Deal sets watchdog growling

By GREG ANSLEY Australia correspondent

CANBERRA - Qantas and Air New Zealand will find no easy route past corporate watchdog the Australian Competition and Consumer Commission and its retiring chairman, Professor Allan Fels.

Publicly reviled by Australian business leaders - Qantas chief Geoff Dixon among them - Fels and the commission have always shown great concern at any potential loss of competition in aviation.

Fels said yesterday he had little doubt that the proposal would lessen competition. The airlines' plan appeared to include "strong elements of anti-competitive arrangements, including price-fixing and route-sharing".

Air NZ and Qantas would need to convince regulators that the benefits to the public outweighed the anti-competitive effect if the alliance were to proceed, he said.

Qantas and the commission have already clashed this year, when the commission launched legal action against the airline in May, claiming that Qantas had dumped capacity on the Brisbane-Adelaide route after Virgin entered the market in December 2000.

In a case yet to start in court, the commission alleges Qantas artificially lifted the number of available seats to force Virgin to either match the increase or suffer heavy losses, and had the resources to win a war of attrition.

The commission, Dixon complained, used the media "in a way that damages companies before they are proven guilty".

A commission spokeswoman said yesterday that no details of the Qantas-Air NZ deal had yet been received, but the two airlines were expected to try to demonstrate that the public benefit outweighed the anti-competitive aspects of their proposal.

The airlines would have cause to prepare for the worst.

Fels and the commission have taken on the biggest guns corporate Australia can muster, slamming "misleading and deceptive behaviour" by Telstra and Medibank Private, raiding offices of Caltex and other big oil companies, hauling the Commonwealth Bank into court, launching actions that cost Pioneer, Boral and CSR A$20 million ($22.4 million), and taking on Woolworths.

The commission oversees competition and consumer law through the Trade Practices and Price Surveillance Acts, and has responsibilities under another seven acts covering airports, Australia Post, broadcasting, telecommunications, trademarks and gas supplies.

In 2001-02 the commission began proceedings in 60 actions, with a further 74 still in court.

In July, it said it would establish a US-style taskforce to crack down on corporate accountants, and called for new powers to jail erring executives for up to seven years and impose fines of up to 10 per cent of company turnover.

Outraging boardrooms even further, Fels said the nation's biggest companies had joined together in the Dawson inquiry into competition law to undermine the enforcement of legislation governing their behaviour.

Business in turn shot back, with Shell Australia describing the commission as "cavalier and illegitimate", and Woolworths chief executive Roger Corbett accusing it of acting without "any line of accountability at all".