Qantas has paused plans to build a majority stake in Alliance Aviation after the competition watchdog expressed concerns about the impact of the carrier’s existing 19.9 per cent shareholding in the regional charter service.
Qantas bought a slice of ASX-listed Alliance in February without seeking informal merger clearance from the Australian Competition and Consumer Watchdog, which has since been investigating the move and is now seeking comments from customers and competitors after laying out its preliminary concerns.
Qantas has provided an undertaking to the ACCC not to acquire any further Alliance shares until the watchdog completes its investigation.
“We consider this shareholding has the potential to impact Alliance’s future growth and its ability to be a strong competitor,” ACCC chairman Rod Sims said on Thursday.
“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.”
Qantas paid $60 million for a 19.9 per cent stake in its long-term charter provider and said at the time it would probably ask the ACCC for permission to build a majority stake.
Qantas on Thursday reiterated that it was a passive investor and had not asked for board representation as a minority shareholder.
“Qantas has invested in Alliance because it is a profitable, well-managed business with attractive levels of exposure to the resurgent resources charter market,” Qantas said.
“We do not believe there is any evidence of a lessening of competition as a result of our minority stake, nor any reasonable prospect that there will be.”