R105m fine for abuse serves SAA right - ex-CEO

10 August 2016

Cape Town - South African Airlines (SAA) "tried all the tricks in the book", but the law has finally prevailed and it "serves them right", Vernon Bricknell former owner and MD of Nationwide Airlines, told Fin24 on Wednesday.

Although he is disappointed that the South Gauteng High Court did not award the full amount Nationwide requested from SAA, Bricknell is satisfied that the national carrier "got what they rightfully deserved".

Nationwide claimed R171.5m in damages, plus interest calculated from 2010, but the court has now ordered SAA to pay Nationwide R104.6m plus interest as damages for its uncompetitive practices. Nationwide had to stop operations in April 2008 and is currently in liquidation.

The court agreed with the Competition Tribunal that SAA's behaviour from 2001 to 2005 was the biggest contributing factor to Nationwide’s loss in passenger volumes. The tribunal found that most of SAA's abuse was due to certain practices relating to the travel agent sector.

Case had been going since 2001

"At least the case has been finalised now. It has been going since 2001. I was determined that the law should prevail and it has, but not to the extent we had hoped for," said Bricknell.

"SAA had caused us so much harm and hopefully they will now stop doing what they did to every competitive airline in SA. They certainly won't be allowed to do this in Europe, where states are not allowed to subsidise airlines."

He believes it is time for aviation regulations in SA to be revised in this regard too.

"SAA needs a lot more than just a change of board. It must start making a profit instead of just killing their competition," said Bricknell.

"Hopefully the result of our case and Comair's upcoming one (will make) SAA start to behave itself. I am thankful they got what they deserved. I wonder if SAA could survive after the outcome of the upcoming Comair case. And we would probably have to wait and see if SAA pays us, I guess."

He emphasised that it is important for SAA to "stop killing competition".

"Even after we won our first case against SAA, they blatantly continued with with the same behaviour, but now they got a good smack," said Bricknell. He added that, although Nationwide was awarded a great deal less in damages than it had asked for, SAA must also pay interest on that amount from 2010 when Nationwide won its case but SAA decided to continue with a dispute on the amount to be paid as damages.

"SAA has tried every trick the law allowed to delay the process, but fortunately we manged to stick it out. At least justice has been done," said Bricknell.

"Nationwide would still have been operational if SAA had not behaved in this anti-competitive way. Nationwide had 15 years of SAA's bad behaviour."

Nationwide's attorney, Lucinda Verster, who specialises in competition law at Bowman Gilfillan, told Fin24 the matter between Nationwide and SAA has a long history. Nationwide had already filed the first complaint against SAA regarding abuse of dominance in terms of the Competition Act in 2001.

Arising from that Nationwide instituted a damages claim in 2005, which was the first damages claim of this nature in SA. It was, however, settled shortly after the commencement of the trial in February 2006.

"SAA continued with its abusive practices and Nationwide filed a second complaint before the competition authorities. SAA was again found to have continued to abuse its dominant position in contravention of the Competition Act. This resulted in a second damages claim filed by Nationwide," explained Verster.

"This matter was heard before the South Gauteng High Court in February 2016. The nature of Nationwide's claim was the second of its kind to be brought in SA law and the third to be litigated, setting a precedent within SA competition law."

That is why she regards the case as a landmark decision, setting a precedent for future damages claims in SA competition law. The court in the Comair case against SAA, which is based on the same grounds but involves a much longer period of time, will have reference to the Nationwide decision.

"We are not aware whether or not SAA will appeal as it has 15 days to file a notice of appeal," said Verster.

SAA spokesperson Tlali Tlali told Fin24 on Wednesday that SAA is still considering the matter, and must attach weight to both its implications and possible legal options if there are grounds to pursue such options.

This article first appeared on Fin24, see here.