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QANTAS & VIRGIN GO AGAINST EACH OTHER AS RIVALS IN ACCC DEBATE

WHERE WILL THE BATTLE GO BETWEEN QANTAS & VIRGIN?

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Power struggle: Qantas and Virgin are going head to head. Photo: Getty Images

The competition regulator is investigating Qantas Airways for potential ­misuse of market power in its ­increasingly bitter fight with arch-rival ­Virgin Australia, The Australian Financial Review reports.

It is believed the Australian Competition and Consumer Commission has been investigating since August the way Qantas has added extra capacity on air routes as part of its ­strategy to control 65 per cent of the domestic market.

Companies are allowed to sell goods or services below cost price but businesses with substantial market share must not “use this power for the purpose of eliminating or substantially damaging a competitor”.

ACCC chairman Rod Sims would not comment on Thursday but told The Sydney Morning Herald in September he was “concerned” about comments by Qantas executives about the ­domestic price war with Virgin.

The head of Qantas’s domestic business, Lyell Strambi, had previously warned he would add two planes for each one added by Virgin.

“We’ve made it very clear we’ll be sensible in terms of capacity,” he said. “But if a competitor puts one [plane] in, we’ll put two in as a group. We’re very clear, we’re not making any apologies for it.”

A Qantas spokesman would not comment on any ACCC discussions.

“We’ve been very clear about our intent to maintain our profit maximising 65 per cent share of the domestic market, which puts us in the position to offer the best service to customers,” the spokesman said.

“This has been in place for about 10 years and our full-year financial results confirmed the merits of this strategy.

“With potentially unlimited foreign capital flowing into our competitor, the concept of market share equating to market power is debatable and ­probably redundant.”

Qantas and Virgin are embroiled in a bitter fight over Virgin’s $350 million capital-raising, backed by the airline’s foreign shareholders, Air New Zealand, Singapore Airlines, Etihad Airways and Virgin Group. Virgin may sue Qantas over comment made by Mr Joyce which it believes were aimed at ­destabilising the raising.

Qantas is ­considering referring Virgin to the Anti-Dumping Commission to highlight what is believes is predatory behaviour by its rival.

AAA

November 22nd, 2013
Topic: TRANSPORT SHIPPING AVIATION Tags: , , ,

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