AUSTRALIAN COMPETITION TRIBUNAL

Qantas Airways Limited (No 2) [2006] ACompT 1

File No 5 of 2003

RE:�� APPLICATION FOR REVIEW OF THE DETERMINATION OF THE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION MADE ON 9 SEPTEMBER 2003 DENYING AUTHORISATION IN RELATION TO APPLICATIONS A30220, A30221, A30222, A90862 AND A90863 (PROPOSED ACQUISITION BY QANTAS OF ORDINARY SHARES IN AIR NEW ZEALAND AND COOPERATIVE ARRANGEMENTS BETWEEN QANTAS, AIR NEW ZEALAND AND AIR PACIFIC)

BY:�� QANTASAIRWAYSLIMITED(ABN16009661901) and AIR NEW ZEALAND LIMITED (ABN 70 000 312 685)

Applicants

GOLDBERG J (President), MR G F LATTA and PROFESSOR D K ROUND

1 FEBRUARY 2006

SYDNEY

IN THE AUSTRALIAN COMPETITION TRIBUNAL

No 5 of 2003

BY:�� QANTASAIRWAYSLIMITED(ABN16009661901) and AIR NEW ZEALAND LIMITED (ABN 70 000 312 685)

Applicants

THE TRIBUNAL:

GOLDBERG J (President)

MR G F LATTA

PROFESSOR D K ROUND

DATE OF ORDER:

1 FEBRUARY 2006

WHERE MADE:

SYDNEY

THE TRIBUNAL DETERMINES THAT:

1.�� The determination of the Tribunal dated 12 October 2004 is varied in the following manner.

2.�� The Tribunal fixes 12 October 2005 as the date on which the period of the authorisations granted on 12 October 2004 shall commence.�

3.�� The authorisations referred to in paragraphs 2 and 4 of the determination made on 12 October 2004 shall be in force for a period of five years commencing on 12 October 2005.

IN THE AUSTRALIAN COMPETITION TRIBUNAL

No 5 of 2003

BY:�� QANTASAIRWAYSLIMITED(ABN16009661901) and AIR NEW ZEALAND LIMITED (ABN 70 000 312 685)

Applicants

THE TRIBUNAL:

GOLDBERG J (President)

MR G F LATTA

PROFESSOR D K ROUND

DATE:

1 FEBRUARY 2006

PLACE:

MELBOURNE

REASONS FOR DETERMINATION

1 On 12 October 2004 the Tribunal published its determination in this matter and made the following orders:

�1.�� The determination of the Australian Competition and Consumer Commission dated 9 September 2003 denying authorisation to applications A30220, A30221, A30222, A90862 and A90863 is set aside.

2.�� Pursuant to subs 88(1) of the Trade Practices Act 1974 (Cth) (�the Act�), the Tribunal grants an authorisation in respect of applications A30220 and A30221 to Qantas Airways Limited (�Qantas�) and Air New Zealand Limited (�Air New Zealand�) to make and give effect to the Strategic Alliance Agreement dated 25 November 2002 between Qantas and Air New Zealand under which:

(a)�� they will coordinate pricing, scheduling, marketing, sales and customer service activities for all Air New Zealand operated flights, all domestic New Zealand flights operated by Qantas, and Qantas operated international flights arriving in, departing from or transiting through New Zealand (�the JAO Network�);

(b)�� Qantas will have the right to codeshare on all Air New Zealand flights, and Air New Zealand will have the right to codeshare on all Qantas flights in the JAO Network and to codeshare on those other Qantas flights that reasonably connect to any flight in the JAO Network;

(c)�� Qantas and Air New Zealand will from time to time enter into contracts and arrangements and arrive at understandings that include exclusionary provisions (within the meaning of s 4D of the Act), including but not limited to in connection with the joint supply or joint acquisition by Qantas and Air New Zealand of air transportation services and other goods and services.

3.�� Pursuant to subs 88(9) of the Act the Tribunal grants an authorisation in respect of application A30222 to Qantas to acquire convertible notes and shares enabling Qantas to hold up to 22.5% of the capital of Air New Zealand as set out in the Subscription Agreement between Qantas and Air New Zealand dated 25 November 2002 in the terms set out in application A30222.

4.�� Pursuant to subs 88(1) of the Act the Tribunal grants an authorisation in respect of applications A90862 and A90863 to Qantas and Air New Zealand to make and give effect to the Cooperation Agreement made in or about December 2002 between Qantas and Air New Zealand.

5. The authorisations referred to in paragraphs 2 and 4 of this determination shall be in force for a period of five years commencing on the date upon which each of the said agreements is first given effect to, which date must be notified in writing by Qantas and Air New Zealand to the Commission (marked for the attention of the Chairman) within 14 days of such first giving effect.� If either of the Strategic Alliance Agreement or the Cooperation Agreement referred to in paragraphs 2 and 4 of this determination is not given effect to within twelve months of the date of this determination the Commission may apply to the Tribunal to vary this determination by fixing a specific date on which the period in respect of which the authorisation in respect of that agreement shall commence.

6. Liberty is reserved to all parties to apply to the Tribunal for such further or other determinations as may be necessary to implement and carry into effect this determination.�

2 Twelve months since the date of the determination have now passed.� The Tribunal has been informed by the solicitors for the Australian Competition and Consumer Commission (�the Commission�) that no notification has been received by the Chairman of the Commission that either of the Strategic Alliance Agreement or the Cooperation Agreement have been given effect to by Qantas Airways Limited (�Qantas�) or Air New Zealand Limited (�Air New Zealand�).

3 The Tribunal has also been informed by Air New Zealand and by Qantas through its solicitors that neither the Strategic Alliance Agreement nor the Cooperation Agreement has been implemented by Air New Zealand or Qantas.

4 The Commission, Qantas and Air New Zealand have notified the Tribunal that they consent to par 5 of the determination of the Tribunal of 12 October 2004 being varied to read as follows:

�5.�� The authorisations referred to in paragraphs 2 and 4 of this determination shall be in force for a period of five years commencing on 12 October 2005�.

5 It is desirable that any period of authorisation in respect of an agreement granted by the Tribunal be fixed so that there can be no doubt as to the period of the protection given by the authorisation.� By virtue of s 91(1A) of the Act, in the circumstances under consideration, the day on which the authorisation comes into force must not be earlier than the day on which the Tribunal makes a determination on the review.� The day on which the Tribunal made its determination on the review was 12 October 2004.� This present determination is a variation of that earlier determination, so the authorisation must not come into force before 12 October 2004.

6 The Tribunal is disposed to vary the determination made on 12 October 2004 in the form consented to by the Commission, Qantas and Air New Zealand and accordingly, determines as follows:

1.�� The determination of the Tribunal dated 12 October 2004 is varied in the following manner.

2.�� The Tribunal fixes 12 October 2005 as the date on which the period of the authorisations granted on 12 October 2004 shall commence.�

3.�� The authorisations referred to in paragraphs 2 and 4 of the determination made on 12 October 2004 shall be in force for a period of five years commencing on 12 October 2005.

I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Determination herein of the Tribunal.

Associate:

Dated:� � 1 February 2006


Date of Submissions:	13 December, 23 and 25 January 2006

Date of Reasons for Determination:	1 February 2006