The Australian Competition and Consumer Commission (ACCC) today announced that it will not oppose TPG’s AUD$1.56 billion acquisition of iiNet. iiNet will seek federal court approval for acquisition tomorrow.
In a draft decision in March, Sims said he may block the stitch-up because it could hurt competition on the lucrative Sydney-Shanghai route in which the airlines now compete.
Success… China Eastern will have more of a process in Sydney and Cairns following the ACCC’s approval of a partnership with Qantas.
Passengers are set to benefit from Qantas now sharing China Eastern’s terminal in Shanghai which could shave off hours on layovers and open up new connecting flights within China.
After implementation, the acquisition will see TPG overtake Optus as Australia’s second biggest broadband provider with over 1.7 million customers.
However, ACCC chairman Rod Sims said on Friday that the airlines’ plans to add a significant number of new services, and an expanded range of destinations, would be a “significant public benefit”.
The ACCC has imposed conditions on the airlines that require them to boost capacity on routes between Australia and China by 21 per cent over the next five years, and report their monthly average fares.
Qantas also hit out at the regulator in May for failing to “appreciate the degree of competitive constraints” on it and China Eastern from other airlines such as Cathay Pacific and Singapore Airlines.
Mr Sims said it was not uncommon for airlines to charge higher fares for passengers on a point to point route where competition was limited.
Qantas Group chief executive Alan Joyce welcomed the decision.
China Eastern chairman Liu Shaoyong said the partnership would help generate more tourism and trade opportunities with Australia and provide more convenient travel options. “Doing so should result in significant expansion in their services between Australia and China”, the ACCC said.
The competition regulator has reversed course and approved a proposed alliance between Qantas Airways and China Eastern, but it has imposed strict capacity commitments and remains concerned the pair could look to take advantage of their dominant position on the Sydney-Shanghai route to raise airfares. “China is Australia’s most valuable inbound tourism market – projected to contribute up to AU$9 billion (US$6.6bn) annually to the Australian economy by 2020”.