Qantas share price lower on ACCC investigation

The Qantas Airways Limited (ASX:QAN) share price is trading lower on Monday after the ACCC provided an update on an investigation…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

In morning trade on Monday the Qantas Airways Limited (ASX: QAN) share price has hit a bit of turbulence.

At the time of writing the airline operator's shares are down almost 2% to $3.92.

Why is the Qantas share price dropping lower?

This morning the Australian Competition and Consumer Commission (ACCC) announced that it is continuing to investigate the airline's acquisition of a 19.9% stake in Alliance Aviation Services Ltd (ASX: AQZ).

The competition watchdog notes that Qantas acquired the stake last year, becoming Alliance's single biggest shareholder.

This led to the ACCC issuing a statement of issues, which set out its competition concerns with the minority stake.

In response to queries by various stakeholders, this morning the ACCC provided the market with an update on its investigation.

ACCC Chair Rod Sims commented: "Qantas' decision to complete the acquisition of the 19.9 per cent stake in Alliance without first seeking ACCC clearance means this is an enforcement investigation rather than a standard merger review."

"The Australian aviation industry remains highly concentrated and it is crucial that competition provided by smaller airlines is maintained long-term," he added.

As such, the competition watchdog is looking very closely at Qantas' shareholding.

Mr Sims explained: "The ACCC has been closely scrutinising the effects of the acquisition of this shareholding by Qantas. Acquiring a strategic stake in a close competitor in such a concentrated market raises clear competition concerns."

What now?

The ACCC's investigation will now focus on the competitive dynamics between Qantas and Alliance. It will examine whether the stake affects Alliance's ability to raise funds, consider takeovers, or participate in commercial ventures.

It will also look to see whether Qantas is attempting to exert influence on Alliance's decision-making or operations.

"We will consider enforcement action if there is evidence that the Qantas shareholding is compromising Alliance's ability to be a strong competitor to Qantas, now and in the future," Mr Sims added.

The ACCC also revealed that it isn't keen on Qantas increasing its stake further, as it has suggested it plans to do.

 "Our current view is that any further increase in Qantas' stake in Alliance is very likely to raise significant competition concerns under the Competition and Consumer Act," Mr Sims concluded.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Fallers

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why DroneShield, Gentrack, Metals X, and Northern Star shares are tumbling today

These shares are ending the week in the red. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Bapcor, Boss Energy, Macquarie, and Novonix shares are falling today

These shares are having a tough session on Thursday. But why?

Read more »

Stock market crash concept of young man screaming at laptop on the sofa.
Share Fallers

Guess which ASX 200 stock just crashed 31% on slumping sales

The $1.3 billion ASX 200 stock is getting hammered today.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why CBA, Inghams, Praemium, and Strike Energy shares are tumbling today

These shares are having a tough time on Tuesday. But why?

Read more »

Man with a hand on his head looks at a red stock market chart showing a falling share price.
Share Fallers

Why Brightstar, Eagers Automotive, Regis Resources, and Westpac shares are sinking

These shares are starting the week in the red. But why?

Read more »

Disappointed man with his head on his hand looking at a falling share price his a laptop.
Share Fallers

Why 29Metals, Atlas Arteria, DroneShield, and Yancoal shares are falling today

Let's see why these shares are ending the week in the red.

Read more »

Shot of a young businesswoman looking stressed out while working in an office.
Share Fallers

Why 29Metals, CAR Group, DroneShield, and Santana Minerals shares are falling today

These shares are missing out on the good times on Thursday. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Imricor, Imugene, Newmont, and Pepper Money shares are falling today

These shares are having a tough time on hump day. But why?

Read more »