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Competition regulator backs call for SAA hearing

Ann Crotty

Tembinkosi Bonakele, the deputy commissioner at the Competition Commission, has welcomed yesterday’s call for a public hearing into the government’s provision of a R5 billion guarantee for SAA, made by portfolio committee for economic development chairwoman Elsie Coleman.

Tembinkosi Bonakele Deputy Commissioner Photo: Leon Nicholas. Credit: INLSA

At a presentation of the commission’s annual report to the parliamentary committee yesterday, committee members asked the commission why it had not undertaken an investigation into the possible role that predatory pricing by SAA had played in the demise of low-cost airline 1time.

Committee members also suggested that the R5bn guarantee had helped to strengthen the national airline’s position in the marketplace and in turn had helped it to implement a strategy of predatory pricing.

Competition commissioner Shan Ramburuth told the committee that the commission was busy considering a complaint that it had received from Comair relating to allegations of anti-competitive behaviour by SAA. Ramburuth said: “We can’t go and raid SAA on a whim, we must have reasonable grounds and should there be reasonable grounds then we will investigate.”

However, he stressed: “We cannot make prosecutorial moves on the basis of public sentiment alone. For an agency like ours to proceed with an investigation we have to be reasonably satisfied that we will be successful in making a case.”

After some discussion of the matter, Coleman suggested that the most appropriate course of action was to have a public hearing into SAA’s competitive situation and the role of the R5bn government guarantee.

The committee also quizzed the commission on its role in job creation. Ramburuth explained that the watchdog’s role was to limit job losses rather than create jobs.

“Mergers by their very nature invariably result in someone losing their job. In the short term our responsibility is to limit those losses and where they do occur to ensure that workers are treated properly.”

He added: “Hopefully after a period the merged entity will grow and create jobs.”

He also noted that by removing barriers to competition companies would be better able to thrive, grow and create jobs.

During financial 2012 the commission considered 282 merger deals, of which 234 were approved without conditions. Thirty-three mergers were approved subject to conditions and eight were prohibited.

“Most of the conditions related to limiting job losses but also included remedies to restrict information exchange between competitors and, in some instances, divestiture,” Ramburuth said.

The number of mergers presented for consideration by the commission in 2012 increased from the 220 that it considered in financial 2011.

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