After 11-months of vetting the transaction, South Africa’s competition authority has given a thumbs up to sale of the country’s national airline.
South Africa’s Competition Commission has given the green light to Takatso Consortium to acquire a 51% stake in the national airline South Africa Airways. The Department of Public Enterprises (DPE) will retain the remaining 49% of the airline.
The sale follows an 11-month investigation into the acquisition terms and conditions of the sale. The Competition Commission says it has approved the deal on condition that Takatso agrees to retain a minimum number of employees.
The commission found that the merger is likely to result in a substantial lessening and prevention of competition in the domestic passenger airlines market. That is because the merger will likely facilitate the exchange of competitively sensitive information between SAA and Lift, through Global Aviation and Syranix having shareholding and the ability to appoint directors to Takato’s board of directors.
“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 amenable to coordinated effects,” the authority said.
To remedy that situation, the authority added a condition that includes starting a process to allow some shareholders in the consortium to exit the deal in the spirit of fair competition in the domestic airline.