Wirraway
21st Nov 2003, 22:53
Sat "Weekend Australian"
Qantas pursuit aborted
By Steve Creedy
November 22, 2003
Virgin Blue last night lashed out at a decision by the Australian Competition and Consumer Commission to drop a misuse of market power case against Qantas, describing the backdown as a blow to consumers and competition.
The ACCC launched the Federal Court action in May last year amid allegations that Qantas had misused its market power by offering extra cheap seats between Brisbane and Adelaide in an attempt to drive Virgin off the route.
Qantas increased flights on the route from two to three and cut fares from more than $500 for a return flight to $117.70 one way - 30c below the Virgin fare.
The ACCC alleged at the time that Qantas had deliberately boosted its flights to eliminate or substantially damage Virgin Blue.
But ACCC chairman Graeme Samuel announced yesterday that it was dropping the action after legal advice and a further review of the domestic airline market.
He said the decision was made after talks with the parties, each of which agreed to bear their own costs.
"Like all section 46 (misuse of market power) cases, final resolution in the courts in this matter would have been extremely difficult, lengthy and expensive," Mr Samuel said.
"Experience in overseas jurisdictions where similar cases have been instituted shows the uncertainty and delays such litigation faces."
Mr Samuel noted that the aviation market had changed since the action began and competition had increased to the benefit of consumers.
Virgin Blue continued to fly the Brisbane-Adelaide route.
"The ACCC will continue to closely monitor the competitiveness of airlines in the domestic market," he said.
A disappointed Virgin Blue described the decision as a blow to consumers and to new entrants in the Australian market.
Virgin head of communication and strategy David Huttner said challengers entering new markets in Australia would face a grim situation without backers with deep pockets.
"The issues raised in this case were important to the Australian consumer," he said.
"Virgin Blue had been advised by the commission that it considered that it had reasonable prospects and it is disappointed that the ACCC did not let the case go to court.
"Clearly, today's decision offers no comfort to new entrants that may be subject to anti-competitive practices, be they in aviation or any consumer sector."
The decision delighted Qantas, which had vigorously protested its innocence and faced a fine of up to $10 million if convicted.
Chief executive Geoff Dixon said the decision to discontinue the case confirmed the airline's belief that it would have successfully defended the action.
"The prosecution has cost Qantas a significant amount of money and has been a major distraction to executive management involved in preparing the defence," he said.
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Qantas pursuit aborted
By Steve Creedy
November 22, 2003
Virgin Blue last night lashed out at a decision by the Australian Competition and Consumer Commission to drop a misuse of market power case against Qantas, describing the backdown as a blow to consumers and competition.
The ACCC launched the Federal Court action in May last year amid allegations that Qantas had misused its market power by offering extra cheap seats between Brisbane and Adelaide in an attempt to drive Virgin off the route.
Qantas increased flights on the route from two to three and cut fares from more than $500 for a return flight to $117.70 one way - 30c below the Virgin fare.
The ACCC alleged at the time that Qantas had deliberately boosted its flights to eliminate or substantially damage Virgin Blue.
But ACCC chairman Graeme Samuel announced yesterday that it was dropping the action after legal advice and a further review of the domestic airline market.
He said the decision was made after talks with the parties, each of which agreed to bear their own costs.
"Like all section 46 (misuse of market power) cases, final resolution in the courts in this matter would have been extremely difficult, lengthy and expensive," Mr Samuel said.
"Experience in overseas jurisdictions where similar cases have been instituted shows the uncertainty and delays such litigation faces."
Mr Samuel noted that the aviation market had changed since the action began and competition had increased to the benefit of consumers.
Virgin Blue continued to fly the Brisbane-Adelaide route.
"The ACCC will continue to closely monitor the competitiveness of airlines in the domestic market," he said.
A disappointed Virgin Blue described the decision as a blow to consumers and to new entrants in the Australian market.
Virgin head of communication and strategy David Huttner said challengers entering new markets in Australia would face a grim situation without backers with deep pockets.
"The issues raised in this case were important to the Australian consumer," he said.
"Virgin Blue had been advised by the commission that it considered that it had reasonable prospects and it is disappointed that the ACCC did not let the case go to court.
"Clearly, today's decision offers no comfort to new entrants that may be subject to anti-competitive practices, be they in aviation or any consumer sector."
The decision delighted Qantas, which had vigorously protested its innocence and faced a fine of up to $10 million if convicted.
Chief executive Geoff Dixon said the decision to discontinue the case confirmed the airline's belief that it would have successfully defended the action.
"The prosecution has cost Qantas a significant amount of money and has been a major distraction to executive management involved in preparing the defence," he said.
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