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  • Aussie airline giant Qantas Airways has raised alarms for the Australian Competition and Consumer Commission (ACCC) due to its shareholding in Brisbane-based Alliance Airlines
  • The watchdog officially announced today it was concerned over the effects on competition the 19.9 per cent shareholding could have in an already “highly concentrated” market
  • The ACCC is mostly concerned over Alliance being the only competitor to Qantas’ passenger routes between Brisbane, Bundaberg and Gladstone
  • Qantas responded today with a media release, claiming it will continue to cooperate with the ACCC while it conducts an investigation but has no plans in decreasing its holding in what it described as a “passive investment”

The Australian Competition and Consumer Commission (ACCC) has expressed concerns today over Qantas Airways owning a stake in Alliance Airlines.

At the start of February this year, Qantas purchased a 19.9 per cent stake in the Brisbane-based aviators. Today, the ACCC released an official statement citing concerns over competition between the two companies.

“Alliance Airlines is a close, important and growing competitor to Qantas, including through its partnership with Virgin,” ACCC Chair Rod Sims said.

The watchdog’s website also claimed Alliance to be the only competitor to Qantas on regular passenger routes between Brisbane, Bundaberg and Gladstone in an already “highly concentrated” market.

“Qantas did not seek informal merger clearance from us before it acquired this stake in Alliance, which made Qantas Alliance’s biggest single shareholder,” Rod continued.

When Qantas made the purchase, it spent a total of $60 million at $2.40 per share.

Now the watchdog has asked for official comments from customers and competitors on the effects of the acquisition.

“In our view, any move by one company to acquire and build on a significant stake in a close competitor is likely to raise competition issues, due to the potential for the two businesses to compete less vigorously, or to influence each others’ strategies or outcomes,” Rod added.

This morning in response, Qantas addressed these concerns with a media release to the ASX.

“Qantas has invested in Alliance because it is a profitable, well-managed business with attractive levels of exposure to the resurgent resources charter market,” the release reads.

Qantas added that the company has not sought any management or board control in Alliance – remaining as a passive investor.

The major Aussie airline also added the company has no plans to decrease its holding in Alliance during this investigation.

“We respect the role of the ACCC and have agreed not to expand our shareholding in Alliance while the ACCC continues its investigation. We continue to cooperate fully with the ACCC’s inquiries,” the airline added.

The ACCC will continue to investigate the effects on competition Qantas’ ownership in Alliance may have.

As of 11:37am AEST, shares in Qantas are sitting flat at $5.71 each in a $8.967 billion market.

Meanwhile, shares in Alliance are slightly up by 0.17 per cent for $2.88 a share. The company’s market cap is presently at $360.2 million.

QAN by the numbers
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