Monday, September 26, 2011

Merger query


ANY merger of Airlines PNG (APNG) and Air Niugini Ltd (ANG) will have to satisfy all requirements set out by the Independent Consumer and Competition Commission (ICCC), the commission has said, The National reports.
ICCC CEO and Commissioner Dr Billy Manoka said last Friday that the ICCC would have the last say in the proposed merger which was approved in principle by ca­binet last week and announced by Prime Minister Peter O'Neill before he departed for New York.
Manoka said: "As the guardian of competition, the commission is always mindful that merger transactions have significant implications for the competitive pro­cess in the market."
Four trade unions also called on the government to immediately shelve the proposed merger.
Former public enterprises minister Arthur Somare yesterday also called for ICCC intervention and approval before the merger could go ahead, saying the merger could derail all positive gains made with the national flag carrier in the past eight years.
Manoka said section 69 of the ICCC Act prohibits anti-competitive business mergers and acquisitions, unless the transaction had been approved by the commission through either a clearance or authorisation process.
"Clearance and autho­risation are simple administrative processes which involve wider stakeholder consultations, through which the commission is able to assess the competitive impact of the merger in the market.
"In the case of authorisation applications, it is whether or not public benefits outweigh the anticompetitive effects, which decides whether or not to grant or decline the application," Manoka said.
O'Neill said last week the merger would expand the airline industry, leading to more services to the people.
The merger issue surfaced last August when APNG took a financial downturn brought on by the 2009 Kokoda Track crash and the entry of Qantas flights between Cairns and Port Moresby.
Government sources said the merger would be
detrimental to ANG's safe­ty record and it would be forced to pay higher insurance premiums, not to mention its record of good profits.
Manoka said that ICCC expected Air Niugini or Airlines PNG to make an appropriate application to it in due course.
Manoka said whether or not applications had not been made by parties to the transaction, did not prevent the commission from inquiring independently to satisfy itself that the law had not been broken.
"If the commission inquires and forms a concluded view that the law has been contravened, there are remedial measures provided to it under the ICCC Act, such as divestiture of assets acquired, and or other pecuniary penalties, which can be sought from the courts", he said.
"In the interim, the commission is monitoring this development closely, including making its own preliminary inquiries," he said.

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