South Africa’s Airlink faces administrative penalties of up to 10 per cent of its annual turnover if found guilty of overcharging customers by ZAR 100 million and predatory pricing against former competitor Fly Blue Crane. The overcharging incident refers specifically to the domestic route from Johannesburg O.R. Tambo to Mthatha, between 2012 and 2016.
Airlink Accused of Abusing Market Dominance
On March 3, after wrapping up its closing arguments, the South African Competition Tribunal adjourned for a final ruling of the long-running case, refereed Competition Commission, its advisory body in 2018.
The alleged abuse of market dominance stated by the commission concerns a markup of over 33 per cent, overcharging customers by ZAR100 million, starting September 2012 and ending August 2016 on the specified route.
The court further charges that predatory pricing on behalf of Airlink is a part of the failure and exit of former startup Fly Blue Crane. Fly Blue Crane operated briefly between September 2015 and November 2016, entering business rescue and finally ceasing operations on February 3, 2017. By January 2024, the company had been eventually de-registered.
Three separate complaints had been filed between 2015 and 2017. The complainers were Fly Blue Crane, business executive Khwezi Tiya, and the O.R. Tambo District Chamber of Business.
The claims are as follows: Airlink had allegedly overcharged until Fly Blue Crane entered the market, when it reduced its prices below cost and added extra capacity, in line with the predatory pricing strategy to drive the competitor out of the market. The strategy worked, and after Fly Blue Crane was successfully driven out, Airlink raised its prices sharply.
Closing Arguments
South African media reported that last week, during closing arguments, the Competition Commission argued that the reasons cited by Airlink for the excessive pricing were not sufficient to justify it, nor were the documents provided.
As the courtroom continued back and forth with arguments, Airlink challenged the commission’s arguments about the pricing benchmark. Airlink’s counsel, Frank Snyckers, remarked:
“I think many people will say that this tribunal has lost its marbles. [It is] unprecedented, incoherent, circular, dangerous, and unfair,”
What do you think about the arguments? Do you think you can recognise predatory pricing in action? Let us know in the comments!
