CAPE TOWN – The Competition Commission prohibited the proposed merger between SA Airlink and Safair Operations. The Commission found that the proposed transaction is likely to result in a substantial prevention or lessening of competition in the market for scheduled passenger services.
The Commission found that the merger is likely to result in the removal of an effective competitor (FlySafair) to SA Airlink particularly on the routes in which FlySafair competes against SA Airlink.
FlySafair offers competitive prices and has been growing in the market both in terms of its existing routes as well as entering into new routes. On the other hand, SA Airlink has monopoly or near monopoly positions on most routes it currently operates on.
FlySafair is also a potential competitor to SA Airlink on those routes which it has not yet entered but could potentially enter in future and therefore poses a competitive constraint on SA Airlink in this regard. This is especially so bearing in mind FlySafair’s current competitive pricing on most routes it operates in. The Commission found that there are significant price differentials between FlySafair and SA Airlink (with FlySafair being cheaper) and that if the merger were to be approved, there is a likelihood of price increases due to the loss of competition from the merger.
The Commission further found that the proposed merger is likely to result in co-ordinated effects through the potential exchange of competitively sensitive information between South African Airways (SAA) and FlySafair (and SA Airlink) since SAA has a shareholding in SA Airlink.