The Competition Tribunal (“the Tribunal”) has approved the merger whereby K2020704995 (South Africa) (Pty) Ltd (“SA Bidco”) will acquire Comair Limited (“Comair”), subject to a range of conditions which relate to employment and a greater spread of ownership in the merged entity (and in the aviation sector), in particular B-BBEE shareholding.
 
Following a virtual (online) hearing this afternoon, Friday 30 October 2020, during which the merger parties and the Competition Commission (“the Commission”) made submissions, the Tribunal has conditionally approved the merger after considering the submissions as well as a set of proposed agreed conditions. Below is a summary of the conditions: 
 
EMPLOYMENT
 
The merger parties will not retrench any employees as a result of the merger for a period of three (3) years from the “Flying Start Date” (the date on which Comair’s flying operations resume, subject to regulatory approvals. This date is scheduled to be 1 December 2020).
 
Although the merger parties submit that the transaction will save a large number of jobs in Comair, they have also confirmed that up to 200 employees will face compulsory retrenchment due to operational reasons, in the months following the implementation of the merger (“the affected employees”).
 
In terms of the merger conditions, the new airline will make employment offers to all affected employees who have been retrenched when jobs become available at the new airline post-merger. This commitment will apply for a period of 36 months after the Flying Start Date and is subject to employees being suitably qualified.
 
B-BBEE
 
The merged entity commits to allocate a portion of its shares to a B-BBEE ownership structure which will include the participation of an Employee Share Ownership Program (ESOP) with a broad representation of Black participants, as well as one or more B-BBEE purchasers “who are agreeable to participating in this initiative on mutually acceptable terms and who are able to demonstrate an alignment of interests and strategic skills which shall support and advance the medium to long-term business case of Comair.”
 
Background
 
The proposed transaction earlier received the green light from Comair’s business rescue practitioners as part of an approved business rescue plan which will see Comair resume operations and resolve its current financial situation.
 
The Commission – which assesses large mergers before referring them to the Tribunal for a decision – recommended that the Tribunal approve the proposed transaction with conditions. The Commission found no competition concerns arising from the transaction. However, it recommended the public interest related conditions.
 
Merger parties
 
Bidco is a newly established company created for the purpose of the proposed transaction.  It does not control any other firms.
 
Comair operates the low-cost airline, Kulula.com and is the operator of British Airways in South Africa. It is a South African aviation company, offering scheduled airline services within the country, the rest of Sub-Saharan Africa and the Indian Ocean Islands. Comair’s JSE listing was suspended from 5 May 2020, the date on which it entered business rescue.