The Competition Commission of South Africa (compcom) has advisable the sale of South African Airways (SAA) to Takatso Aviation Proprietary Limited, which is in search of to accumulate a 51% stake within the national carrier.
Compcom has advisable that the Competition Tribunal should approve the proposed merger. The advice follows the conclusion of an investigation regarding a merger notification received in June 2022. If the deal goes through, Takatso will acquire a 51% stake in SAA, while the federal government retains the remaining 49%.
SAA’s sale will significantly change the airline’s operations, so compcom has to place regulatory measures for the merger. The Competition Act empowers the commission to analyze and evaluate restrictive business practices and mergers to attain equity and efficiency within the South African economy.
Conditions for the merger
South African Airways’ privatization negotiations have been occurring for a very long time. The merger was vulnerable to not getting approval from compcom due to the consequences it could have on competition within the aviation industry.
The Competition Commission fears that the airline privatization will likely lessen and forestall competition within the domestic passenger market. The involvement of LIFT’s parent organization Global Aviation is the commission’s primary concern.
The deal will likely facilitate the exchange of competitively sensitive information and market insights between SAA and LIFT through Global Aviation, because it has the authority to nominate members to the Takatso board of directors.
Takatso’s major stake within the South African flag carrier will give it access to the airline’s competitively sensitive information. This can be a major concern considering how concentrated the domestic airline market is. Moreover, the market has strict entry requirements and is amenable to coordinated effects.
The commission and parties have agreed to a divestiture condition to avoid these effects. Global Aviation and Syranix will completely divest from Takatso before the implementation of the merger. This can be a non-negotiable condition for the deal to undergo.
The involvement of Global Aviation and LIFT
Takatso was founded for this proposed merger. Asset management firm Harith General Partners Proprietary Limited holds the bulk stake in Takatso, while Global Aviation and Syranix are minority stakeholders.
Photo: Jeffry Surianto/Shutterstock
LIFT is a three way partnership between two aviation professionals and South Africa-based ACMI company Global Aviation. Syranix co-owns the LIFT trademark but doesn’t hold a domestic passenger Airline Operators License (AOL).
Moreover, Harith has investments in infrastructure projects across various sectors, including Johannesburg’s Lanseria airport. Nevertheless, the commission has found that this will not be a serious concern.
The longer term of SAA employees
The parties initially rejected the divestiture and employment conditions, which resulted within the commission recommending a prohibition of the merger. Following the agreement, compcom has advisable the approval of the sale.
Photo: South African Airways
Compcom has also put in measures to make sure the employment of SAA staff. If the merger goes through, Takatso will likely be required to keep up a minimum variety of employees at SAA.
Aside from this, the one condition to be addressed is the involvement of assorted stakeholders. Compcom’s involvement in large mergers is simply advisory. Its advice has been submitted to the tribunal, where a final decision will likely be made.
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