SA airlines accused of collusion

Friday, January 29, 2010

Pretoria - Several of South Africa's major airlines are being investigated for colluding on prices and pricing strategies to be possibly adopted during the FIFA 2010 World Cup.

The Competition Commission is investigating possible collusion between British Airways/Comair, South African Airways (SAA), 1Time, SA Airlink, Mango and SA Express.

An investigation was launched following a leniency application made by SAA in December 2009, in which it undertook to fully cooperate with the commission in exchange for leniency from prosecution under the Competition Act.

The airline, in its application, gave e-mail correspondence between the airlines in which there are indications that the airlines might adjust airfares ahead of the World Cup. The e-mail also suggested that airfares would have to be raised in order to cover various anticipated additional costs.

SA Airlink Chief Executive Rodger Foster has said, however, that the airline had not participated in any collusion, adding that the airline was committed to complying with the provisions of the Competition Act.

He said the airline would not be tolerant of collusive activities in its organization.

"We fully intend to determine our own pricing strategies for flights that will take place during the World Cup, and we will do that without any form of coordination with our competitors," said Foster.

The Office of the President had earlier also requested the commission to look into concerns that airlines planned to escalate their air fares during the World Cup.

The Competition Commission will investigate the allegations made by SAA and circumstances surrounding the allegations to determine if the airlines have colluded to increase prices or adopt similar pricing strategies ahead of the World Cup.

If they find reason, the commission will refer the case to the Competition Tribunal for a hearing and request an appropriate penalty.

Commissioner Shan Ramburuth said the World Cup tournament provided South African business with a good opportunity to showcase their international competitiveness, but it was also possible that some firms might want to exploit the situation by engaging in anti-competitive conduct.