Mergers: Commission approves acquisition of British Midlands (bmi) by IAG subject to conditions
30-Mar-2012 The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the UK airline British Midlands Limited (bmi), by the International Consolidated Airlines Group (IAG), the holding company of British Airways and Iberia. The decision is conditional upon the release of 14 daily slot pairs at London Heathrow in order to facilitate new entry, and upon IAG's commitment to carry connecting passengers to feed the long-haul flights of competing airlines out of London Heathrow. In light of these commitments, the Commission concluded that the transaction would not raise competition concerns.
Commission Vice President in charge of competition policy Joaquín Almunia said: "The Commission could clear this transaction in the first phase given the commitments package offered by IAG which addresses the competition concerns we identified. The commitments package includes an appropriate number of very sought-after slots at London Heathrow as well as far-reaching feeder arrangements as regards connecting passengers. We are therefore satisfied that the competitive dynamics will be maintained so as to ensure choice and quality of air services for passengers."
The Commission's investigation found that the transaction, as initially notified, would have led to high market shares and even monopolies on a number of domestic, European and international routes out of London Heathrow airport. The Commission also analysed whether there was a risk that IAG would prevent passengers from connecting on long-haul flights operated by competing airlines out of London Heathrow.
During the first-phase review, IAG submitted commitments to release 12 daily slot pairs at London Heathrow which could be used on the specific routes of concern, including the UK domestic routes, as well as on other European routes. In addition, two Heathrow daily slot pairs will be leased to Transaero for use on flights to Moscow. These slots and other incentives such as the acquisition of grandfathering rights after a certain period of time should facilitate new entry. Furthermore, IAG committed to entering into special agreements with competing airlines which operate long haul flights out of London Heathrow to provide these airlines with connecting passengers, including from UK domestic routes and other European routes. Passengers will therefore continue to have a choice to use other airlines than IAG when connecting at London Heathrow.
These commitments adequately address all competition concerns identified by the Commission. The Commission therefore concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or a substantial part of it.
The transaction was notified to the Commission on 10 February 2012.
Companies and products
The undertaking International Consolidated Airlines Group ("IAG" - United Kingdom) is the holding company of both BA and Iberia Líneas Aéreas de España, S.A. bmi is currently owned by Deutsche Lufthansa AG.
Both IAG and bmi provide air transport for passengers, air transport for cargo, airport ground handling services and maintenance, repair and overhaul services.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
A non-confidential version of today's decision will be available at:
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=2_M_6447