Competition impacts of contracting for the market

Under South Australian legislation, bus contracts in Adelaide have to be reviewed by the Auditor-General who, amongst other things, has to take into account whether any new bus contracting regime would provide an operator a monopoly or a market share that was close to a monopoly and whether the contracting regime would develop and maintain sustainable competition. In 2005, the Auditor-General criticised the South Australian Department of Transport for not sufficiently taking account of these requirements during the procurement process, noting that the “analysis and consideration of sustainable competition and the avoidance of monopoly … (had been) … inadequate.”

NineSquared consultants were engaged to undertake an assessment of the competition impacts from the procurement undertaken five years later in 2010-11. We undertook a review of the relevant legislation, the economic principles of competition and monopoly and developed a comprehensive report into the impacts of the contracting options being considered by the Department at the time. The opinion about our report from the South Australian Auditor-General was the advice we provided was ‘substantial and compelling’ and that the issue at hand was ‘thoroughly and appropriately considered’.