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Xenophon attacks ACCC over Qantas

2 Feb 2013 THE AGE - BY GARETH HUTCHENS



SENATOR Nick Xenophon has slammed the consumer watchdog for admitting that it had not properly tested Qantas' claims that its international operations would face "terminal decline" if its proposed alliance with Emirates could not go ahead.

The Australian Competition and Consumer Commission granted interim authorisation in January for an alliance between Qantas and Emirates that will see the airlines share joint marketing, pricing and co-ordination on some routes, as well as reciprocal frequent-flyer benefits and an extensive codesharing arrangement.

The controversial decision came after Qantas warned in September that its international operations were in serious trouble and that its proposed 10-year partnership with Emirates was an "urgent strategic imperative".

But in a stakeholders' meeting on Friday, the ACCC admitted it had not asked a forensic accountant to go over Qantas' books to test its claim before allowing the alliance to go ahead. Instead, it said it had relied on its own investigation and on Qantas' submission to the watchdog.

Senator Xenophon said he was was concerned about the admission.

"It is absolutely extraordinary . . . that there has been no forensic analysis [of Qantas' financial accounts]. That's one admission we got out of the ACCC," he said.

"Qantas' hundreds of companies, hundreds of subsidiaries, and literally the ACCC has not even assessed that, has not forensically looked at these claims of terminal decline.

"Let's put this in context, back in February 2011, Alan Joyce said that Qantas Group was ticking along nicely, the international division was making really good solid profits, yet less than four months later it was seen to be a complete turnaround. What happened?"

The commission said on Friday that its decision to allow the deal to go through had not been based on Qantas' claim that its business would be in terminal decline if it did not go through.

It also said its decision was not swayed by a consideration of job losses at Qantas, only for the effect on the Australian economy as a whole.

Tony Sheldon, national secretary of the Transport Workers Union, said he was concerned the ACCC had not considered the impact the alliance would have on jobs.

"The commission has said today that they refused to actually fully investigate or allocate the required resources into the employment impacts of the decision they made in this interim decision and future decisions they plan to make regarding Emirates and the Qantas tie-up," he said. "This is quite clearly a fundamental economic question in the national interest."

But a Qantas spokesman said the anti-Emirates attitude of the unions was "completely out of step".

"Three-quarters of Qantas staff support the partnership, as does the federal government, state tourism bodies, our shareholders and our customers," the spokesman said.

"After months of scrutiny, the ACCC's draft determination indicated that it intends to approve the partnership because of the net benefits it will deliver to consumers."