CompCom shouldn't brush aside request for SAA investigation - Natasha Michael

DA MP says publicly available evidence certainly suggests anti-competitive behaviour by the national carrier

Competition Commission cannot brush aside request for SAA investigation 

The Competition Commission has reportedly decided not to investigate the possible anti-competitive behaviour of South African Airways (SAA) and its impact on the domestic airline market. The Commission has cited a lack of evidence of anti-competitive behaviour on the part of the state carrier for its decision not to probe SAA. 

For the Competition Commission to cite a lack of evidence as a reason not to investigate SAA is ludicrous. Is the purpose of an investigation not precisely to gather evidence? 

In terms of Section 49B of the Competition Act, "any person may submit information concerning an alleged prohibited practice to the Competition Commission". Section 49B(3) then holds that "upon initiating or receiving a complaint in terms of this section, the Commissioner must direct an inspector to investigate the complaint as quickly as practicable".

Describing possible outcomes of complaints in Section 50, it is clear that a complaint must either be referred to the Competition Tribunal or a notice of non-referral must be issued to the complainant. 

The DA referred a complaint to the Competition Commission on 23 August this year. I met with the Competition Commission on 27 September and was told that more evidence would be required before any investigation could be instigated. This excuse is also widely reported today. 

We have, however, not received any confirmation that an inspector has been directed to investigate the complaint and we have certainly not received a formal notice of non-referral. 

Publicly available information and information from industry players certainly suggests anti-competitive behaviour on the side of SAA and especially its relationship with low-cost carrier Mango. 

  • On the back of a R4 billion government bail-out in 2007, a R1.25 billion loss in the 2012 financial year and no concrete plans to turn its operations around, a R5 billion loan guarantee from the South African government has continued to cushion SAA from competitive market forces.
  • Other industry players, including Comair CEO Erik Venter, seem to have no doubt that SAA linked low-cost carrier Mango was able to offer prices that were not economically viable to operators without government backing and that Mango paid below-market prices for subleases of aircraft from SAA.
  • Mango's financials are opaque about how it used a R300 million loan it received from SAA in 2009.
  • Since its launch in 2006, Mango has never released its financial statements, raising concerns around its true independence and SAA's adherence to provisions that it was not allowed to cross-subsidise domestic with international operations.

Surely the matter warrants further investigation. An investigation that the Competition Commission is mandated to conduct. 

If the Competition Commission needs further information before making a decision to investigate, the DA will continue to do what it can to gather such evidence. We will be setting up meetings with industry players and previous SAA executives to gather such information.

We do, however, maintain that it is the responsibility of the Commission to investigate complaints and gather evidence. 

There are too many unanswered questions around SAA's behaviour in the domestic airline industry. The Competition Commission must take steps to have those questions answered.  

Statement issued by Natasha Michael MP, DA Shadow Minister of Public Enterprises, November 12 2012

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