Market dominance is killing smaller companies, the Competition Commission has been told.
The Competition Commission is investigating allegations of market dominance by VFS Global in the visa support services market to foreign embassies.
The firm, through its local arm, VFS Visa Processing, is also the sole channel through which foreigners in South Africa and locals with foreign family members must apply for visas or permits. This followed the introduction of new immigration regulations by the department of home affairs earlier this year.
The commission confirmed that the allegations were being investigated.
The commission’s screening unit had completed its preliminary investigation and submitted its report, the commission’s spokesperson, Themba Mathebula, said. It recommended further formal investigations into VFS, which the commission would decide on next week.
Jaco Badenhorst, the managing director of Visa Request, brought the initial complaint, alleging that the exclusive rights obtained by VFS to provide visa support services to a growing number of foreign missions was threatening a number of smaller independent service providers, such as his business.
South Africans wishing to travel to countries such as Canada, Sweden or Saudi Arabia had no alternative but to use VFS, thanks to exclusivity arrangements, he said.
He also claimed that in many cases VFS charged more than others.
Rishen Mahabeer, VFS general manager of operations in Southern Africa, said the company was not an immigration adviser and was not taking over that role.
He said VFS did not have a monopoly over visa facilitation services to diplomatic missions in South Africa either. He said there were a number of companies that provided this service, including Teleperformance, which served the Swiss, British and Australian missions, and Intergate Visalink, which provided support services to Germany.
A multi-entry visa application for Canada costs R980. To this, VFS adds a R307 service fee; a R116.05 self-service fee to use their computer terminal to complete an application online, if required; a R222.43 fee for help in using the self-service terminal; and a R246.27 fee for the secure transmission of a passport to the embassy at the request of its visa office.
Badenhorst hopes his complaint will result in foreign missions allowing other qualified visa facilitations companies, besides VFS, to assist applicants.
This month, home affairs opened the first of 11 VFS Global visa facilitation centres countrywide.
To process any visas or permits, VFS charges a fee of R1 350, over and above the fees charged by the department, which range from R450 to R1 520.
Critics complain that the charges are prohibitively expensive for many foreign applicants.
VSF said that the tender, awarded in December last year, was based on a user-pays model, involving zero cost to the government or the taxpayer.
In the case of foreign missions such as Canada, Mahabeer said self-service terminals were part of the contractual obligations required by the Canadian government. Fees charged were market-related and, where applicable, based on the relevant exchange rates.
The department said VFS’s services were free to the state and its fees were “not excessive” considering they had to establish 11 centres, employ staff and deploy online and biometric technology.
Make a profit
The Immigration Act did not require the gazetting of administrative costs, only visa and permit fees, and VFS had to recover its costs and make a profit, the department said.
The powers of adjudicating applications remained with the department and were not delegated to VFS or its officials.
VFS also rendered services to a many other countries, including some local foreign missions.
Home affairs director general Mkuseli Apleni said the introduction of VFS was not a new idea and it operated alongside a number of similar companies.
He said the tender to provide in-country services had been open and it was not clear why local service providers had not made a bid.
Furthermore, applicants were still able to, and did, use the services of immigration practitioners, although they were now required to go to the centres personally to capture their biometric data, Apleni said.