ACCC updates authorisation allowing limited international tariff agreements

The Australian Competition and Consumer Commission today issued a determination revoking authorisation A90427 and granting substitute authorisation A91059 to Qantas Airways Limited*.

Qantas has applied for revocation and substitution of authorisation A90427 in relation to tariff arrangements with designated airlines that are required under Australia's air service agreements** with other countries, subject to the authorisation only offering protection under certain circumstances.

The ACCC notes a number of ASAs require Qantas to reach agreement in limited circumstances with a competing foreign airline in relation to the establishment of tariffs. Currently Japan and the Philippines continue to enforce these requirements.

The ACCC considers that there are potentially significant anti-competitive detriments by allowing tariff agreements between Qantas and foreign airlines.

The ACCC considers however that the conduct is likely to result in benefits by ensuring Australia can meet its international obligations. The authorisation will also ensure that Qantas can operate routes to a country in these limited circumstances.

The ACCC is also satisfied that the safeguards placed on the conduct are likely to limit the conduct to specific circumstances where the foreign government expressly requires tariff cooperation which will limit the detriment arising from the conduct.

The substitute authorisation has been granted to Qantas until 31 December 2017. The ACCC's determination will be available from the ACCC website.

Background

* Authorisation provides protection from court action for conduct or arrangements that might otherwise raise concerns under the competition provisions of the Trade Practices Act 1974. Authorisation is granted where the ACCC is satisfied that the benefit to the public from the conduct outweighs any public detriment. A party to whom authorisation had been granted may also apply to the ACCC for a minor variation of that authorisation.

**An ASA specifies the terms and conditions of airline activity between two countries. The ASAs generally provide for the destinations that can be served in a particular country, and 'beyond' rights and the permitted frequencies per week. These bilateral ASAs normally include some provision relating to the tariffs that airlines may charge on services governed by the ASA.