The Australian Competition and Consumer Commission (ACCC) has launched an investigation into Qantas’ acquisition of a 19.9 per cent stake in a local charter operator.
Qantas announced the acquisition in Alliance Airlines, for a total of $60 million, at the beginning of the month. However, in a statement to shareholders, Alliance said its board was not warned by Qantas about its acquisition move.
Alliance is a service provider to the resources sector with particular prominence in Western Australia and Queensland. It is also a long-term provider to the Qantas Group and flies regional services on behalf of the national carrier.
At the time of the acquisition announcement, Qantas said it expected to ultimately seek regulatory approval from the ACCC to build on its current shareholding, with a longer-term view of taking a majority position in Alliance “in order to better serve the charter market by unlocking synergies”.
However, the ACCC is investigating Qantas’ newly acquired stake in Alliance to assess whether there has been a breach of section 50 of the Competition and Consumer Act.
Section 50 prohibits acquisitions which are likely to have the effect of substantially lessen competition in a market.
“There is no threshold level shareholding for the purposes of section 50. All acquisitions are therefore subject to the Act,” and ACCC spokesperson told Travel Weekly.
“A level of ownership less than a controlling interest that nevertheless alters the incentives of parties may give rise to a contravention of the Act. The Act does not refer to the level of control but rather to the effect on competition.”
The closing date for submissions to the ACCC’s inquiry is Monday 4 March 2019.
Travel Weekly has contacted Qantas for comment.