The Competition Commission today issued terms of reference (TOR) for a market inquiry into the supply and distribution of Liquefied Petroleum Gas (LPG) in South Africa. This is the second market inquiry in South Africa following the Commission's decision last year to launch a market inquiry into the private healthcare sector.
The TOR formally launches and outlines the scope of the inquiry. The TOR state that the objectives of the market inquiry are to:
- examine whether the supply bottlenecks in the LPG industry may serve to create circumstances or incentives that serve to distort, prevent or lessen competition;
- analyse the current price regulatory framework with the aim of examining whether there is any room for improving regulation to limit the exercise of substantial market power by market participants;
- examine whether the current features of the market increase switching costs to a prohibitive level when customers seek to switch between resellers of LPG;
- assess the extent of the barriers to entry and general competition dynamics at various levels of the supply chain;
- make recommendations that may serve to improve the state of competition;
- make recommendations on appropriate policy and regulatory mechanisms that would enhance competition. This, where possible, will be achieved through
- reviewing international models for regulatory interventions;
- engaging with different stakeholders to obtain their input; and
- identifying regulatory models / options for South Africa; and to
- make recommendations with regard to the role of competition policy and competition law in achieving pro-competitive outcomes in the LPG sector in South Africa.
The participants in the market inquiry process will include: business enterprises along the LPG value chain (including manufacturers, wholesalers/distributors and retailers), other related enterprises, end-users, government departments, public entities, regulatory authorities, industry associations and any other stakeholders that may be able to provide information relevant to the market inquiry. The inquiry is expected to commence in June 2014 and is likely to be completed by October 2015. The guidelines for participation are still to be published.
To the extent that you have any queries related to the Commission's LPG market inquiry, please contact your Webber Wentzel advisor for further insights.
Click here to download the terms of reference.