Australian competition watchdog delays AirNZ-Virgin deal
31 July 2013
The Australian Competition and Consumer Commission (ACCC) has delayed its review of Air New Zealand Ltd's proposed acquisition of an additional 6-per cent stake in the country's second-biggest carrier Virgin Australia Holdings Pty Ltd (Virgin) on competition concerns.
ACCC has requested further information from Virgin and suspended its 1 August deadline for arriving at a final conclusion.
''Former proposed decision date of 1 August 2013 delayed to allow provision of requested information. ACCC will announce a new decision date in due course,'' the regulator stated on its website.
Air New Zealand, which currently owns almost 20-per cent stake in Virgin, had sought the regulator's permission in June to boost its interest in the carrier by up to an additional 6 per cent, thereby increasing the total ownership interest in Virgin to 26 per cent making it the largest shareholder of the company.
The airline has already entered into a deal to raise the stake by 3 per cent to around 23 per cent, but has not indicated yet whether it will take up a further 3 per cent.
ACCC is reviewing the case under section 50 of the competition and consumer act 2010, which prohibits mergers and acquisitions that substantially lessen competition in the market.
The regulator had sought comments from market participants and other interested parties to enable it to assess competitive effects of the proposed deal, by 28 June.
Auckland-based Air New Zealand, the country's national flag carrier, provides international and domestic passenger and cargo services within New Zealand as well as to Australia, South West Pacific, Asia, North America and the UK.
The group is 73-per cent owned by the New Zealand government and Her Majesty the Queen holds an unlisted special preference share while the remainder is held by private investors.
The airline, which is a member of the Star Alliance, has a market cap of approximately A$1.26 billion. It also has code share or partnership agreements with Japan Airways, Virgin Atlantic and others.
Bowen Hills, Queensland-based Virgin Australia, co-founded by British business tycoon Richard Branson, began operations as Virgin Blue in 2000. In 2011, the company was re-launched under the Virgin Australia brand. Its 2012 revenue was A$3.9 billion.
Virgin Group owns 13.3-per cent stake in the company. Other stakeholders include Air New Zealand and Singapore Airlines with 20 per cent each and UAE's Etihad holding 10 per cent.
Earlier in June, Etihad received approval from Australia's Foreign Investment Review Board (FIRB) to increase its stake of 10 per cent in Virgin to 19.9, and a fortnight ago, the airline confirmed that it was in Australia for the ''long-term game'' and was ''buying on the market.''
Branson has indicated that he would be prepared to sell his 13.3-per cent stake in Virgin at the right price.