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ACCC launches Qantas probe

By KRISTA HUGHES
22nov01

THE consumer watchdog will consider regulating cut-price air tickets and seat numbers after complaints Qantas had abused its market power since the collapse of rival Ansett.

The Australian Competition and Consumer Commission said about 12 complaints had been levelled at Qantas in recent months, ranging from undercutting prices to unfairly increasing the capacity on routes.

ACCC commissioner Ross Jones said the authority had launched an inquiry into anti-competitive behaviour in the domestic airline industry and would consider whether it needed to intervene.

"Since Ansett collapsed we've had complaints from Virgin, we've had complaints from the Ansett administrator, we've had complaints from airports," Mr Jones said.

"And so what we've decided to do is ... to expand the investigation from each specific and isolated instance into a more general analysis of anti-competitive conduct, with a view to seeing whether it's worthwhile trying to develop some sort of guidelines for industry behaviour."

"We'd be looking at sort of behavioural things, seeing if we could give some direction in terms of when a particular type of price cut was predatory, what types of capacity increases were acceptable."

Mr Jones said if Qantas was found to have breached the Trade Practices Act, it could face fines of up to $10 million per offence.

Mr Jones said the ACCC also received complaints from customers over the prices they had to pay for tickets but the industry complaints were more substantial.

"We have had a complaint for example about Qantas' one million cheap seats ... one of the competitors said we believe that this is another example of Qantas engaging in predatory behaviour," he said.

The difficult part of the job was deciding where the line was between predatory behaviour and smart business practice.

The inquiry came after Qantas earlier this year swallowed up budget airline Impulse, leaving Richard Branson's Virgin Blue and Ansett Mark II as the only alternatives to Qantas.

Virgin Blue chief executive officer Brett Godfrey said the future of low fares and competition depended on ACCC guidance.

"Discount fare dumping and predatory capacity expansion designed to stop low-fare competition requires a quick and effective response," he said.

"Regulators have these powers in the United States and Canada and Australian consumers should expect the same."

AAP

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And the other side of the story, for balanced reporting.....

(QUOTE)

Qantas slams 'fanatical' ACCC plan

From AAP
22nov01

PROPOSALS by Australia's competition watchdog to introduce airline specific competition laws bordered on fanatical, Qantas Airways Ltd chief executive Geoff Dixon said.

The Australian Competition and Consumer Commission (ACCC) said today it would extend an investigation into the aviation industry over misuse of market power provisions of the Trade Practices Act.

Addressing a business luncheon in Brisbane today Mr Dixon said Qantas would defend itself against any allegations by the ACCC.

"We're still hearing that Qantas is somehow still a monster that must be sedated," he said.

"Talk that the Corporations Act should be changed to give the ACCC more power to regulate Qantas borders on the fanatical.

"The ACCC already has wide ranging powers and very significant resources to ensure Qantas does not exploit its market position."

He said the effects of many of the proposed changes would be to handicap Qantas for simply being efficient.

ACCC commissioner Ross Jones said today the authority had extended an an inquiry into anti-competitive behaviour in the domestic airline industry and would consider whether it needed to intervene.

"Since Ansett collapsed we've had complaints from Virgin, we've had complaints from the Ansett administrator, we've had complaints from airports," Mr Jones said.

Mr Dixon said Qantas had responded to more than 10 separate ACCC requests in recent months and engaged in two ACCC investigations which were "unwarranted".

He added apart from Canada, where one airline has already folded and the country's major carrier Air Canada teeters on the brink of bankruptcy, no country in the world has competition policy that is specific to the aviation industry.

"It would be extraordinary to introduce such laws into Australia especially if they are focused, as the ACCC is suggesting, on the effects of actions taken rather than intent," he said.

"There are also suggestions that `cease and desist' notices should be introduced, we believe this would have the practical affect of treating companies as guilty until proven innocent."

He added the ACCC would not find anything wrong with Qantas' practices.

"I know (ACCC chairman Alan Fells) won't find anything," he said.

ACCC chairman Allan Fels told an aviation conference earlier this month that under current legislation it would be too difficult to find Qantas guilty if it was involved in any anti-competitive tactics.

Mr Fels said he wanted to add an "effect test" to the Corporations Act, so that anti-competitive behaviour could be stopped merely by proving that the tactic had "the effect of damaging competition".

Qantas shares closed three cents weaker at $4.13.

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*Virgin applauds ACCC plans to widen aviation industry*

Queensland-based airline Virgin Blue has welcomed a decision by the
Australian Competition and Consumer Commission (ACCC) to widen its
aviation industry inquiry.

The ACCC says it will now consider allegations of anti-competitive
practices by some carriers.

Virgin Blue's head of commercial David Huttner says he is looking
forward to making a submission, which will include concerns about the
market position of Qantas.

"I think these policies are generally designed to ensure that no player
has complete market dominance and in light of the fact that Qantas
basically has about 90 per cent of the market right now, it's a little
bit like Telstra I think," he said.

"It's fair to say the ACCC would be likely to look at that that
situation."
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Watchdog bites on airlines

By FLEUR ANDERSON and wire srvices
23nov01

THE national competition watchdog is considering regulating cut-price air tickets and seat numbers as it investigates accusations Qantas has abused its market power since Ansett's collapse.

But Qantas chief executive Geoff Dixon yesterday lashed out at the Australian Competition and Consumer Commission, describing moves to increase the organisation's power as "bordering on fanatical".

The ACCC said it had received about 12 complaints levelled at Qantas, ranging from undercutting prices to unfairly increasing capacity on routes.

ACCC commissioner Ross Jones said the authority had launched an inquiry into anti-competitive behaviour in the domestic airline industry and would consider whether it needed to intervene.

"Since Ansett collapsed we've had complaints from Virgin, we've had complaints from the Ansett administrator, we've had complaints from airports," Mr Jones said.

The watchdog said it would approach interested parties for submissions whether the ACCC should develop guidelines relating to anti-competitive conduct in the airline industry.

Budget airline Virgin Blue supported the investigation and chief executive Brett Godfrey said the Federal Government should boost ACCC powers to stop anti-competitive behaviour.

"Discount fare dumping and predatory capacity expansion designed to stop low-fare competition requires a quick and effective response," Mr Godfrey said.

"Regulators have these powers in the US and Canada, and Australian consumers should expect the same."

Speaking in Brisbane yesterday, Mr Dixon denied Qantas was "under siege" from the ACCC, but claimed ACCC chairman Alan Fels was targeting the airline.

Qantas is not the first company to question the ACCC's tactics.

Gerry Harvey, chairman of retailer Harvey Norman, lashed out at the ACCC earlier this week, saying it had victimised his company for more than a year.

Mr Dixon said Qantas responded to 10 different requests for information from the ACCC in recent months and was the subject of two ACCC investigations "that we know are unwarranted".

He said the ACCC called Qantas in the days following Ansett's collapse, warning "we hope you have doubled your number of lawyers because you are going to need them".

"Talk that the Trade Practices Act should be amended to give the ACCC more power to regulate Qantas borders on the fanatical," Mr Dixon said.

As Qantas moves to slash 2000 jobs from its workforce, unions warned 280 full-time catering positions would be the first to go in early next year. And Qantas maintenance workers yesterday continued their threat of industrial action and rolling stoppages to protest Qantas's proposed 18-month wages freeze.

Mr Dixon said the airline had secured support for the freeze from 90 per cent of workers and most unions.

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