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Qantas and Air New Zealand proposal

Qantas and Air New Zealand proposal: Commission awaits an application

Commerce Commission Chair John Belgrave today said the Commission is preparing to receive an application for an authorisation under the Commerce Act following the announcement by Air New Zealand and Qantas of a proposed alliance between the two airlines. He also confirmed that there would be an opportunity for public submissions on the proposal during the Commission’s inquiry process.

The proposed alliance is subject to several conditions, one of which is approval from the relevant regulatory bodies. In New Zealand, one of the required approvals is from the Commission.

“The purpose of the Commerce Act is to promote competition in markets for the long term benefit of consumers within New Zealand,” said Mr Belgrave.

“The Commerce Commission is an independent quasi-judicial body. It is not subject to direction in its enforcement and regulatory control activities and does not advise the Government on policy matters. It performs its enforcement and regulatory control functions within the relevant statutory framework.”

“The Commission’s role is to inquire into the merits of the application. The proposal clearly raises competition implications for the domestic, trans-tasman and trans-pacific aviation markets. The Commission will identify the competitive impact of the proposed alliance between Air New Zealand and Qantas and measure it against the benefits to New Zealand.

Mr Belgrave said that the Commission had invited both Qantas and Air New Zealand to meet with it in recent months, and that the Commission had reminded both businesses of their obligations under the Commerce Act.

“The Commission operates an open-door policy for any business wanting to know more about the role of the Commission and the legislation it enforces. We are confident that Qantas and Air New Zealand are both aware of their obligations under the Commerce Act.”

The Commission can grant an authorisation for potentially anti-competitive arrangements if it is satisfied that the economic benefit directly attributable to the acquisition outweighs any detriment.

Mr Belgrave added that Commission decisions are made within a statutory framework and on the basis of the relevant information and analysis, including material provided by the applicant and other parties. The process includes the Commission publishing a draft determination, and calling for submissions. It will then hold a conference to receive oral submissions.

“The process is open, transparent and robust. If parties disagree with our decisions they are subject to challenge in the courts in the normal way.”

“The Commission has no preconceptions about the proposed alliance. It will consider the application on its merits and in accordance with the law. The Commission has not yet received an application relating from Air New Zealand or Qantas.”

Any application will require careful consideration of complex issues. If an application is received in the next few weeks, the Commission’s determination could be reported in 2003.

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