Act. To this end, the report proposes solutions that could be considered to help remedy these challenges and thereby potentially aid the promotion of the competitiveness of HDSAs in the piped-gas industry both from the regulatory and legislative reform perspectives.
Submitted in partial fulfilment of the requirements for the degree of Master of Laws by Coursework and Research Report at the University of the Witwatersrand, Johannesburg,2018