The Competition Commission has given the go-ahead for the merger between State-owned South African Airways (SAA) and newly incorporated Takatso Aviation, but said Global Aviation Operations – the owner and operator of domestic passenger airline Lift – must completely exit the consortium before the deal’s implementation.

Syranix, which is the owner of the Lift trademark, would also have to leave Takatso, the Competition Commission said on Friday.

This is to prevent the potential exchange of competitively sensitive information between SAA and Lift, through Global Aviation and Syranix having shareholding in Takato and the ability to appoint directors to its board.

Takatso is a consortium between asset management firm Harith General Partners as the majority shareholder, aircraft leasing company Global Aviation Operations and airline management support services provider Syranix.

Takatso intends to acquire 51% of the issued share capital of SAA from the government, as represented by the Department of Public Enterprises, which will retain the remaining 49% shareholding in SAA if the deal proceeds.

Of relevance to the merger is also Harith’s investment in Lanseria Airport, in northern Johannesburg.

The commission said the divestiture and employment conditions were initially rejected by the parties, resulting in the commission first taking a decision to recommend a prohibition of the merger. It was only after the merging parties agreed to the imposition of the remedial conditions initially proposed by the commission, which include divestiture conditions and a moratorium on merger-related retrenchments and to maintain a minimum number of employees at SAA, that the commission has now recommended conditional approval of the merger.

The commission said the ‘fix-it-first’ remedy was appropriate in the circumstances given the extent of the competition concerns identified.