ACCC chair Gina Cass-Gottlieb faces the first real test of her attitude to possible anti-competitive behaviour in a concentrated market thanks to a Qantas takeover of Alliance Aviation.
Having outplayed the Australian Competition and Consumer Commission in round one of the fight for control of fly-in, fly-out charter airline Alliance Aviation Services, Alan Joyce at Qantas is boldly coming back for round two.
He was forced to launch an enforcement investigation because Qantas did not seek informal merger clearance for the transaction. Of course, Qantas would have known that an enforcement investigation requires a high bar for evidence that must be presented in court. This will be the first significant test of her approach, which is said to be shaped around an understanding of commercial reality and rigorous evidence-based decisions.
In a move clearly aimed at getting ACCC clearance, Joyce also promised to extend the Qantas program of guaranteed lower fares for residents in those few communities where Alliance operates passenger services. Allowing Qantas to have 60 per cent of the charter market could disadvantage Virgin which has 22 per cent of the charter market through its subsidiary Virgin Australia Regional Airlines .
Virgin, which gets its competition legal advice from Cass-Gottlieb’s former employer Gilbert + Tobin, will no doubt ask the ACCC one simple question: why would you allow the No. 1 player in the market to take over the second player in an already concentrated market?Qantas will probably argue that the charter market is vibrant with many players other than Virgin and Alliance such as Cobham Aviation, which is up for sale, REX, Skippers, Air North and Skytrans.
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