A request by Link PNG, a subsidiary of Air Niugini to purchase 40% shares from PNG Air has been declined by Independent Consumer and Competition Commission.
ICCC General Manager Brian Ivosa said the ICCC after assessing the application and taking into consideration stakeholder submissions and comments, they had found that if the acquisition proceeded it would cause serious harm to the level of competition in the airline services.
ICCC stated that Air Niugini would be able to set airfares and service standards and it would create a monopoly in the industry.
Link PNG looked at the option to purchase the shares from Nasfund in May this year.
ICCC considered that the Proposed Acquisition would affect the following relevant markets:
- The markets for the provision of domestic regular passenger transport services in PNG;
- The markers for the provision of domestic air freight services in PNG;
- The markets for the provision of air charter services in PNG;
- The markets for the provision of international Regular Passenger Transport services between PNG and Australia; and
- The markets for packaged tours in PNG and overseas.
“Whilst Link PNG argued that, post-acquisition of the two airlines (PNG Air and Air Niugini) will remain as separate entities, the characteristics of the domestic markets are such that, if the acquisition proceeds, the separate management of the two major competitors in relevant markets would combine or at least act in concert to become an effective monopoly,” said Ivosa.
If the acquisition is authorized, the following are likely to happen to competition;
- The acquisition would create a monopoly; and
- There will be inefficient services due to the absence of competitive pressure.