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Airport Enters Agreement With Commerce Commission

Airport Enters Agreement With Commerce Commission

Auckland International Airport Limited (AIAL) has entered into an undertaking with the Commerce Commission to drop plans to reduce the number of duty free retailers from two to one.

The Commission investigated AIAL under the Commerce Act, after it became concerned that the airport had decided to move to a single duty free provider from August 2009.

The Commission has issued a warning to AIAL that it risked breaching the Commerce Act with such a move. AIAL has undertaken not to continue with the plans.

"The Commission was concerned that had the move from two to one retailers gone ahead consumers would have paid higher prices for duty free products," said Commission Chair Paula Rebstock.

"It is important to have resolved the competition concerns promptly, as changes implemented already have resulted in only a minor presence for one of the duty free providers in the new arrivals hall," said Ms Rebstock.

"Under the move from two to one duty free retailers consumers would no longer have choice, and the price benefits gained from competition," said Ms Rebstock.

"The Commission acknowledges the cooperation from AIAL in moving to ensure airport travellers can benefit once again from effective competition in duty free retailing."

Background

In May 2007 AIAL tendered a single duty free concessionaire contract, which would be in force from August 2009 to June 2015.

AIAL currently has two duty free providers: DFS Galleria and The Nuance Group (trading as Regency Duty Free).

On 21 November 2007 the Commerce Commission received an application from DFS Galleria seeking clearance to acquire 100 % of the shares in, or the assets of, the New Zealand operations of Nuance. In March 2008 the Commission declined the clearance application. The Commission was not satisfied that the proposed acquisition would not have, or would not be likely to have, the effect of substantially lessening competition in the market for the retail supply of duty free goods at Auckland International Airport

ends

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