ACCC Gives Green Light To Buyout
Australian Prime Minister John Howard and Treasurer Peter
Costello are in disagreement over whether the proposed takeover of Qantas
Airlines should proceed. The Australian Competition
and Consumer Commission gave the 'green light' to the deal on
Costello insists that too little private equity deals could
damage market confidence, he told the The Age. He has raised
further concerns about private equity deals in general and their
"complexity and lack of transparency" and "potential conflicts of
Howard said that the government will not intervene in the $11.1
billion takeover bid and warned there would be a "savage reaction"
from the business community if he interfered. It was not for his
government to dictate how shareholders chose to sell their private
property, Howard added.
Airline Partners Australia Consortium -- led by major investment
bank Macquarie Bank -- has offered $11.1 billion for the airline in
a takeover bid. The bid is being examined by the Foreign Investment
Review Board, because some of the consortium's members are North
American private equity groups. The bid has the backing of Qantas
"The key issue is that is the takeover of Qantas goes ahead,
Macquarie Bank would have an interest in both the country's biggest
airport, Sydney, and the nation's dominant airline, Qantas," PM
Economics Correspondent Stephen Long said. "The concern was that it
could use its influence over the airport to favor Qantas against
competitors. But, the ACCC dismissed those concerns."
Also raising eyebrows is the fact Macquarie Bank owns what it
calls a small amount of direct shares in the Sydney Airport... but
that's misleading, according to Long.
"It doesn't tell the whole story,
because a spin-off Macquarie business, Macquarie Airports,
effectively controls the airport. It is by far the dominant
shareholder," he said. "Texas Pacific, which will own 25 percent of
Qantas if this goes ahead, also has an interest in Tiger Airlines,
which runs routes from Darwin to Singapore and has indicated it
wants to expand services to Sydney."
"The ACCC has found that it can't see that there won't be
vigorous competition between Qantas and Tiger airlines despite the
fact that one company will have an economic interest in both," Long
The who-controls-whom question is extending to governmental
levels, as well. The Treasurer is the only official with the power
to "stop this deal dead in its tracks," according to the Herald
"What we would like to know is has the Prime Minister overruled
the Treasurer?" asked Labor treasury spokesman Wayne Swan. "As far
as we were aware, the treasurer was examining this takeover plan
from Airline Partners and he was going to report back to the
Australian people with his conclusions."
"So it seems strange... that the prime minister would be on the
front page of the paper declaring the deal a done deal, what's the
answer to that? Has he overruled the Treasurer?" Swan asked.
The Foreign Investment Review Board report is due to be
submitted to the prime minister on Wednesday.