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Comair seeks tribunal order against SAA

Staff Reporter

In order to pursue a civil claim for damages in the high court, regional airline Comair is seeking an order from the Competition Tribunal declaring that an incentive scheme for travel agents that was run by South African Airways (SAA) was a prohibited practice in terms of the Competition Act.

In order to pursue a civil claim for damages in the high court, regional airline Comair is seeking an order from the Competition Tribunal declaring that an incentive scheme for travel agents that was run by South African Airways (SAA) was a prohibited practice in terms of the Competition Act.

The application will be heard by the Competition Tribunal from March 17 to 28. 

The issue dates back to October 2004 when the Competition Commission referred a complaint against SAA to the tribunal after Comair had lodged a complaint with the commission.

The complaint alleged that a SAA remuneration scheme to travel agents by way of override incentive agreements that allegedly kept travel agents loyal to SAA to the exclusion of its rivals was anti-competitive.

The Comair complaint resulted in a settlement agreement with the commission—confirmed by the tribunal on December 4 2006—in which SAA agreed to pay an administrative fine of R15-million and refrain from future incentive agreements with travel agents. However, in that settlement agreement SAA did not admit liability.

In order to pursue a civil claim for damages in the high court, Comair has to obtain an order from the tribunal that SAA’s conduct was a prohibited practice in terms of the Competition Act. This is the basis of the application that will be heard from March 17 to 28.

Comair has also asked the tribunal to declare void certain agreements concluded by SAA with travel agents pursuant to its alleged anti-competitive conduct.

The matter will be heard together with another matter involving Nationwide flowing from an earlier complaint. That complaint also dealt with SAA’s override incentive agreements with travel agents and its Explorer programme.

This case was decided and the tribunal found SAA’s conduct constituted a prohibited practice and imposed an administrative penalty of R45-million. However, Nationwide was of the view that the commission had not referred and the tribunal had not adjudicated all aspects of its complaint.

The tribunal had considered SAA’s conduct during a specified period of time while Nationwide alleged that the conduct was ongoing.

Nationwide referred the remaining aspects of its complaint to the tribunal and was permitted to proceed with its application.

SAA contends that the Comair and Nationwide complaint should be dismissed on the basis the override incentive schemes between SAA and travel agencies have already been found to constitute a prohibited practice in terms of the Act.—I-Net Bridge

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