newcrew
26th Apr 2006, 12:42
civil damages to follow?
South Africa: SAA, Comair to Battle It Out At Competition Tribunal
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Business Day (Johannesburg)
April 24, 2006
Posted to the web April 24, 2006
Khulu Phasiwe
Johannesburg
SOUTH African Airways (SAA) and Comair will face off at the Competition Tribunal in September following a complaint that the national carrier has been abusing its domestic market dominance.
The public hearings into the matter are expected to bring to an end an acrimonious three-year legal battle between the two companies.
On Friday, the tribunal gave both parties until the end of July to compile and exchange their supporting documents so that the case can proceed without delays when the hearings get under way.
Comair, which operates British Airways in SA and low-cost carrier kulula.com, lodged a complaint with the competition authorities in October 2003.
The JSE-listed company complained to the Competition Commission that SAA had offered override incentives to travel agents and that the scheme had influenced travel agents to sell more SAA tickets at the expense of other airlines.
The commission conducted an investigation which found that SAA's conduct in paying high commissions had induced travel agents to sell SAA tickets at the expense of other airlines.
It recommended that the tribunal impose an administrative penalty of up to 10% of SAA's annual turnover for the 2003-04 financial year.
In July last year, the tribunal ruled against SAA in a similar case that was lodged by Nationwide Airlines. In that ruling, the tribunal said it had found conclusive evidence showing SAA had abused its dominant position by offering incentive schemes to travel agents. Such practices were in breach of the Competition Act.
The tribunal said the schemes were detrimental to the interests of consumers, created barriers to entry for other airlines and impeded SAA's competitors from expanding.
SAA was then fined R45m, which constituted 2,25% of nearly R2bn of its sale of domestic tickets bought through South African travel agents in the 2000-01 financial year.
SAA had initially said it would appeal against the tribunal's ruling, but later changed its stance. The national carrier has reportedly arranged to pay the fine by the end of next month. The ruling has also opened the way for Nationwide and Comair to proceed with civil claims against SAA .
Nationwide estimates that SAA's anticompetitive behaviour has cost it more than R200m.
SAA's request to have the Comair case postponed until its Nationwide appeal has been concluded was rejected by competition authorities.
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Southern Africa
Travel and Tourism
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South Africa
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The national carrier's request that the two cases be consolidated into one -- since they dealt with the same issue -- was also rejected.
Meanwhile, SAA and its regional feeder airlines could be slapped with a 10% fine each on their 2004 revenue if found guilty by the tribunal.
In March last year the Competition Commission found that SAA, together with SA Express and SA Airlink, had colluded to "simultaneously introduce a fuel surcharge of equal amounts on the price of tickets on all legs of domestic flights, which resulted in price increases".
South Africa: SAA, Comair to Battle It Out At Competition Tribunal
Email This Page
Print This Page
Business Day (Johannesburg)
April 24, 2006
Posted to the web April 24, 2006
Khulu Phasiwe
Johannesburg
SOUTH African Airways (SAA) and Comair will face off at the Competition Tribunal in September following a complaint that the national carrier has been abusing its domestic market dominance.
The public hearings into the matter are expected to bring to an end an acrimonious three-year legal battle between the two companies.
On Friday, the tribunal gave both parties until the end of July to compile and exchange their supporting documents so that the case can proceed without delays when the hearings get under way.
Comair, which operates British Airways in SA and low-cost carrier kulula.com, lodged a complaint with the competition authorities in October 2003.
The JSE-listed company complained to the Competition Commission that SAA had offered override incentives to travel agents and that the scheme had influenced travel agents to sell more SAA tickets at the expense of other airlines.
The commission conducted an investigation which found that SAA's conduct in paying high commissions had induced travel agents to sell SAA tickets at the expense of other airlines.
It recommended that the tribunal impose an administrative penalty of up to 10% of SAA's annual turnover for the 2003-04 financial year.
In July last year, the tribunal ruled against SAA in a similar case that was lodged by Nationwide Airlines. In that ruling, the tribunal said it had found conclusive evidence showing SAA had abused its dominant position by offering incentive schemes to travel agents. Such practices were in breach of the Competition Act.
The tribunal said the schemes were detrimental to the interests of consumers, created barriers to entry for other airlines and impeded SAA's competitors from expanding.
SAA was then fined R45m, which constituted 2,25% of nearly R2bn of its sale of domestic tickets bought through South African travel agents in the 2000-01 financial year.
SAA had initially said it would appeal against the tribunal's ruling, but later changed its stance. The national carrier has reportedly arranged to pay the fine by the end of next month. The ruling has also opened the way for Nationwide and Comair to proceed with civil claims against SAA .
Nationwide estimates that SAA's anticompetitive behaviour has cost it more than R200m.
SAA's request to have the Comair case postponed until its Nationwide appeal has been concluded was rejected by competition authorities.
Relevant Links
Southern Africa
Travel and Tourism
Transport and Shipping
South Africa
Legal and Judicial Affairs
The national carrier's request that the two cases be consolidated into one -- since they dealt with the same issue -- was also rejected.
Meanwhile, SAA and its regional feeder airlines could be slapped with a 10% fine each on their 2004 revenue if found guilty by the tribunal.
In March last year the Competition Commission found that SAA, together with SA Express and SA Airlink, had colluded to "simultaneously introduce a fuel surcharge of equal amounts on the price of tickets on all legs of domestic flights, which resulted in price increases".