The Australian Competition and Consumer Commission has reportedly announced that it would continue the investigation of the case concerning the acquisition of some stake by Qantas Airways in Alliance Airlines.

On February 1, 2019, Qantas Airways had publicly announced its move to acquire 19.9 per cent stake in Alliance Airlines further stating its intention to seek a subsequent regulatory approval for acquiring the majority stake. The shareholding is currently estimated to have a market value of more than $60 million and both the airline companies are known to have been strong competitors for providing fly-in fly-out services for the workforce of mining and resource companies.

The Australian Competition and Consumer Commission claims it to be an unapproved acquisition and had issued a statement of issues in August 2019 citing concerns of competition with the minority shareholding. As per sources, ACCC believes that the Australian aviation industry is in a state of majority upheaval and intends to seek information from market participants to assess any potential impacts post Qantas’ acquisition of stake in Alliance Airlines.

According to Rod Sims, the ACCC Chair, Qantas’ move for acquiring 19.9 per cent stake in Alliance without seeking ACCC’s approval is indicative of an enforcement investigation instead of a standard merger review. He has further added that the highly concentrated nature of the Australian aviation industry has made it imperative for the Commission to maintain long-term competition provided by the smaller airlines.

For the record, ACCC has focussed this investigation on the competitive dynamics between the two airline companies and a thorough assessment of the effects of Qantas’ acquisition on Alliance’s fund-raising ability, future acquisitions, and participation in commercial ventures.

Sims has also stated that ACCC will initiate enforcement action if it gains evidence that Qantas’ shareholding is compromising on Alliance’s ability to provide a competition to Qantas Airways. Sims has further explained that under the Competition and Consumer Act, ACCC has opinionated that any further increase in shareholding in Alliance by Qantas is certain to raise significant concerns of competition.

Source Credits:

https://www.accc.gov.au/media-release/investigation-into-qantas%E2%80%99s-stake-in-alliance-airlines-continues