ACCC delays decision on Virgin's Tiger bid
The competition regulator has delayed making a decision on Virgin Australia’s bid to take control of Tiger Australia after requesting more details about the deal from Australia's second-largest airline.
Virgin notified investors today that it had received a request from the Australian Competition and Consumer Commission for further information.
The airline did not disclose what information it had been asked to provide.The regulator had earmarked next Thursday as the date for when it would make its decision on the deal which, if approved, would return Australia’s aviation industry to an effective duopoly.
The ACCC said that it had delayed the decision to allow for time for Virgin to provide the extra information, and would announce a new date in ‘‘due course’’.
Virgin chief executive John Borghetti has threatened to walk away from the proposed deal if the regulator forces it to commit to growing Tiger’s fleet.
He has said Tiger’s fleet could be tripled to 35 planes within five years but insists that he can not promise to live up to such growth because of the volatile nature of the industry. Virgin and Tiger’s Singaporean parent have been relying on the so-called ‘‘failing firm’’ argument to win approval from the regulator.
Analysts have expected the deal to gain approval from the Australian regulator.
CBA Equities analyst Matt Crowe has said that Mr Borghetti’s recent comments made the Tiger deal ‘‘less likely’’ but he also pointed out that the ACCC’s view on whether Tiger would be able to survive on its own in a competitive market will be a key factor in its final decision.
Shares in Virgin were unchanged at 41 cents on Friday morning.