ACCC harbours concerns about Tiger acquisition

written by australianaviation.com.au | February 7, 2013
The tie-up between Virgin and Tiger is not a foregone conclusion. (Seth Jaworski)

The Australian Competition and Consumer Commission (ACCC) has re-affirmed its concerns about the proposed acquisition of 60 per cent of Tiger Airways by Virgin Australia.

In a statement of issues the ACCC said it remains unconvinced that it would not have a detrimental impact on competition.

“The ACCC’s concerns relate to the risk of muted competition following the reduction in the number of airline groups within Australia from three to two (excluding regional airlines), and the loss of Tiger Australia as an independently owned discount competitor,” ACCC chairman Rod Sims said.

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“This potential reduction in competition arises as a result of the increased ability on the part of Qantas/Jetstar and Virgin Australia/Tiger Australia to coordinate their activities once Tiger Australia is no longer operating as an independent low cost carrier,” he added.

Sims also noted that proposals to expand Tiger’s fleet remain an influential factor.

“Another relevant factor is that the merger parties have publicly announced an intention to expand Tiger Australia’s fleet from its current 11 aircraft to 35 aircraft by 2018,” Sims said.

“If the ACCC was satisfied that a significant increase in capacity would take place, this would also diminish the prospect of any increase in coordinated conduct in the market.”

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In response the ACCC’s views, Virgin Australia merely said it would study the statement and prepare a response, adding in a statement to the Australian Securities Exchange: “Virgin Australia strongly believes the proposed acquisition will increase competition in the market to the benefit of Australian consumers.”

A final decision from the ACCC on the acquisition is expected on March 14.

 

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