The Competition and Fair Trading Commission (CFTC) says the partnership of Air Malawi (2012) Limited and Ethiopian Airlines may encourage unfair trade practices because the latter is already established on the global market.
The Malawi Government, through the Public Private Partnership Commission (PPPC) settled for Ethiopian Airlines as the new strategic investment partner of Air Malawi (2012) Limited after it emerged as a preferred bidder.
The bid by Ethiopian Airlines stood out among the companies that had been shortlisted for the exercise based on its global experience and competitiveness, according to PPPC.
But in an interview last week, CFTC acting director Charlotte Malonda argued the partnership may encourage unfair trade practices.
“Yes, Ethiopian Airlines already has a presence on the market and the partnership will add on to the market share they already have, therefore, they can easily abuse the increased market power to the detriment of the consumer and other airlines.
“That is why we use the law to regulate such market imperfections to avoid abuse of dominance. The Malawi economy and consumers are very important at this point. We stand to protect the market,’’ she said.
Malonda said it is important for the CFTC to be involved in the partnership between Air Malawi, the PPPC and Ethiopian Airlines because the law gives them powers to undertake an analysis and review any trade agreement to ensure that the parties comply with competition law.
“This is very crucial because it will help us ensure that the partnership is pro-competitive and that the agreement does not result in less competition in the aviation sector. We expect more innovation and a fair share of benefits trickling to the consumer,” she said.
Malonda said once the agreement has been finalised, they expect the PPPC to alert the parties of the legal requirement to notify the agreement with the CFTC for them to undertake a thorough competition analysis of it and make recommendations to the parties on how any anticompetitive provisions should be addressed.
But a marketing officer at Ethiopian Airlines in Lilongwe, Godfrey Lungu said the CFTC is missing the point because the newly established institution is a different altogether.
“To my understanding, the cooperation or the partnership does not mean that there is a new company which has been formed. We will continue operating as Ethiopian Airlines and Air Malawi (2012) Limited will also continue operating as Air Malawi.
“This is why the partnership has not been concluded up to now because Air Malawi has its traffic routes and Ethiopian Airlines also has its routes. If it was forming a new company, I think it could have been operational by now,” said Lungu.