Curious to know what peoples thoughts are on this: Currently the ACCC is considering the QF/EK tie up.

4 replies

TheRealBabushka

Member since 21 Apr 2012

Total posts 2,059

Curious to know what peoples thoughts are on this:

Currently the ACCC is considering the QF/EK tie up. Is it appropriate that only the Australian competition authority is considering this matter, when in fact passengers affected by this tie up are not just domiciled in Australia?

Or is this just a flaw of globalisation that the WTO and global community have yet to deal with and have chosen to ignore, leaving it in the too hard to deal with basket?

moa999

Qantas - Qantas Frequent Flyer

Member since 02 Jul 2011

Total posts 835

Many deals are dealt with at both ends - eg. The Qantas/Air NZ deal a few years ago was looked at by both the ACCC and NZ equivalent who I think passed it.

I don't think the UAE has a competition commission -- consider who owns Emirates 

David

Member since 24 Oct 2010

Total posts 992

"I don't think the UAE has a competition commission -- consider who owns Emirates" - very canny observation, moa999! :)

spinoza

Member since 01 Feb 2012

Total posts 218

Based on my memory of my M&A course.... any country's ACCC equivalent can make a ruling on any M&A deal around the world if it feels that it is affected. i.e. any nation where the companies operate can choose to investigate the deal. When BHP and Rio Tinto tried to merge a few years back, regulators around the world needed to give its approval.

Similarly for the Qantas Air NZ deal as moa999 says. The ACCC first defines the market(s) and then considers each market separately. I think the reason ACCC rejected the merger was because they defined the Australia to NZ routes as an individual market, not the Oceania or Asia Pacific market as a whole. Therefore on Aus/NZ routes, the two airlines had too high a market share, and so the merger was rejected. 

I think in this current deal Virgin or Air NZ is trying to complain to the ACCC with regards to the Aus - NZ routes again, since Emirates also competes on it, though I suspect the ACCC will approve it since Emirates has a much lower market share than Air NZ. 

However, hypothetically if Emirates and Qantas had 80% market share or above on a route such as Bangkok - Sydney, then the Thai competition commission would likely investigate too. If they alone reject the deal on that basis, Qantas and Emirates can ameliorate the commission by excluding that route of their JV agreement.

TheRealBabushka

Member since 21 Apr 2012

Total posts 2,059

Thank you spinoza! Love the succinct and well written response.

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