Regulator fines bus company

Business Reporter

THE Competition and Tariff Commission (CTC) has fined Intercape-Pathfinder Luxury Coaches $75 970 for failure to notify the commission of their merger five years ago.

Intercape Ferreira Mainliner (Pvt) Limited and Pathfinder Luxury Coaches (Pvt) Limited entered into a joint venture agreement involving a 50-50 shareholding five years ago in which both parties contributed an equal number of assets. However, the regulator only received full notification in October 2018 as the entity was not cooperating during the examination of the transaction.

“The parties were not cooperating during the examination of the transaction and it took the company five years to finally comply with the notification requirements.

“The parties did not fully cooperate with the Commission as they delayed in responding to the Commission’s request,” said CTC. 

“In light of this analysis, the Commission approved the merger and resolved to penalise the merged entity $75 970,96 for violating merger notification provisions.

Intercape is a South Africa-registered company operating intercity luxury coaches in Southern Africa. Pathfinder was also in the same business and operated in the Harare-Bulawayo-Victoria Falls route. The transaction is a horizontal merger as both parties were in the luxury coach bus service business.

“The Commission’s analysis revealed that the merger had negatively affected Pathfinder since the merger resulted in significant loss of market share,” said CTC in a latest update.

“The merger did not lead to any changes in the market structure since the merged entity is struggling to adhere to its former time table and standards.

“Pre-merger, Pathfinder’s performance was strong but post-merger erratic service resulted in a weak performance, which led to significant loss in market share.”

Since the transaction was a post-merger assessment, CTC said the two parties contravened provisions of Section 34 (a) of the Competition Act (Chapter 14:28), which empowers the regulator to impose a penalty on the merged entity.