Comesa may consider KQ, SAA deal a merger

Kenya Airways’ partnership with South African Airways will be treated as a merger on the back of the effect that the joint venture will have on competition in the region, the Comesa Competition Commission (CCC) has said.

The national carrier operates in countries that are members of the Common Market for Eastern and Southern Africa (Comesa) and is bound by the regional watchdog’s treaty and will be forced to notify CCC of an impending merger.

The two carriers, which want to form a pan-African airline, have many times denied that they are merging, terming their deal a partnership by using their existing assets.

However, the CCC says that it is not the form or the terms that the two airlines are using that will determine whether it is a merger or not, but rather the effect it will have on competition in the region.

“The two may claim that this is just a partnership and not a merger; what we worry about is not the term they use or the form but the effects that the coming together of the two will have in the market,” said CCC chief executive officer Willard Mwemba.

Kenya Airways chief executive officer Allan Kilavuka has said that regulatory requirements by competition bodies may hinder the process.

“We wanted to see if we can share assets and other resources, but the authorities need to immunise us so that we can overcome hurdles that may come up in regards to antitrust and anti-competition requirements,” said Mr Kilavuka during an investors briefing for half year to June 2022.

Strategic Partnership

Dr Mwemba said by virtue of the fact that Kenya Airways operates in the common market, they will need to inform them of a potential matter despite the form that the transaction may take.

“The company that operates in Comesa is Kenya Airways, South Africa is not, but that potential transaction if it were to be categorised as a merger, then CCC has to be notified,” he said.

Kenya Airways signed a Strategic Partnership Framework with South African Airways in November 2021, forming a key milestone towards co-starting a pan-African airline by this year.

The talks were initiated by former President Uhuru Kenyatta and his South African counterpart Cyril Ramaphosa.

During his State visit to Kenya this year, Mr Ramaphosa assured President William Ruto that the plans of forming the airline remain on course.

The Strategic Partnership Framework will see both airlines work together to increase passenger traffic, cargo opportunities, and general trade by taking advantage of strengths in South Africa, Kenya, and Africa.

Source: Business Daily