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SYDNEY: Australia's competition watchdog has said it will not block a proposed 11.1 billion dollar (8.8 billion US) takeover of national carrier Qantas, just as parliament launched a probe into the bid.
The planned acquisition of the country's iconic airline by a private equity consortium cleared a major hurdle when the Australian Competition and Consumer Commission (ACCC) said it would not intervene in the deal.
"The proposed acquisition is unlikely to substantially lessen competition under section 50 of the Trade Practices Act 1974," ACCC chairman Graeme Samuel said in a statement.
The watchdog launched a review of the deal announced in December to establish whether the interests of the members of the private equity group, Airline Partners Australia Ltd (APA), would undermine competition in the market.
The areas examined by the panel included aeronautical services, passenger services, aircraft leasing, airline catering, aircraft parts, ticket reservation and booking services.
"The ACCC found there was no likely substantial lessening of competition in each of these cases, having regard to the restrictions on related party transactions under the APA consortium and the level of competition in the relevant market," Samuel said.
The consumer watchdog also looked at whether there was any conflict of interest involving Australia's largest investment bank, Macquarie, a member of the consortium which also owns a large share of Sydney Airport, Qantas' hub.
But the ACCC concluded that "there is a level of influence by Macquarie Bank over Sydney Airport but that this influence is somewhat mitigated by a series of regulatory and corporate restraints," Samuel said.
The APA consortium includes Macquarie, Australian financial services company Allco Finance Group, which is involved in long-term aircraft leasing, as well as US private equity giant Texas Pacific Group; and Canadian equity investor Onex Partners.
The consortium welcomed the ACCC's decision not to oppose the acquisition, which has however yet to be approved by Australia's Foreign Investment Review Board.
"Airline Partners Australia has worked with the ACCC constructively to address all relevant issues in relation to our bid," APA director Bob Mansfield said.
Qantas's board has unanimously backed an offer from APA of 5.60 dollars per share.
But even as the controversial deal, which has made labour unions nervous, cleared a major potential obstacle, it flew into further turbulence in parliament.
The upper house, the Senate, on Thursday decided to hold an inquiry into the proposed sale's impact on low-cost airline Jetstar, a Qantas subsidiary. A committee will report back on the sale by March 20.
But Federal Treasurer Peter Costello insisted the inquiry would not delay a decision by the Foreign Investment Review Board on whether the deal would breach foreign ownership rules.
"I don't think there's any necessity to delay the decision for that inquiry," Costello said.
"I think the inquiry is going to go to other matters, particularly Jetstar and the applicability of the Qantas Sale Act to Jetstar. I'll be interested to see the outcome of the inquiry but I don't think that's a reason to delay the decision," he said. - AFP/yy
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