Nationwide settles with SAA

Pretoria - A massive legal battle for damages between Nationwide Airlines and SAA, resulting from a Competition Tribunal ruling, was on Thursday quietly settled out of court.

Nationwide sued SAA for an undisclosed amount, believed to run into millions of rand, following the tribunal's 2005 ruling that SAA's incentive schemes for travel agents constituted an abuse of its dominant position and was designed to exclude or impede SAA's rivals in the domestic market.

SAA was fined R45m for its anti-competitive conduct.

The tribunal's investigation followed an October 2000 complaint by Nationwide that SAA was trying to exclude it from the domestic market.

The court was told that SAA had paid out millions of rand to travel agents between October 1999 and May 2001 by paying a higher commission on increased sales and additional commission on every single sale, resulting in travel agents being able to virtually double their earnings.

The Competition Tribunal held that the practical effect of this and a second incentive scheme called Explorer, in terms of which agent points could be exchanged for free airline tickets, had induced agents not to deal with competitors of SAA.

Nationwide reached a confidential settlement with SAA after the conclusion of Nationwide CEO Vernon Bricknell's evidence and an order by Acting Judge L Sapire, gagging the press from reporting or even talking about evidence on Nationwide, SAA and Comair's internal financial affairs.

Grilled extensively

Bricknell was grilled extensively about Nationwide's run of negative publicity in the relevant period, which SAA said may have cause a decline in ticket sales, rather than its incentive schemes.

Nationwide sued for the loss in revenue it claimed it had suffered on its domestic routes between October 1 1999 and May 31 2001 as a direct result of travel agents choosing SAA as a "preferred client" because of its incentive schemes.

Bricknell earlier testified that Nationwide had grown "quite phenomenally" from the start, but that passenger numbers had decreased significantly since mid-2000.

He said Nationwide's own investigation revealed that the problem lay with ticket sales and that some travel agents, who had supported them well in the past, were even being reprimanded for selling Nationwide tickets.

- Sapa

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