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Law360 (June 19, 2020, 3:24 PM EDT) -- The Australian government has directed enforcers to closely monitor competition in the domestic airline market for the next three years, increasing scrutiny of an industry already closely watched in the country.
Australia's Treasurer Josh Frydenberg said in a statement Friday that the government has told the Australian Competition and Consumer Commission to monitor prices, costs and profits of companies in the domestic airline industry and to provide quarterly reports.
"The government has consistently said Australia's national interest is best served through having a sustainable, competitive aviation sector," Frydenberg said. "ACCC monitoring will assist in protecting competition in the domestic passenger airline market, for the benefit of all Australian airline travellers."
ACCC Chair Rod Sims said in a statement from the commission Friday that enforcers welcome the opportunity to ensure competition in a critical industry. The agency was already tasked with monitoring and reporting on the costs and quality of services at Australia's four major airports under a prior direction from the government.
"A strong aviation industry is vital for Australian consumers and the economy more broadly, and for our way of life," Sims said. "A sufficient level of competition provides consumer choice and helps to maintain service levels and keep prices down over the long term."
The ACCC statement noted that the aviation industry has been hard hit globally by the COVID-19 pandemic and said the agency will be monitoring, among other things, the rate at which airlines begin increasing capacity and on which routes.
"This will provide insight into whether an airline could be adding additional flights to a route in an attempt to damage a competitor or drive them off the route," the statement said.
Frydenberg said the new monitoring program will aid in the ACCC's existing efforts by helping enforcers obtain the information they need and providing another avenue for people to raise concerns about the sector. He also noted challenges the industry is facing due to the coronavirus and detailed subsidies the Australian government has committed to providing.
"The government will continue to act in Australia's national interest by supporting a commercially viable and competitive aviation sector," Frydenberg said.
The ACCC is also currently investigating a AU$60 million ($41.1 million) minority investment by Australian airline Qantas in rival Alliance Airlines, a deal that gave Qantas a 19.9% stake in Alliance and made it the company's largest shareholder. The commission said earlier this month it was pushing ahead with the probe despite the upheaval being caused by the pandemic.
But in March, the ACCC authorized Qantas, Virgin Australia and Regional Express to coordinate flight schedules to help deal with the pandemic, calling the request urgent and saying enforcers hoped it would help them compete against one another afterward.
--Editing by Gemma Horowitz.
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