The Comesa Competition Commission (CCC) has announced that due to the impact of the joint venture on competition in the region, the collaboration between Kenya Airways and South African Airways will be considered a merger.
An airline that belongs to a country within the Common Market for Eastern and Southern Africa (Comesa) is obligated to adhere to the regional watchdog’s agreement and must inform the Comesa Competition Commission (CCC) if they plan to merge.
Despite their intentions to create a pan-African airline, the two carriers have consistently refuted claims of merging and instead describe their agreement as a partnership that utilizes their current resources.
The CCC emphasizes that the determination of whether the two airlines’ arrangement constitutes a merger is not based on the language or structure of their agreement. Instead, it hinges on the impact it will have on regional competition.
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.
CCC chief executive officer – Willard Mwemba
According to Allan Kilavuka, the CEO of Kenya Airways, the process may be impeded by regulatory requirements imposed by competition authorities.
We wanted to see if we can share assets and other resources. Still, the authorities need to immunise us so that we can overcome hurdles that may come up regarding antitrust and anti-competition requirements.
Allan Kilavuka – CEO of Kenya Airways
Kenya Airways- South African Airways Strategic Partnership
Dr Mwemba stated that since Kenya Airways operates within the common market, they must inform CCC of any potential issues, regardless of the form of the transaction. According to him, if the potential transaction were to be classified as a merger, Kenya Airways would be required to notify CCC, even though South Africa is not a part of Comesa.
In November 2021, Kenya Airways (KQ) and South African Airways signed a Strategic Partnership Framework, which was a significant step towards creating a pan-African airline this year. Former Presidents Uhuru Kenyatta and Cyril Ramaphosa initiated the talks. During his visit to Kenya, Mr Ramaphosa assured President William Ruto that the plans to form the airline were still on track.
The Strategic Partnership Framework aims to leverage the strengths of South Africa, Kenya, and Africa to increase passenger traffic, cargo opportunities, and overall trade.
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