The Competition Tribunal fined South African Airways (SAA) R45-million — the largest fine in the history of the Competition Act — on Thursday for abusing its dominant position in the domestic airline market.
The national carrier, which has just seen the end of a massive strike, has 20 days to pay the fine.
According a statement from the tribunal, SAA broke the law by operating incentive schemes for travel agents that were in breach of the Competition Act.
”The tribunal found on the evidence that the override schemes gave travel agents a compelling commercial incentive to sell tickets of SAA in preference to that of its rivals, and secondly, that to a significant extent, they were able to influence customer preferences.”
The tribunal further found that the Explorer scheme, a system of rewarding travel agency staff with SAA tickets on the basis of the number of SAA tickets they sold, helped to reinforce the exclusionary effects of the override scheme.
”While the tribunal accepted that, at the same time as it had behaved anti-competitively, SAA was also engaged in more aggressive pro-competitive behaviour, the evidence was such that it could nevertheless find that the abuse of dominance had played a significant part in the decline of Nationwide and Comair.”
The case followed a complaint lodged by Nationwide Airlines in 2001.
”The tribunal has concluded that the incentive schemes were unlawful and a prohibited practice.
”Nationwide and Comair will be able to proceed with a civil claim against SAA in the High Court if they can prove that they suffered damages as a result of the abuse during the relevant period.”
Strike settled
On Thursday, the SAA pay strike was settled, the airline and unions announced.
”Starting today, we are back in business,” SAA boss Khaya Ngqula said.
The strike, which began last Friday, brought 75% of the airline’s operations to a halt as workers pushed for an 8% increase, against management’s offer of 5%.
The final agreement provides for a 5% increase on wages, medical and housing benefits, plus a non-pensionable allowance worth 1% of each staffer’s pay.
”We don’t like the result, but it is a result we can live with,” said South African Transport and Allied Workers’ Union (Satawu) secretary general Randall Howard.
Howard had spent much of the day in the parking lot of the SAA headquarters discussing the settlement with picketing workers, many of whom were divided over whether to accept a settlement or continue striking.
Tempers rose at times, with one picketer saying: ”I am going back to work and I am not ashamed to say it in front of all of you.”
United Association of South Africa (Uasa) spokesperson Andre Venter said its members had already started returning to work and hoped that services would be back to normal by Friday.
He said Uasa was not happy with the offer, but had to make a choice.
”It was more worth it in the sense that we proved that SAA is not as omnipotent as they think they are.”
As picketers folded up their camping chairs to go home, one woman said: ”This has been a waste of a week.”
At a later press conference to announce acceptance by all parties of the agreement, Howard said the strike had been ”bruising”, but historic.
”I don’t think anybody thought it would last for seven days.”
Ngqula refused to discuss the cost of the strike, estimated by economist Mike Schussler to have been about R25-million a day.
”The cost to the airline — we are not going to tell you. It is simple. Because of competition,” he said.
He said the biggest loss had been the effect on the company’s loyal regulars.
”The biggest challenge is to remove that pain, and make people rely on us.”
Structures will be put in place to address grievances raised during the negotiations, he said. — Sapa