The proposed $11.1 billion acquisition of Qantas Airways Ltd has cleared a major hurdle with the competition watchdog giving it the all-clear.
The Australian Competition and Consumer Commission (ACCC) said it would not intervene in the proposed acquisition of Qantas by the Airline Partners Australia Ltd (APA) consortium.
"The proposed acquisition is unlikely to substantially lessen competition under section 50 of the Trade Practices Act 1974," ACCC chairman Graeme Samuel said.
The ACCC said its inquiries revealed potential competition issues arising from the interests of APA consortium members, relating to 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," Mr Samuel said.
The APA consortium includes Australia's largest investment bank, Macquarie Bank Ltd; and Australian financial services company Allco Finance Group, which is involved in long-term aircraft leasing.
It also includes Allco Equity Partners, a listed large-scale private equity company; US private equity giant Texas Pacific Group; and Canadian equity investor Onex Partners.
The ACCC also considered whether Macquarie Bank's interests in Qantas and Sydney Airport could lead to discrimination in favour of Qantas by Sydney Airport management and lessen competition in downstream aviation markets.
"Our assessment indicated 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," Mr Samuel said.
The ACCC recognised that Sydney Airport could already exercise a level of market power and could discriminate between airlines for its own commercial reasons.
The key question for the ACCC was whether the acquisition by Macquarie Bank of a minority holding in Qantas would increase its ability and incentive to facilitate discrimination in favour of Qantas to the extent that it could substantially lessen competition.
"It appeared from the ACCC's extensive market inquiries that there were not clear incentives for Macquarie Bank to seek to facilitate increased discrimination in favour of Qantas," Mr Samuel said.
APA welcomed the ACCC's decision.
"Airline Partners Australia has worked with the ACCC constructively to address all relevant issues in relation to our bid," APA director Bob Mansfield said.
"This is consistent with Airline Partners Australia's approach to fully cooperate with all government departments and regulators."
Meanwhile, Treasurer Peter Costello said that a Senate inquiry into the Qantas sale would not delay a decision on the takeover bid for the airline.
The Foreign Investment Review Board is due to report to Mr Costello next week on whether the APA bid breaches foreign ownership laws.
The Senate agreed to hold a short inquiry into the proposed sale's impact on low-cost airline Jetstar, a Qantas subsidiary.
The inquiry will report back on March 20.
Qantas directors have unanimously recommended shareholders accept APA's $11.1 billion takeover offer, and an independent analysis of the $5.60 a share bid has found it to be a `fair and reasonable offer'.
Qantas shares were two cents lower at $5.13 on Thursday.