Nationwide, Comair may litigate against SAA
August 20, 2004
By Ann Crotty
Johannesburg - Comair and Nationwide are set to take legal action against SAA if the competition tribunal finds the national airline guilty of an abuse of dominance.
Nationwide chief executive Vernon Bricknell said yesterday that the decision on whether to pursue legal action was dependent on the outcome of the hearings, but the airline was, nevertheless, preparing itself.
Earlier in the proceedings, tribunal member Norman Manoim had said Nationwide and Comair would be entitled to pursue a civil claim `but only if we find there has been a restrictive practice` by SAA.
In the absence of any such legal action being taken, the worst-case scenario for SAA might represent nothing more than a book entry for the government.
If the tribunal finds SAA guilty of a restrictive practice and an abuse of dominance and fined it the maximum it can - about R200 million - this would be debited to SAA and credited to the department of trade and industry, which oversees the competition authorities.
Asked to comment on this situation, Piet van Hoven, Comair`s managing director, said yesterday that regardless of any payment, a decision against SAA would send out a strong message, which would discourage similar behaviour by a wide variety of parties throughout the economy.
Sources in the aviation industry say there are already signs travel agents are becoming more supportive of Nationwide and Comair but say this is only after the case had been with the competition authorities for four years.
Indications are that the last over-ride incentive agreement between SAA and travel agents ended in March this year.
New incentive agreements are reported to exclude the provisions that are currently the subject of the tribunal`s proceedings.
At yesterday`s proceedings, conducted for SAA by junior counsel Rafik Bhana, the tribunal heard that similar schemes in the EU had been declared anti-competitive and had been abolished.
They had been replaced by various systems including a flat-rate commission payment or a fixed-fee per transaction.
In his cross-examination of the commission`s expert economics witness, Bhana said the expert`s evidence `was unreliable, incomplete and partisan` and based on wrong assumptions and insufficient research.
Bhana queried the accuracy of the assumption that Nationwide`s inability to sustain strong growth was a result of SAA`s incentive scheme.
He also pointed out that other domestic airlines used similar incentive schemes.
SAA`s outgoing chief executive, Andre Viljoen, is due to give evidence today.
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