Monday, April 12, 2010

Sir Richard Branson tells it like it is

In a commentary column for Bloomberg, Virgin Atlantic airline owner Sir Richard Branson takes a swipe at the proposals to merge the Atlantic routes of British and American Airways, which would result in a drastic reduction of competition on the routes.
[...] the way the regulators deal with issues over the Atlantic -- the busiest air corridor in the world -- is the major focus of my attention. British Airways Plc and American Airlines’ proposed joint venture -- effectively a merger of their businesses on the world’s busiest long-haul routes -- is currently under evaluation by the authorities on both sides of the Atlantic. They have a duty to ensure consumers aren’t harmed by big businesses getting together to stitch up markets. It is very clear to me that regulators should be stopping BA-AA in its tracks.
In a clear statement on monopoly power, Sir Richard's example has massive resonance here in Auckland. Just substitute "The Atlantic" with "The Waitemata" and "BA-AA" with "Fullers":
I have no doubt whatsoever that BA will use its exemption from competition laws and its overwhelming dominance to destroy competition, reduce choice and raise fares -- after all when has a monopoly ever led to lower prices? I don’t necessarily blame BA and AA as it is the job of their management to work in the interests of shareholders, not consumers.
And we could blame the regulators in ARTA too, as Sir Richard puts it:
The competition authorities have a mandate to preserve competition and only approve deals that can provide tangible public benefits and demonstrate that these outweigh the risks to competition.

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