By Matthew Freer & Michael Williams

Introduction  

South Africa’s logistics and freight infrastructure stands at a critical crossroads, with persistent inefficiencies in the rail, port, and road sectors posing a significant threat to the country’s economic competitiveness and growth. In response to this crisis, the government has introduced the Block Exemption for Ports, Rail and Key Feeder Road Corridors which came into effect on 8 May 2025, a landmark regulatory intervention under the Competition Act 89 of 1998 (the “Act”), spearheaded by Trade, Industry and Competition Minister Parks Tau (Government Gazette No. 6182, 2025). This block exemption represents one of the most substantial reforms in South Africa’s competition law landscape, specifically designed to enable greater collaboration among firms operating in the logistics value chain, while still safeguarding against anti-competitive conduct.

The exemption, notable for its 15-year duration, signals the Government’s commitment to long-term, structural support for revitalising the country’s logistics backbone. It allows companies in the transport infrastructure and logistics sectors to apply to the Competition Commission for permission to coordinate efforts aimed at addressing operational inefficiencies, infrastructure capacity shortages, and systemic breakdowns in port and rail infrastructure, all while complying with relevant sector laws and policies. This marks a decisive shift from the traditional competition law approach, which generally prohibits coordination among competitors, to recognise that South Africa’s logistics crisis requires extraordinary, collective action.

Minister Parks Tau’s role has been pivotal, as he gazetted the exemption to promote collaboration that can reduce costs, improve service levels, and minimise losses caused by years of underinvestment and mismanagement in the logistics sector. There is a clear and urgent economic basis for the intervention supported by the fact that South Africa is estimated to lose as much as R1 billion per day due to freight system failures, with follow on effects across production, manufacturing, wholesale, retail, and export sectors (“A billion a day – that’s what SA loses through freight failures”, Freight News, 21 May 2024). Congestion at major ports, a deteriorating rail network, and poorly maintained road corridors have not only undermined daily business operations but have also eroded the country’s position in the broader global trade industry.

By enabling coordinated, pro-competitive solutions-subject to strict oversight and clear exclusions for cartel conduct, the block exemption aims to unlock investment, restore critical infrastructure, and lay the foundation for a more resilient, efficient, and globally competitive logistics system.

Background/History 

South Africa’s ports and rail infrastructure have historically suffered from inefficiencies and significant decay, impacting the country’s logistics and economic performance. The rail network, largely completed by 1925, faced underinvestment from the late 20^th century onwards, leading to deteriorating rolling stock, signalling, and track conditions. This decline was arguably caused by theft, vandalism, and outdated systems, most notably within Transnet Freight Rail, which has struggled with equipment shortages and infrastructure damage, including cable theft and adverse weather events such as the 2022 KwaZulu-Natal floods (Dr Mitchell, The Rise and Fall of Rail, Chapter 4). Ports like Durban and Cape Town, originally designed for mostly rail cargo, now face congestion and aging infrastructure challenges, with cranes and gantries exceeding their intended lifecycle, further slowing cargo handling and export throughput. These events trigger a bottleneck for resources waiting to be exported.

To address these challenges, privatisation is often proposed as a solution. However, previous reform efforts including partial privatisation and initiatives to involve the private sector in infrastructure management have largely failed. These failures were primarily due to poor project management, cost overruns, and user resistance, as demonstrated by the Gauteng electronic tolling system. Recognising these shortcomings, the Government now seeks to mobilise private sector financing and expertise through public-private partnerships and concessions, with the goal of enhancing infrastructure delivery and operational efficiency (P Bond and G Ruiters, South Africa’s Failed Infrastructure Privatisation and Deregulation).

Previous key policy milestones that are aimed at addressing these problems include the Transnet Network Statement, which promotes open access reforms to rail infrastructure, the transport ministry’s Request for Information (“RFI”) to explore private sector involvement and innovative solutions, and now the Government Notice issued by Trade, industry & competition minister Parks Tau.

Legal Framework: The Competition Act

The Act ordinarily prohibits agreements between competitors that substantially prevent or lessen competition, with Section 4(1)(b) specifically prohibiting price-fixing, market division, and collusive tendering (Competition Act 89 of 1998, s 4(1)(b)). However, under Section 10(10) of the Act, the Minister of Trade, Industry and Competition may issue exemptions in the public interest Competition Act 89 of 1998, s 10(10). The newly gazetted 15-year Block Exemption for Ports, Rail and Key Feeder Road Corridors, is one such intervention. It permits limited coordination among firms in the logistics value chain to address critical inefficiencies, while maintaining prohibitions on core cartel conduct such as fixing selling prices or excluding small and historically disadvantaged market participants.

