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SAA faces massive claims for damages

Apr 12 2011 06:33 Amanda Visser

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Comair Limited [JSE:COM]

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Pretoria - The Comair and Nationwide airlines’ claims for hundreds of millions in compensation against South African Airways (SAA) can proceed, following Monday’s decision by the Competition Appeal Court.
The court had issued an order for costs against SAA when it appealed the Competition Tribunal’s decision in 2007. The tribunal had found that SAA had contravened the Competition Act in offering incentives to travel agents.

In the initial case Nationwide had complained about the schemes which had been operated from 1999 to 2001. In this case SAA had been found guilty and ordered to pay an administrative fine of R45m.

In the second case Comair had also protested about the incentive and confidentiality payments to travel agents. This time the alleged contravention had taken place from 2001 to 2005.

Nationwide had approached the tribunal and complained that during this period it had also been harmed by the schemes.

The tribunal found that SAA’s schemes and the periods involved were not exactly the same as in the original complaint, and again found it guilty of abuse of its dominant market position.

These incentive schemes were of such a nature that the travel agents had been persuaded to buy SAA’s flight tickets rather than those of Comair or Nationwide. The two smaller airlines did not have the capacity to offer better incentives.
In 2008 Nationwide had gone bankrupt and stopped flying.

In the Comair case SAA had come to a R15m settlement agreement with the commission.

On Monday Comair joint chief executive Eric Venter said they had anticipated Monday’s decision and that his airline would now proceed with its claim for damages, which involved a large sum. The calculations had been done and all Venter would say was that it ran into hundreds of million.

In its original case (1999 to 2001) Nationwide had reached an out-of-court settlement with SAA for compensation.

Lucinda Verster of legal firm Bowman Gilfillan, which from the outset had been involved with the Nationwide case, said they were returning to court.

They would claim for damages suffered from 2001 to 2005.  She declined to mention an exact figure, but did indicate that it could be more than R100m.

On Monday evening SAA said that it was aware of the decision and was weighing its options.

- Sake24

For business news in Afrikaans, go to Sake24.com.
saa  |  comair  |  nationwide  |  competiition  |  airlines



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