The Commission approves a new acquisition in the air transport sector under certain conditions

On 5 July 2019, the European Commission has approved the acquisition of the UK regional air carrier Flybe by Connect Airways, a consortium by Virgin Atlantic, Stobart Aviation and Cyrus, if certain conditions are met. 

The proposed transaction, notified on 14 May 2019, was examined by the Commission, which has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds and to prevent concentrations that would significantly impede competition in the European Economic Area or any substantial part of it. According to the EU Merger Regulation, indeed, companies have the obligation not to implement a notifiable transaction before it has been declared compatible with the common market, as to avoid that competition could be harmed beyond repair prior to the Commission’s decision. 

The Commission’s analysis showed that the transaction, as initially notified, would have led to quasi- monopolies on two direct European routes, namely Birmingham – Amsterdam and Birmingham – Paris. In particular, this situation would result from Air France-KLM acquiring indirect control over Flybe via its joint control over Virgin Atlantic. The joint acquisition of Virgin Atlantic by Air France-KLM, Delta and Virgin group was approved by the Commission on 21 February 2019 on the basis of Article 7(3) of the Merger Regulation. According to the EU norms, indeed, the Commission can give a temporary approval for certain parts of a transaction in a way that does not harm effective competition and in order to prevent negative effects for consumers, which happenedto impede flight cancellations to their detriment and to avoid staff layoffs while the merger review was ongoing.

Since there is the risk that the merger would make the entry of competitors into these routes extremely difficult, considering that both Amsterdam Schiphol and Paris Charles de Gaulle airports are very congested, Connect Airways offered a set of commitments to face the competition concerns, undertaking to release five daily slot pairs at Amsterdam Schiphol airport and three daily slot pairs at Paris Charles de Gaulle airport to competing airlines that want to fly the above-mentioned routes. Deeming these commitments satisfying, the Commission approved the transaction.

Sara Capruzzi