Uber, Bolt reject government’s proposed pricing controls

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E-hailing companies Uber and Bolt have rejected the price regulatory aspect of government’s planned Economic Regulation of Transport Bill.

The draft legislation, gazetted in December 2019, will see the establishment of the Transport Economic Regulator, which will establish the Transport Economic Council.

It also seeks to work towards the consolidation of the economic regulation of transport within a single framework, and to make consequential amendments to various other Acts, and to provide for related incidental matters within the industry.

The e-hailing companies have expressed concern regarding section 11 of the Economic Regulation of Transport Bill – the Price Regulation Determination of price controls, which stipulates that every regulated entity is subject to price regulation in accordance with a price control determined by the regulator.

The Bill further states the price control for a regulated entity may comprise: (a) a schedule of tariffs, charges, fees, tolls or other amounts that may be imposed by the regulated entity; (b) a limit on the total amount of revenue it may raise from the facilities and services offered by it; (c) a limit on the return it may derive from the assets utilised by it to provide its facilities and services; or (d) any other appropriate pricing method.

According to Uber and Bolt, the e-hailing sector is still in its early stages in SA, and such pricing controls will have far-reaching consequences for riders and drivers – potentially resulting in a price hike.

“We do not support the introduction of price regulation – it will distort the market dynamics, be disadvantageous for consumers as well as players in the market given that the South African market is developing and growing with the entry of new participants,” says Gareth Taylor,country manager for Bolt South Africa.

“Such proposed pricing controls will act as a disincentive and market barrier for entry and access to new players as well as drivers and passengers.”

E-hailing platforms and services should, therefore, be exempted from the application of Section 11 in its entirety, as it allows government to directly intervene in the operations and business models of independent transport services, adds Taylor.

Compromising cost and flexibility

The Competition Commission’s Public Passenger Transport Market Inquiry Provisional Metered Taxis and E-hailing Services Report, published in February 2020 for stakeholder comment, reveals that some e-hailing drivers in SA are earning less per trip today than they did in 2013.

This is partly due to more operators entering the local ride-hailing industry.

In light of these findings by the commission, the draft legislation further proposes that each regulated entity must submit a proposal to the regulator, requesting approval of a price control for the facilities and services offered by that regulated entity.

When considering a proposal submitted in terms of this section, the regulator must consult with interested parties and the public in the prescribed manner, and determine whether the proposal is fair and reasonable, after considering all relevant circumstances.

Uber told ITWeb that while the economic regulation of the Bill has the potential to improve mobility and job creation for locals and indicates a positive way forward for local e-hailing and the transport industry, the proposed regulations contain a few areas of concern.

“Given the important role that transport plays in enabling people to sustain an income, the cost and flexibility of transport should never be allowed to become prohibitive, in a country where thousands of jobs are being shed and economic conditions continue to worsen,” says an Uber spokesperson.

In terms of the commission’s findings, Uber refutes claims that its drivers’ earnings have been declining.

“The inquiry erroneously compared the minimum fares for two separate Uber products, which have independent pricing, namely UberX in 2014 and UberBlack fares in 2013. It also does not take into account temporary versus permanent pricing. Therefore, the appropriate comparison for UberX fares is R15 net earnings per minimum fare trip in 2014, versus R18.75 today on minimum fare trips only. It is important to note that minimum fare trips only make up a small percentage of overall trips in the city,” says the spokesperson.

The Bill also endorses the establishment of a specialised division within the South African Police Service, which aims to better address public transport safety-related matters.

Earlier this month, e-hailing drivers and operators across various provinces staged what they called the “mother of all” protests, calling on government to regulate the industry, due to what they called exploitation, safety issues and low wages in the industry.

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