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ACCC approves Virgin-Etihad deal, Shares lower: Economy Roundup

The Australian Competition and Consumer Commission has granted preliminary approval for a proposed alliance between airlines Virgin Blue and Etihad. The corporate watchdog said in a statement it has granted an interim authorisation, which allows the companies to prepare for the deal and begin advertising. Virgin shares opened 2.2% higher this morning after the decision […]
Patrick Stafford
Patrick Stafford

The Australian Competition and Consumer Commission has granted preliminary approval for a proposed alliance between airlines Virgin Blue and Etihad.

The corporate watchdog said in a statement it has granted an interim authorisation, which allows the companies to prepare for the deal and begin advertising. Virgin shares opened 2.2% higher this morning after the decision was announced.

“In granting interim authorisation the ACCC has taken into account the fact that Virgin Blue and Etihad currently do not operate any competing services, as well as the lead time required to market and sell tickets before the commencement of long-haul services,” ACCC chairman Graeme Samuel said in the statement.

The deal will see Virgin and Etihad work together on pricing and scheduling services, allowing an increase in flights between Australia and Abu Dhabi.

“The Virgin Blue Group of Airlines will now be able to deliver an alternative and competitive network to the Middle East, Europe, United Kingdom and beyond,” Virgin Blue Group chief executive John Borghetti said in a statement.

“This is an important milestone as we create a global international network, greater competition on the international landscape and benefit our guests with great value fares, better scheduling and more choice.”

Samuel said the ACCC was aware customers who booked during the preliminary authorisation method were likely to be affected if the authorisation is denied later on.

“However, Virgin Blue and Etihad have put in place route protection plans to manage the travel arrangements of any affected passengers,” he said in defence.

Overseas, Potash has filed a lawsuit against mining giant BHP Billiton to protect itself against a $US39 billion hostile takeover bid.

The lawsuit was filed in a district court in Chicago, and alleges that BHP misrepresented facts relating to its bid for Potash.

“This lawsuit seems to be their answer to the absence of another bidder emerging, and it’s surprising that they would try to deprive their shareholders of the only offer on the table,” a BHP spokesperson told Reuters.

One source has said that Potash has requested the court resolve the lawsuit before the 18 November deadline set for the BHP bid.

ING has announced it has appointed Kevin McCann as chairman of ING management. McCann already serves as chairman of origin Energy, director of BlueScope Steel and Macquarie Bank and lead independent director of Macquarie Group.

“We are sorry to see Richard Colless leave, however, we understand and appreciate his decision,” ING REIMA head of strategy Christophe Tanghe said in a statement. “We are delighted that Kevin has accepted the position to lead the IML Board.

“His reputation as a practitioner of strong corporate governance and his high standing in the Australian business community will provide additional support to the IML board.”

Australian shares lower on disappointing Wall Street lead

The Australian sharemarket has opened lower following a disappointing result from Wall Street overnight, where investors were discouraged regarding a drop in Adobe’s revenue and a poor dividend from Microsoft.

The benchmark S&P/ASX200 index was down five points or 0.11% to 4620.2 at 12.15 AEST, while the Australian dollar has remained flat at about US95.6c.

Commonwealth Bank shares lost 0.7% to $52.15, while Westpac shares fell 0.3% to $23.47. AMP 0.2% to $5.12 as NAB dropped 0.4% to $25.76.

The Investor Group on Climate Change has said miners and other Australian firms face scrutiny from investors on greenhouse gas emissions, saying companies that do not disclose their carbon risks to be targeted at shareholder meetings.

“We actually want companies to disclose information for investors, so the beauty of the Carbon Disclosure Project is that it is a tool specifically for the investment market,” Investor Group on Climate Change chief executive Nathan Fabian told Reuters.

Meanwhile, the Melbourne Institute household financial conditions index fell to 32.7% in September from 33.7% in June, indicating financial positions deteriorated since the June quarter.

The index, which reveals the proportion of debt-free households to those with debt, found the proportion of respondents “saving for a rainy day” as their motivation was 49.1%, down from 51.5% in June.

“The share of respondents that fully own their home fell to 37.5%, the lowest level since December 2005 while the share of debt free households fell to 36.2%, the lowest level since the start of the Report in March 2001,” Melbourne Institute research fellow Edda Claus said in a statement.

US to move on China legislation

Reuters reports lawmakers in the United States may move on legislation next week that would punish China for keep its currency artificially low.

“It is time for Congress to pass legislation that will give the administration leverage in its bilateral and multilateral negotiations with the Chinese government,” House speaker Nancy Pelosi said in a statement.

“If China allowed its currency to respond to market forces, it could create a million U.S. manufacturing jobs and cut our trade deficit with China by $100 billion a year, with no cost to the U.S. Treasury.”

On Wall Street, the Dow Jones Industrial Average dropped 0.2% to 10,739.31.