The Australian Competition and Consumer Commission will not oppose the proposed acquisition of Impulse by Qantas but only after significant undertakings were provided by Qantas, ACCC Chairman, Professor Allan Fels, said today.
Impulse claimed that it was a failing firm and would become insolvent on 14 May 2001. The ACCC independently evaluated this claim and concluded that the withdrawal of support by certain investors had prevented Impulse from remaining viable.
The likely failure of Impulse and the lack of alternative buyers led the ACCC to consider the impact of two alternatives on longer term competitiveness in domestic aviation. These alternatives were to allow Impulse to go into receivership or allow Qantas to acquire the company.
Given the alternatives, after extensive evaluation the ACCC concluded that while the acquisition would lessen competition, the competition concerns could be better addressed by allowing the acquisition to proceed accompanied by undertakings designed to improve the competitive position of firms currently constrained in their ability to expand and any potential new entrants. Under the other alternative, that is a receivership for Impulse, a less competitive outcome was likely.
The undertakings relate particularly to access to scarce take-off and landing s lots at Sydney Airport, terminal access and certain price undertakings.
The undertakings accepted from Qantas address the ACCC's concerns by including assurances on access to peak slots (7 a.m. to 9 a.m. and 5 p.m. to 7 p.m) to enable new and emerging airlines to compete more effectively on inter-State trunk routes.
On routes currently operated only by Qantas and Impulse, Qantas has provided an undertaking with regard to the maintenance of services (with regard to frequency and capacity) and restrictions on airfare increases.
The ACCC also welcomed the commitment made by Qantas to the Tasmanian Government regarding the maintenance of services to Tasmania.
"After taking into consideration the undertakings provided by Qantas, the ACCC considered that any anti-competitive detriment caused by the Qantas merger with Impulse will be minimised. Under these circumstances, the ACCC decided not to oppose the proposed merger".