Global Courant 2023-05-12 17:28:19
The South African Competition Commission has recommended that the Competition Tribunal approve the proposed merger between Takatso Aviation Propriety Ltd and state-owned South African Airways.
The decision, according to the committee, comes after an investigation into the merger in which Takasto intends to acquire 51% of SAA’s issued share capital from the government, represented by the Department of Public Enterprises (DPE).
If the merger is approved by the tribunal, the DPE will retain the remaining 49% stake in SAA.
Takatso is a consortium in which Harith General Partners Proprietary Limited has a majority interest. The minority shareholders in Takatso are Global Aviation Operations Proprietary Limited and Syranix Proprietary Limited.
Harith has previously invested in Lanseria Airport in Gauteng, while Global Aviation leases aircraft and owns and operates domestic passenger airline Lift.
Syranix is a co-owner of the Lift trademark, but is not licensed as a domestic passenger airline. It provides Lift management support services including commercial, customer support, branding and related activities.
The commission determined that the merger would result in a substantial reduction in competition in the domestic aviation industry due to the exchange of competitively sensitive information between SAA and Lift due to Global Aviation and Syranix having shareholdings and ability to nominate Takato board members.
“Takatso will have access to SAA’s competitively sensitive information by virtue of its controlling interest in SAA, as a result of the proposed merger. These concerns are exacerbated by the fact that the domestic passenger airline market is highly concentrated, barriers to entry are high and can be turned into coordinated effects.
To best address concerns, the committee and relevant stakeholders have agreed to a ‘divestment condition’ under which Global Aviation and Syranix will fully divest themselves of Takatso prior to the merger going through.
“The Commission believes that this ‘fix-it-first’ remedy is appropriate given the magnitude of the competition concerns identified,” the commission said.
Plans to divest and terms of employment were initially rejected, the commission said, but after the merging parties agreed to impose conditions, the commission recommended that the merger be approved subject to conditions.
The Committee found that Harith’s investment in Lanseria is unlikely to warrant foreclosure, taking into account factors such as recent investments to expand and improve Lanseria Airport and the availability of Johannesburg International Airport as an alternative to Lanseria, among other factors.
The committee found that the merger does not raise other substantial public interest concerns. It therefore recommends that the Tribunal approve the merger conditionally – pending the final decision.
The merger follows a lengthy process to bring SAA back to normal. In mid-April this year, the SAA appointed a new interim chairman: former tourism minister Derek Hanekom.
DPE said Hanekom’s experience dealing with the government and private sector would be extremely valuable in guiding SAA’s restructuring and revitalization.
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