Re Qantas Airways Ltd - [2004] ACompT 9

AUSTRALIAN COMPETITION TRIBUNAL
Qantas Airways Limited [2004] ACompT 9
SUMMARY
File No 5 of 2003
RE:APPLICATION FOR REVIEW OF THE DETERMINATION OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION MADE ON 9 SEPTEMBER 2003 DENYING AUTHORISATION IN RELATION TO APPLICATIONS A30220, A30221, A30222, A90862 AND A90863 (PROPOSED ACQUISITION BY QANTAS OF ORDINARY SHARES IN AIR NEW ZEALAND AND COOPERATIVE ARRANGEMENTS BETWEEN QANTAS, AIR NEW ZEALAND AND AIR PACIFIC)

BY:QANTAS AIRWAYS LIMITED (ABN 16 009 661 901) and AIR NEW ZEALAND LIMITED (ABN 70 000 312 685)

Applicants
GOLDBERG J (President), MR G F LATTA and PROFESSOR D K ROUND
16 MAY 2005
MELBOURNE (Heard in Sydney and Melbourne)

SUMMARY

In accordance with the practice of the Australian Competition Tribunal (“the Tribunal”) the following summary has been prepared to accompany the Reasons for Determination made today. The summary is intended to assist in understanding the outcome of these proceedings and is necessarily not a complete statement of the reasoning or the conclusions of the Tribunal. The only authoritative statement of the Tribunal’s reasons is that contained in the published Reasons for Determination which is being published today and will be available on the internet at together with this summary.
The matter before the Tribunal was a review sought by Qantas and Air New Zealand of the Australian Competition and Consumer Commission’s (“the Commission”) refusal to grant them authorisation in respect of agreements relating to their activities across the Tasman and elsewhere. In essence, Qantas and Air New Zealand entered into a series of agreements, subject to authorisation, rationalising a number of their airline activities.
On 12 October 2004 the Tribunal handed down its determination in which it granted the authorisation sought. The Tribunal has found that although there is a detriment arising out of certain anti‑competitive aspects of the proposed agreements, there are public benefits accruing as a result of the proposal which outweigh that detriment.
In December 2002 Qantas and Air New Zealand applied to the Commission for authorisation for Qantas to acquire ordinary shares in Air New Zealand comprising up to a 22.5% voting equity interest, and for Qantas and Air New Zealand to enter into agreements for the coordination of their activities such as scheduling and pricing for all passenger and freight services on all Air New Zealand flights and all Qantas flights into, within and leaving New Zealand. There was also an application for authorisation of an agreement relating to co‑operation with respect to aspects of passenger and freight services with Air Pacific Limited. We refer to this acquisition and these agreements as “the Alliance”. The Alliance between Qantas and Air New Zealand involved, in substance, the combining of flights and the removal of competition between them in relation to matters such as pricing and scheduling.
On 9 September 2003 the Commission denied authorisation in respect of all the agreements on the grounds that they would involve a substantial lessening of competition and that the anti‑competitive effects of the proposed agreements would substantially outweigh the public benefits…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] ACompT 9
Decision Date: 16 MAY 2005

CaseChat Overview and Summary

- **Parties, Dispute, and Court:**
Qantas Airways Limited and Air New Zealand Limited sought a review of the Australian Competition and Consumer Commission's decision to deny authorisation for their proposed agreements. The matter was heard by the Australian Competition Tribunal.

- **Legal Issues:**
The court had to determine whether the proposed agreements between Qantas and Air New Zealand, including the acquisition of shares and cooperative arrangements, would substantially lessen competition. Additionally, the court needed to assess whether the public benefits from these agreements outweighed any potential anti-competitive detriments.

- **Court's Reasoning and Outcome:**
The Tribunal concluded that while there would be some anti-competitive effects, particularly for time-sensitive passengers, the public benefits from the proposed agreements, such as cost savings and improved tourism, outweighed the detriments. The Tribunal granted authorisation for the agreements, finding that the benefits to the public were significant enough to justify the authorisation despite the potential for some anti-competitive effects.

- **Final Orders:**
The Tribunal set aside the Commission's determination and granted authorisation for the proposed agreements between Qantas and Air New Zealand, including the acquisition of shares and the strategic alliance. The authorisations were set to be in force for five years, with the possibility for the Commission to apply to vary the commencement date if the agreements were not implemented within twelve months.

Orders