Aviation

ACCC wont oppose Sydney Aviation Alliance’s proposed $23.6 billion Sydney Airport acquisition

The Australian Competition and Consumer Commission (ACCC) announced today it will not oppose Sydney Aviation Alliance’s proposed acquisition of Sydney Airport and all it’s shares.

Sydney Aviation Alliance is a consortium of IFM Investors, QSuper, AustralianSuper, and U.S.-based Global Infrastructure Partners which have investments in a variety of infrastructure assets, including shareholdings in other Australian airports.

“Throughout our investigation, we heard that there is very little, if any, competition between Australian airports,” ACCC chair Rod Sims said.

“This is no surprise, as we’ve been saying for a long time that Australian airports such as Sydney Airport are natural monopolies, with significant market power and no price regulation.”

“The proposed acquisition is therefore unlikely to substantially lessen competition in a market that already has such little competition,” said Sims.

The ACCC reported that they accept there is small potential for competition between airports in relation to some aeronautical services, although any lessening of competition from the proposed acquisition would not be substantial.

The review process involved the ACCC consulting with stakeholders including airlines, retailer groups, service providers and industry bodies.

Some stakeholders were worried that the acquisition may add to the flow of information between airports with common ownership, giving airports more bargaining power against airlines and others users of airports.

“We understand the stakeholder concerns, however, fundamentally the lack of competition between airports means that any such sharing of information between airports would not amount to a substantial lessening of competition, which is what the law requires before we can oppose a merger,” Sims said.

Market participants also expressed concern to the ACCC that the current monitoring regime is not effective in constraining Sydney Airport from charging excessive prices.

“The ACCC maintains the view that the threat of regulation under the current limited monitoring regime does not constrain the pricing behaviour of our airports,” Sims said.

“The absence of constraint ultimately leads to consumers paying higher airport passenger charges than they otherwise would.”

“We will continue to advocate for a regulatory regime that is effective, particularly as the aviation industry and the Australian economy recover from the COVID-19 pandemic,” Sims said.

The announcement comes after months of toing and froing between SAA and Sydney Airport.

The deal will need to pass through the Foreign Investment Review Board and the Treasurer before Sydney Airport investors can be consulted.



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