Dominance in the Air: How Mozambique’s LAM Landed in Competition Trouble

By Matthew Freer

In August 2025, Mozambique’s Competition Regulatory Authority (“ARC”) imposed a significant fine of 11.1 million meticals (approximately ZAR 3 million or $175,000) on the national airline Linhas Aéreas de Moçambique (“LAM”) for breaching competition law by imposing unlawful surcharges and obstructing an official investigation.

Background to the Sanction

The ARC’s decision, formalised in Decision No. 03/2025 and published in the Boletim da República (Government Gazette), followed an investigation that began in November 2022 into alleged anti-competitive pricing practices by LAM. The regulator concluded that LAM, which operates the majority of domestic passenger flights in Mozambique, had abused its dominant market position by unlawfully applying a fuel-related surcharge, referred to as “YQ”, to ticket prices.

Originally designed to adjust fares in response to volatile fuel costs on international routes, the YQ surcharge had been banned by the Mozambican Government in 2021. Despite this, LAM continued to levy the charge on domestic flights, in some cases resulting in the surcharge amounting to up to 60% of the total ticket price (e.g., 6,000 meticais on 10,000 meticais fare).

According to the ARC, there was no legal basis or transparent accounting methodology to justify the continued application of the surcharge, which had the effect of inflating, and distorting, the real price of air travel for consumers. The conduct was therefore deemed unjustifiably excessive and harmful to passengers.

Breakdown of the Penalty

The total fine of 11,109,738.05 meticais comprised two parts. 8,332,303.54 meticais for the improper collection of the surcharge and 2,777,434.51 meticais for failing to cooperate fully with the ARC’s investigation, including providing incomplete or insufficient information.

The ARC gave LAM 15 days to settle the fine and two months to stop the surcharge practice completely. Should further irregularities be established, the matter has also been referred to the Attorney General’s Office for potential further action.

LAM’s Response and Appeal

LAM’s management, in a press conference in Maputo on 12 August 2025, publicly rejected the sanctions and announced its intention to appeal the ARC’s decision, asserting that key facts presented in its defence were not adequately considered by the regulator. The airline’s leadership further argued that its limited fleet and operational challenges, including competition from larger regional carriers, should be taken into account.

While LAM maintains that past administrations’ decisions contributed to the circumstances under scrutiny, the current board has acknowledged ongoing efforts to restructure and stabilise the airline, including fleet expansion plans.

Implications for Competition Enforcement in Mozambique

This enforcement action underscores the increasingly active role of the ARC in policing domestic markets and holding even state-owned enterprises accountable to competition standards. By confronting dominant behaviour and unjust pricing strategies, the regulator is signalling a robust application of the Competition Law (Law No. 10/2013), which prohibits abuse of dominance and empowers the ARC to impose fines for anti-competitive conduct and non-cooperation in investigations.

As Mozambique continues to liberalise and diversify its market economy, this case may set an important precedent for competition enforcement, particularly in sectors traditionally characterised by limited competition and strong public ownership.