The Australian Competition and Consumer Commission has granted interim authorisation, subject to a condition, for the proposed alliance between Qantas Airways Limited and Emirates. Under the alliance, the two airlines will cooperate on passenger and freight operations across their networks.
The applicants plan to undertake certain preliminary steps to prepare for the proposed implementation of the alliance in April 2013. This work relates to joint sales and pricing strategy, joint marketing, system integration and testing, customer handling, and scheduling and capacity coordination.
“The ACCC is allowing Qantas and Emirates to start implementing their alliance because of the long lead time required to market and sell tickets before the commencement of long-haul services,” ACCC Chairman Rod Sims said.
“In its draft determination issued in December the ACCC formed the preliminary view, after conducting a detailed assessment, that the public benefits resulting from the alliance are likely to outweigh the public detriment which may result through its effect on competition where Qantas and Emirates offer overlapping services. In most regions, this detriment is likely to be mitigated by a number of factors, including continued competition from a number of established airlines.”
“Under interim authorisation, the applicants will be able to commence activities that will enhance the product and service offerings to Qantas and Emirates customers. In making its decision, the ACCC has accepted written assurances from the parties that should the ACCC ultimately decide not to allow the alliance to go ahead, the airlines will accommodate consumers’ bookings.”
“The ACCC raised concerns about the potential impact of the alliance on the overlapping routes between Australia and New Zealand. The ACCC is concerned that the alliance may have an increased ability and incentive to reduce or limit growth in its capacity in order to raise airfares. Therefore, the ACCC is granting interim authorisation on the condition that the applicants do not engage in the conduct for which authorisation is sought in relation to services between Australia and New Zealand,” Mr Sims said.
The ACCC may review its decision on interim authorisation at any time and it should not be taken to be indicative of whether or not final authorisation will be granted.
On 20 December 2012, the ACCC issued a draft determination proposing to grant authorisation to the alliance, subject to a condition, for five years. The ACCC has sought submissions from the applicants and interested parties in relation to the draft determination. The ACCC is also currently organising for a pre-decision conference to be held regarding these applications. The ACCC anticipates making a final decision on whether to authorise the conduct in March 2013.
Authorisation provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment. Interim authorisation allows the parties to engage in the conduct while consideration is given to their application.
More information about the application for authorisation and the ACCC’s granting of interim authorisation is available at www.accc.gov.au/AuthorisationsRegister