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Qantas plays defence as ACCC probes Alliance stake

Steven DeareAAP
The competition watchdog launched an investigation in August last year, months after Qantas acquired a 19.9 per cent stake in Alliance.
Camera IconThe competition watchdog launched an investigation in August last year, months after Qantas acquired a 19.9 per cent stake in Alliance. Credit: Supplied

Qantas has rejected suggestions its stake in competitor Alliance Aviation may be anti-competitive, after the consumer watchdog said it is continuing investigation into the deal.

Qantas on Monday said it has held the 19.9 per cent stake for 16 months and there has been no influence on competition.

The Australian Competition and Consumer Commission is concerned about what the stake means for Brisbane-based Alliance, which focuses in serving regional markets and providing fly-in, fly-out services for mining companies.

It is investigating whether Qantas’ stake affects Alliance’s ability to raise funds, consider takeovers or participate in commercial ventures, and whether Qantas is attempting to exert influence on Alliance’s decision-making or operations.

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Qantas said its shareholding was entirely passive and it had not tried to gain board membership.

The stake allows Qantas to tap Alliance’s income from the resources sector, the company said.

Qantas has previously said it will seek approval to increase its shareholding and plans to be the majority owner of the carrier.

The Australian Competition and Consumer Commission began investigating in August. Qantas did not consult the watchdog prior to the purchase in February 2019.

“Qantas’s 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 chairman Rod Sims said.

The watchdog is concerned about a shrinking pool of players in the industry, particularly in light of Virgin Australia entering voluntary administration in April.

“The Australian aviation industry remains highly concentrated and it is crucial that competition provided by smaller airlines is maintained long-term,” Mr Sims said.

“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.”

Qantas has argued the industry has fewer barriers to entry than others across the world.

Alliance, through a codeshare arrangement with Virgin, is Qantas’ only competitor on passenger routes between Brisbane and the regional centres of Bundaberg and Gladstone

The ACCC said it will continue seeking information from market participants to gauge any impacts from Qantas’s stake in Alliance.

Qantas shares were trading 0.13 per cent higher to $3.99 at 11.45am. Alliance shares were 1.89 per cent lower at $2.60.

AAP

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