ACCC rejects Virgin-Air New Zealand deal, Coke rules out Foster’s bid: Economy Roundup

The Australian Competition and Consumer Commission has rejected an alliance between airlines Virgin Blue and Air New Zealand for flights between Australia and New Zealand.

In a statement, the watchdog said the proposed deal would be, “likely to reduce competition in the market for trans-Tasman air passenger services”.

Chairman Graeme Samuel said in a statement there were a number of concerns raised about how the proposed deal would impact the market.

“These routes account for around one quarter of passenger traffic in the trans-Tasman market,” he said. “This means that more than one million passengers per year may be adversely affected by the removal of competition between Virgin Blue and Air New Zealand.”

While the ACCC said the partnership would give the airlines a more integrated network and would enable them to compete against Qantas and Jetstar, it was “not convinced” that it could increase competition.

Meanwhile, Coca Cola Amatil has said it has no interest in Foster’s wine business, following a surprise bid from a private equity firm worth over $US2.5 billion, according to Reuters.

“I have absolutely no interest in the wine business,” managing director Terry Davis told reporters. “Nothing’s changed. … We’ve been on an organic growth focus. You never say never, but it’s not on the current agenda.”

Business Spectator has reported AMP could renew ambitions to become the fifth player in the Australian financial services market with a bid for AXA Asia Pacific.

The rumour comes after the ACCC said yesterday it rejected a takeover offer from NAB for AXA, ending an exclusivity agreement between NAB and AXA SA.

In the IT industry, one expert has said a plan to have the NBN rolled out in regional areas first may be troubled by a skills shortage in the industry.

Communications Electrical and Plumbing Union divisional president Len Cooper has told The Australian the shortage could increase wages and the overall cost of building the network.

Australian shares higher after slight Wall Street lead

The Australian share market has opened slightly higher today following a small lead from Wall Street, where stocks rose on solid jobs and trade data.

The benchmark S&P/ASX200 index was up five points or 0.11% to 4587.3 at 12.20 AEST, while the Australian dollar rose even higher to US92c.

ANZ shares gained 0.8% to $23.96, while Commonwealth Bank rose 0.7% to $52.88. NAB rose 0.2% to $24.89 as Westpac rose 1.1% to $23.23.

The Chinese media has warned against a $US39 billion bid from BHP Billiton for Potash Corp, saying it could create a monopoly.

“Once a monopoly is formed in the fertiliser industry, it will have negative impacts on all grain-producing countries in the world,” the official Xinhua news agency said, referencing a deal between Russian groups Silvinit and Uralkali.

“While both cases involve attempts to monopolise resources and control pricing to seek extortionate profits, the fertiliser manufacturers’ move has caused greater concern.”

“This is because BHP Billiton-Rio Tinto deal involves industrial raw materials, but fertiliser manufacturers’ merger will have direct impact on food production cost and consequently cost of living for ordinary people.”

Supermarket giant Woolworths has said it is open for further acquisitions in order to increase its revenue, but it sees more growth in cost reductions.

“We remain open to additional acquisition opportunities both in Australia and offshore but will continue to assess these in a prudent, considered and highly disciplined manner,” the retailer said in its annual report.

“We will also continue to pursue complimentary revenue streams such as online channels as well as adjacent opportunities such as financial services.”

Wall Street stocks rise on jobs data

New jobs data in the United States show claims for unemployment benefits dropped more than expected to a two-month low, with claims falling 27,000 to 451,000. The Labor Department also said the trade deficit shrank 14% to $US42.8 billion in July.

The news sent the Dow Jones Industrial Average gained 28.23 points, or 0.27%, to 10,415.24.