SAA fined R1.16bn for anticompetitive move
CASH-strapped South African Airways (SAA) has been hit with a R1.16-billion fine, adding to its struggle to remain a going concern.
On Wednesday, the High Court in Johannesburg ruled that SAA must pay Comair R554-million, plus years of interest, for engaging in anticompetitive behaviour between 1999 and 2005. While Comair warned its shareholders SAA may appeal the judgment, the civil claims once again raised fears yet another bailout would be required to keep SAA solvent.
SAA said it was studying the judgment, but noted this was a “legacy issue” under different management and the airline had put in place new business rules.
SAA was given a list of stringent conditions attached to a further R4.7billion guarantee it received in September last year, when its board agreed to proceed with a process to stabilise operations and finances, including possible rationalisation of three state-owned airlines.
In August, Nationwide Airlines – which went into liquidation in 2008 – won its claim for R325-million. SAA said on Wednesday it had settled that matter and did not intend to appeal.
The airlines lodged civil claims based on a 2006 Competition Appeals Court ruling that SAA had engaged in anticompetitive behaviour by paying commissions to travel agents in order to incentivise them to divert customers to SAA flights.
The civil litigation was the first based on a Competition Tribunal ruling.
The Competition Appeal Court had ultimately concluded that SAA could demonstrate no reason why the scheme, which saw SAA capture high-value customers and grow its revenue by a threefold differential over competitors, would drive technological innovation in the sector.
On Wednesday, Comair chief executive Erik Venter said the company would study the judgment before giving detailed comment. “We pursued this case because a dominant carrier had abused its position in the market to the detriment of its competitors, their shareholders and employees and the flying public.”
DA finance spokesman Alf Lees said the party would approach the Independent Regulatory Board for Auditors (Irba) to request they conduct an investigation into the failure of the SAA auditors to qualify the 2015-16 SAA annual financial statements.
SAA has levelled its own charges of uncompetitive practice against Comair in 2015, based on that airline’s allegedly litigious behaviour against competitors. SAA did not comment further on this.
Comair also declined to comment on this, while the Competition Commission did not respond to requests for comment by the time of going to press. — BDLive