Competition Commission raid SAA, Mango

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The Competition Commission has raided the offices of state-owned airline South African Airways (SAA), its low-cost subsidiary Mango Airlines as well as that of the Airlines Association of Southern Africa (AASA).

The Commission says in a statement issued yesterday afternoon that the searches were conducted a week ago Wednesday and forms part of its investigation into collusion in the airlines industry around the soccer World Cup period, announced in January. The commission says the search and seizure operation was prompted by the Commission’s suspicion SAA and Mango might have withheld information having a bearing on its investigation.

The Commission says it has seized documents and electronic data, “which will now be analysed together with other information gathered to determine whether a contravention of the Competition Act has taken place”.

Deputy commissioner Thembinkosi Bonakele told the Business Times newspaper that he could not “provide specifics right now since we are still investigating. But when we looked at their submissions it became clear to us that both Mango and SAA, which applied for leniency, were hiding information,” he said. “If we ask for pricing information, for instance, and we later compare notes with other airlines, we would be able to see that there are large sections missing.”

The Commission is authorised to enter and search premises and seize documents, which have a bearing on an investigation in terms of section 48 of the Competition Act. Section 46(2) (b) of the same Act authorises a judge or magistrate to issue the Commission with a warrant allowing them and accompanying police officers to enter and search such premises, the Commission said.

Ironically, it was SAA that first made a leniency application to the Commission in December, when it reported on a communication from a competitor – Comair – relating to 2010 pricing. At that stage, SAA undertook to fully cooperate with the Commission in exchange for leniency from prosecution under the Competition Act. It later emerged that the email was sent by Comair joint-CEO Erik Venter in response to one from Pule Selepe of the Department of Transport, advising the airlines that alleged excessive pricing was to be raised at an aviation subsector task team meeting late last year, Business Day says. Comair said the email was only meant to inform the discussion on pricing, not influence it. Comair as well as SA’s other scheduled airlines, namely SA Express and 1time have denied collusion.

In an emailed statement yesterday, SAA said that it continued to cooperate fully with the investigation, giving the Commission its full support, and added that SAA was eager to ensure that matters were brought to a resolution as soon as possible. Spokeswoman Vimla Maistry said SAA continued to co-operate with the commission. Mango spokesman Hein Kaiser said the airline was also co-operating fully with the investigation.



Chris Zweigenthal, CE of the Airlines Association, confirmed to Bloomberg that documents were taken by the commission last week. The association hadn’t previously been asked by the commission to provide information for its investigation, he said. “We fully complied with them,” Zweigenthal said in a phone interview today. “I’m not aware of any price-fixing in the industry. We are waiting to see what comes out of this investigation.”