The Competition Commission has granted South African Airways a conditional exemption in relation to its membership of Star Alliance and its participation in various Star Alliance products.

In January 2011 South African Airways lodged an application with the commission for an exemption from provisions of the Competition Act. On July 8 2011 the commission granted South African Airways conditional exemption for a period of 55 months, commencing on June 1 2011 and ending on December 31 2015. The exemption is an extension of a previous exemption and relates to South African Airways' membership of the Star Alliance and its participation in various products (ie, Round-the-World Fare, Regional Passes/Fares, Corporate Plus, Conventions Plus and Meeting Plus). The exemption has been granted subject to the following conditions:

  • The commission must be informed of any material changes in the facts and circumstance on which the exemption succeeded;
  • Any amendment or addendum to the Main Star Alliance Agreement, insofar as it affects South Africa, will be of no force and effect until approved by the commission;
  • The exemption is applicable only to South African Airways' participation in the Star Alliance and the current Star products. Any new joint Star product or new package created by the Star Alliance, insofar as it affects South Africa, must be approved by the commission; and
  • South African Airways must submit annual reports to the commission in respect of the revenue that it generates through participating in the Star products.

The commission concluded that South African Airways' membership of the Star Alliance constitutes a prohibited practice, in contravention of the provisions of the Competition Act that prohibit price fixing, market allocation and collusive tendering. However, the commission was satisfied that the exemption is necessary to achieve an objective contained in the Competition Act - that is, the maintenance or promotion of South African exports.

For further information on this topic please contact Nkonzo Hlatshwayo at Webber Wentzel by telephone (+27 11 530 5000), fax (+27 11 530 5111) or email ([email protected]).