The Australian Competition and Consumer Commission issued a draft decision today stating that it was going to deny authorization for Qantas and China Eastern to coordinate their freight and passenger operations between Australia and China under an agreement proposed in November 2014, because the tie-up could result in "significant public detriment" by giving Qantas and China Eastern increased ability and incentive to limit capacity and increase airfares on the Sydney-Shanghai route.
Rod Sims, the Commission’s chairman, said he understands the commercial reasons for the alliance, but his concern revolves around the fact that this would be a tie-up between the two largest competitors on the route – thus a monopoly could be formed.
Qantas and China Eastern account for more than 80% of all seats on direct flights between Sydney and Shanghai. The commission is seeking submissions on the draft determination before making a final decision. Submissions are due by April 8.