Commission closes investigation

Media Release

Issued 31 March 2006/117

Commission closes investigation

The Commerce Commission has today closed its investigation into claims by Origin Pacific Airways Limited that Air New Zealand took advantage of its market power to restrict, prevent or deter competition on selected provincial air services markets.

On 1 September 2003 Origin Pacific announced new non-stop flights between Christchurch and Hamilton. Before that time there were no non-stop flights between the cities. On 9 September 2003 Air New Zealand announced its own new non-stop flights between Christchurch and Hamilton. Origin then cancelled its plans to operate the service as it considered it could not viably fly the route alongside Air New Zealand.

Origin Pacific alleged that Air New Zealand’s behaviour was an abuse of market power and therefore a breach of s36 of the Commerce Act. After extensive investigation, the Commission has concluded that, by introducing its own direct flights between Christchurch and Hamilton, Air New Zealand was exhibiting a competitive response to a rival in the marketplace. Air New Zealand’s behaviour is unlikely to have been materially different from what might have occurred in a competitive market.

Background

Section 36 of the Commerce Act 1986 prohibits persons who have a substantial degree of market power in a market from taking advantage of that position for various purposes, including preventing or deterring competitive conduct by others.

ENDS

Commission media releases can be viewed on its web site www.comcom.govt.nz

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