ICCC rejects Link PNG’s bid to acquire shares in PNG Air

THE Independent Consumer and Competition Commission (ICCC) has for the second time declined Link PNG’s application to acquire shares in PNG Air Ltd.
Link PNG Ltd had applied to acquire 40 per cent shares owned by the National Superannuation Fund and nine per cent from other shareholders in PNG Air Ltd.
The consumer and competition watchdog announced last week that upon completing its assessment of the proposed acquisition, the transaction was likely to have an effect of substantially lessening competition in the relevant markets.
Their assessment also found that the acquisition would yield potential public detriments that would outweigh the likely public benefits.
Upon submitting its application, Link PNG claimed that PNG Air was not profitable and with the Covid-19 impacting the aviation industry, PNG Air would likely exit the market.
Link PNG, a subsidiary of Air Niugini, also stated that to maintain current service levels, competition and to protect the employment of current employees of PNG Air, it was important that the proposed share acquisition be approved.
ICCC commissioner Paulus Ain said the watchdog noted that PNG Air had been making losses, however, those losses had been reduced as the airline was increasing its market shares and its revenues were continuously increasing.
“There was no evidence of any significant rationalisation or restructure carried out by PNG Air to suggest that such measures have already been exhausted, such that continued losses are a sign of a failing firm,” Ain said.
“No application provided by PNG Air or the applicant to satisfy the ICCC that PNG Air has done all it could to make it a profitable entity.
“For example, there has not been any cost cutting in 2019 and 2020 have tripled from 2017 and 2018 figures.
“Whilst the financials for 2019 and 2020 are unaudited and much weight are not placed on them, the ICCC considers that the costs should relatively remain the same because from the information available, there has not been any major changes in the administrative aspect that would contribute to such large increase.
“The ICCC also understands that besides Link PNG, there are other parties that have shown an interest to acquire the Nasfund shares.”