Restructuring of the aviation industry is far from over and the Commerce Commission will continue to closely monitor developments in the industry Commission Chairman Dr Alan Bollard said today.
Dr Bollard was speaking at the Aviation Law Association annual conference in Queenstown.
He said the Commerce Act applies to far more than just acquisitions like the Air New Zealand/Ansett deal, and all aviation companies operating or based in New Zealand must understand how it applies to them.
International alliances between airlines are becoming increasingly common. They include code-sharing - where one airline flies the route and another has rights to sell seats on those flights - sharing computer reservation systems, pooling of engineering facilities, and agreements about fares and fees.
Depending on the circumstances, any of these arrangements could breach the Commerce Act. The Commission will investigate possible breaches and, if necessary, will take action against them.
Some other agreements outside strategic alliances, such as putting pressure on a travel agent not to deal with a competing airline, are also likely to be illegal.
An airline or airport in a dominant position that has other "below wing" activities, such as cargo forwarding or jet engineering, must also pay attention to the Commerce Act.
To protect themselves against breaching the Act, companies must understand it. Significantly, it is not only the Commission which can take action under the Commerce Act, but competitors and customers can too.
The objective of the Act is to promote competition. It does not try to determine how businesses should behave nor how industries should develop. Instead, it prohibits anti-competitive business practices.
Furthermore, it does not protect businesses which may have to restructure or even close down because of competition.
Ultimately, it is choices made by customers and competitors that determine the shape of markets in New Zealand.
The Commission's role is to protect the competitive process.
Copies of Dr Bollard's speech are available from the Commission.
Media contact: Communications Officer Vincent Cholewa