The exemption allows for collaboration on operational matters such as joint use of transport infrastructure, coordinated scheduling, and shared logistics data, activities that would typically contravene the Act’s per se prohibitions under Sections 4(1)(b)(i) and (ii). Importantly, each form of collaboration must be reviewed and approved by the Competition Commission, which retains oversight to ensure that such cooperation is pro-competitive, time-bound, and aligned with Competition Commission’s broader transformation and public-interest objectives. The exemption explicitly requires that such collaboration does not exclude new entrants or small, medium, and micro enterprises (“SMMEs”) and instead encourages inclusive participation.

However, the regulations expressly exclude cartel conduct. Section 4(1)(b)(i) and (ii) of the Act prohibits price-fixing, tender collusion, and market division, and these sections remain intact. Any coordination must be submitted for review to the Competition Commission, which will assess whether the collaboration is genuinely pro-competitive and in line with sector-specific goals and transformation mandates.

Rationale: Tackling a Logistics Crisis

The rationale behind the 15-year block exemption lies in its capacity to enable coordinated responses to mounting inefficiencies across the country’s rail, port, and road freight infrastructure, systems upon which the economy’s competitiveness rests.

A recent report by the Council for Scientific and Industrial Research (CSIR) estimates that freight logistics failures cost the economy up to R1 billion per day, affecting production schedules, increasing costs, and undermining export reliability (“A billion a day – that’s what SA loses through freight failures”, Freight News, 21 May 2024). These issues are particularly acute in port terminals such as Durban and Cape Town, where backlogs have resulted in vessel queuing, delayed shipments, and significant demurrage charges.

The rail network, operated largely by Transnet Freight Rail, continues to degrade due to rolling stock shortages, cable theft, signalling issues, and adverse weather events (Transnet Integrated Report 2023). Following the 2022 KwaZulu-Natal floods, major lines experienced months-long disruptions, highlighting the vulnerability of logistics infrastructure (Presidential Climate Commission Brief on the 2022 KZN Floods, 2022). Moreover, a 2024 National Treasury report identified inadequate investment, operational inefficiency, and governance issues as long-standing contributors to the sector’s decline (National Treasury Annual Report 2023/24 (2024). In light of these challenges, the block exemption provides a legal framework through which firms can engage in limited coordination on logistics operations, such as the sharing of transport assets or the synchronisation of delivery schedules, without breaching competition laws. 

The decision to set the exemption for 15 years rather than the more typical short-term period reflects a deliberate strategy to create regulatory certainty. Such long-term clarity is essential to attract private sector investment into joint ventures, infrastructure upgrades, and concessioning models. By providing a legally protected framework for collaboration, the exemption seeks to catalyse systemic reform and reduce South Africa’s long-standing overreliance on inefficient, state-controlled freight logistics.

Competition Analysis: Risk vs Reward

The exemption, while pragmatic, raises legitimate questions from a competition law perspective. One of the key risks is that, under the guise of coordination, dominant firms could entrench their market position and SMMEs and historically disadvantaged persons (“HDPs”). This concern is echoed by academic literature, which warns that crisis-driven exemptions, if not tightly monitored, can facilitate collusion and market foreclosure.

The block exemption also contains an explicit requirement that the collaborative measures must not undermine the participation of new entrants or black-owned logistics firms. In fact, they are encouraged to be integrated into these collective solutions, thereby aligning with the broader objectives of the Act, which focuses on inclusive growth and reducing economic concentration.

Internationally, temporary exemptions have been deployed during times of sectoral distress. During the COVID-19 pandemic, the European Commission issued Temporary Frameworks allowing certain forms of cooperation in sectors such as pharmaceuticals, food distribution, and energy, provided they were transparent, necessary, and time-limited (European Commission, Temporary Framework for State Aid Measures, 2020: 1–9). Similarly, the United Kingdom’s Competition and Markets Authority (CMA) granted exemptions in retail supply chains during 2020, illustrating how temporary coordination can maintain essential operations under stress (UK Competition and Markets Authority, Approach to Business Cooperation in Response to COVID-19, 2020).

Therefore, while there are inherent risks, the reward, a more functional, cost-effective, and inclusive logistics sector which outweighs the downsides if strict oversight is maintained. The exemption represents a calculated, legally bounded exception to orthodox competition principles, in the service of restoring one of the country’s most vital economic sectors.

Conclusion 

The 15-year Block Exemption for Ports, Rail and Key Feeder Road Corridors represents a pivotal recalibration of South Africa’s competition law in response to an unprecedented logistics crisis. By permitting targeted, supervised coordination among industry participants, the exemption offers a legal mechanism to address inefficiencies without compromising core competition rules. It reflects a pragmatic shift in recognising that structural reform and economic recovery in the logistics sector require more than individual market forces can deliver.

While the exemption creates opportunities for collaboration and investment, its success will hinge on rigorous oversight by the Competition Commission to prevent anti-competitive abuse and to ensure inclusive participation by SMMEs and historically disadvantaged groups. Ultimately, if implemented with discipline and accountability, the exemption has the potential to catalyse a more efficient, resilient, and equitable logistics ecosystem, one that supports South Africa’s broader goals of economic transformation and global competitiveness.