- The Australian Competition and Consumer Commission (ACCC) is continuing to investigate Qantas Airways’ (QAN) purchase into Alliance Aviation (AQZ)
- In February 2019, Australia’s biggest airline acquired a 19.9 per cent interest in Alliance, which is currently worth over $60 million
- ACCC Chairman Rod Sims said that Qantas completed the acquisition without the ACCC’s approval
- The Chairman concluded this therefore calls for an enforcement investigation rather than a standard merger review
- ACCC claims if it finds evidence that Qantas is compromising Alliance’s ability to be a strong competitor, it will take enforcement actions
- Qantas is down 0.50 per cent and currently selling shares for $3.97 each
The Australian Competition and Consumer Commission (ACCC) is continuing to investigate Qantas Airways’ (QAN) purchase into Alliance Aviation (AQZ).
On February 1 2019, Australia’s biggest airline purchased a 19.9 per cent interest into competitor Alliance. However, the ACCC issued some concerns. The current market value for this shareholding is over $60 million.
“The Australian aviation industry is in a state of major upheaval and now, more than ever, we are concerned that competition by smaller airlines is not hindered,” the ACCC said.
Alliance is a close competitor to Qantas, specifically in regional markets for the FIFO workers.
“Qantas’ decision to complete the acquisition of the 19.9 per cent stake in Alliance without first seeking ACCC clearance means this is an enforcement investigation rather than a standard merger review,” ACCC Chair Rod Sims said.
“The ACCC has been closely scrutinising the effects of the acquisition of this shareholding by Qantas. Acquiring a strategic stake in a close competitor in such a concentrated market raises clear competition concerns,” he added.
ACCC said if it finds evidence that Qantas is compromising Alliances ability to be a strong competitor, it will take enforcement actions.
Qantas has publicly stated it intends to receive approval to increase its stake in Alliance, with a long-term goal of taking a major position in Alliance.
However this is set to raise even more eyebrows.
“Our current view is that any further increase in Qantas’ stake in Alliance is very likely to raise significant competition concerns under the Competition and Consumer Act,” Rod told the market.
Qantas is down 0.50 per cent and selling shares for $3.97 each at 2:30 pm AEST.