The proposed link between Qantas and Air New Zealand will come under close scrutiny from the Australian Competition and Consumer Commission, ACCC Chairman, Professor Allan Fels, said today.
"The proposal immediately raises competition concerns for the ACCC", he said. "The ACCC has previously indicated that it had concerns about proposed mergers between the two airlines, particularly on the Trans-Tasman and Pacific routes.
"Today's announcement appears to include strong elements of anti-competitive arrangements including price-fixing and route-sharing.
"If so, for the proposal to proceed the companies will have to apply for authorisation under the Trade Practices Act 1974, which only allows such arrangements if the benefit to the public can be shown to outweigh the anti-competitive effect.
Professor Fels said the ACCC would examine the impact of the proposal on all markets – Australia, Australasia, Australia to Europe and also the United States.
"This will require a very detailed investigation", he said. "I do not expect a decision will be made for some months.
"In addition, the ACCC will review the Joint Services Agreement currently struck between Qantas and British Airways, which is due to expire in the middle of 2003. This allows price-fixing on the so-called Kangaroo Route between Australia and Britain".
Professor Fels said the parties were yet to put a formal proposal to the ACCC.
"When such a proposal is made, full market inquiries will be conducted with the views of all participants being sought. This will be a very public process".