The Australian Competition and Consumer Commission will not oppose the proposed acquisition by Air New Zealand Limited (Air New Zealand) of an additional 6 per cent of Virgin Australia Holdings Pty Ltd (Virgin).
On 3 September 2013, the ACCC issued a final determination granting conditional authorisation until 31 October 2018 for Virgin and Air New Zealand to continue their trans-Tasman alliance.
This alliance removes any potential competition between Air New Zealand and Virgin on trans-Tasman routes until at least that date. The ACCC noted that it was unclear if and when Virgin and Air New Zealand would return to competition in air passenger services markets on the trans-Tasman following that date, and how closely the two airlines would compete if they were to return to competition.
The ACCC noted that, as a consequence of the trans-Tasman alliance, the only direct overlap for air passenger services between Virgin and Air New Zealand was for minor flight routes between New Zealand and the PacificIslands.
"The ACCC concluded that the proposed acquisition would not be likely to result in a substantial lessening of competition in any market as it would not provide Air New Zealand with the ability to control or materially influence Virgin or significantly affect Air New Zealand's incentives to compete with Virgin," ACCC Commissioner Jill Walker said.
Air New Zealand welcomed the announcement by the Australian Competition and Consumer Commission (ACCC).
On 6 June 2013 Air New Zealand announced it had entered into an agreement to acquire a further 3% of the shares of Virgin Australia, taking its interest to 22.99%. The agreement remains subject to customary Foreign Investment Review Board (FIRB) conditions. Air New Zealand also announced that it will consider acquiring up to a further 3% of the shares in Virgin Australia, to the extent it is permitted to do so under the Australian Corporations Act, and has made an application to FIRB on that basis.
As part of its usual process, FIRB sought the views of the ACCC on any competition-related issues. While the ACCC announcement is a positive development, Air New Zealand has not yet received FIRB approval.
