Competition Commission provisionally approves Takatso, SAA deal

The Competition Commission has recommended the provisional approval of the proposed merger between South African Airways (SAA) and Takatso Aviation.

The commission announced its recommendation on Friday following an investigation into the ongoing deal.

The recommendation follows the Commission’s investigation in terms of the large merger notification received on 3 June 2022 in which Takatso intended to acquire 51% of the issued share capital of SAA from the South African Government as represented by the Department of Public Enterprises (DPE).

The remaining 49% shareholding in SAA will be retained by the DPE, should the merger be approved.

In a statement, the commission said if the merger went ahead with Global Aviation and Syranix, which co-owns the LIFT trademark, as minority shareholders of Takatso, the SAA deal would decrease competition in the domestic passenger airlines market.

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Access

“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 amendable to coordinated effects.

“To remedy this concern, the Commission and the parties have now agreed to a divestiture condition in terms of which Global Aviation and Syranix will completely divest from Takatso prior to the merger’s implementation. The Commission considers that this ‘fix-it-first’ remedy is appropriate in the circumstances given the extent of the competition concerns identified.”

The Commission said it recommended that the tribunal approve the merger subject to the recommended conditions decision.

Controversy

In April, The Economic Freedom Fighters (EFF) called for the newly-appointed board SAA to be put on ice until more information was revealed about the Takatso Consortium’s acquisition of the majority stake in the airline.

The deal was again under the spotlight following allegations made by suspended Public Enterprises director-general, Kgathatso Tlhakudi.

Tlhakudi wrote to National Assembly Speaker Nosiviwe Mapisa-Nqakula raising concerns about the undervaluation of SAA’s assets.

He alleged that the R7 billion undervaluation by Takatso has been accepted by Public Enterprises Minister Pravin Gordhan and his department “without conducting their own independent valuation”, City Press reported.

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Additional reporting by Molefe Seeletsa