The competition regulator has revealed reservations about Virgin Australia's plan to merge with Tiger Airways.

Two months ago, Virgin announced it had struck a deal to acquire 60 per cent of the loss-making domestic airline from its Singapore-based parent company in a deal worth $35 million.

Last month, the Australian Competition and Consumer Commission (ACCC) gave draft approval to a proposed alliance between Qantas and the Dubai-based airline Emirates.

But ACCC chairman Rod Sims says while international aviation is very competitive, there is more at stake in the Virgin-Tiger tie-up.

"Domestically, the Virgin-Tiger merger is complicated," he told ABC News 24.

"On the one hand, if the merger proceeds, Virgin will be in a much better position to take on Jetstar by using Tiger.

"On the other hand, it will be taking out the third player in our aviation market to do that, so there's a very complex equation there to weigh up."

Supermarket dominance

The competition regulator, meanwhile, says it will also be examining the dominance of Australia's two biggest supermarket chains this year.

The ACCC is trying to streamline the way it assesses takeovers of smaller shops by Woolworths and Coles to ensure they do not gain too much market power.

Last month, Woolworths snubbed the regulator's plan, saying it creates more red tape.

However, Mr Sims has told News 24 that Woolworths' refusal will only mean more scrutiny around any acquisitions.

"We will look at all their single site acquisitions, obviously all their larger acquisitions," he said.

"It's very resource intensive for us, but our judgment is the supermarket sector, the liquor sector, the hardware sector are either very concentrated now, or will become increasingly concentrated, and so it's important that we're out there looking at all their acquisitions."

 

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