2 years ago
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ARTICLE AD BOX
The South African Competition Commission has recommended that the Competition Tribunal approve the proposed merger between Takatso Aviation Propriety Ltd and the state-owned South African Airways.
According to the commission, this decision comes after an investigation in terms of the large merger in which Takasto intends to acquire 51% of the issued share capital of SAA from the government as represented by the Department of Public Enterprises.
If the merger is approved by the Tribunal, the remaining 49% shareholding in SAA will be retained by the DPE.
Takatso is a consortium in which Harith General Partners Proprietary Limited holds the majority shareholding. The minority shareholders in Takatso include 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 the domestic passenger airline Lift.
Syranix co-owns the Lift trademark but does not hold a domestic passenger airline operator’s licence. It provides Lift with management support services, including commercial, customer support, branding, and associated activities.
The commission found that the merger would result in a substantial lessening of competition in the domestic airline space with the exchange of competitively sensitive information between SAA and Lift, through Global Aviation and Syranix having shareholding and the ability to appoint board members to Takato.
“Takatso will have access to SAA’s competitively sensitive information by virtue of its majority stake in SAA, pursuant to the proposed merger. This concern is further exacerbated by the fact that the domestic passenger airlines market is highly concentrated, barriers to entry are high and is amendable to coordinated effects.”
As a result of this, to best remedy the concern, the commission and relevant stakeholders have agreed to a ‘divestiture condition’ in which Global Aviation and Syranix will completely divest from Takatso prior to the merger’s implementation.
“The Commission considers that this ‘fix-it-first’ remedy is appropriate in the circumstances given the extent of the competition concerns identified,” said the commission.
Plans to divest and employment conditions were initially rejected, said the commission, however, after the merging parties agreed to the imposition of conditions, the commission recommended the conditional approval of the merger.
The commission found that Harith’s investment in Lanseria is unlikely to raise foreclosure concerns, considering factors such as recent investments to expand and improve the Lanseria Airport and the availability of Johannesburg International Airport as an alternative to Lanseria, amongst other factors.
The Commission found that the merger does not raise any other substantial public interest concerns. Therefore, it recommends the Tribunal approve the merger subject to conditions – awaiting the final decision.
The merger follows a lengthy process of bringing SAA back to fighting weight. In mid-April this year, the SAA appointed a new interim chairperson – the former minister of tourism Derek Hanekom.
The Department of Public Enterprises (DPE) said that Hanekom’s experience in dealing with the government and the private sector would be extremely valuable in guiding SAA’s restructuring and revitalisation
Competition Commission approves SAA deal
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