The Australian Competition and Consumer Commission will not oppose Virgin Australia’s proposed acquisition of 60% of the existing shares in Tiger Airways Australia.
ACCC chairman Rod Sims said the regulator concluded that Tiger was ”highly likely” to leave the Australian market if Virgin’s acquisition did not go ahead.
”Accordingly, blocking the acquisition would not serve to protect competition,” he said.
Tiger Airways and Virgin Australia have pledged to invest up to a further A$62.5 million collectively into the Tiger Australia business.
The acquisition will allow Virgin to have a dual-brand airline approach to rival Qantas-Jetstar operations.
Virgin Australia boss John Borghetti said: "There is a real opportunity to provide strong competition in the budget travel segment and bring further benefits to consumers."
The proposed transaction still remains subject to certain conditions and regulatory approvals, including from the Foreign Investment Review Board.
The ACCC approval of the deal was welcomed by the peak lobby group, Transport and Tourism Forum.
TTF acting CEO Trent Zimmerman said: "Maintaining a second low-cost carrier will ensure healthy competition at the price-sensitive end of the market."
