Airport ground handling merger may give rise to competition concerns
Menzies’ acquisition of ASIG may give rise to competition concerns over ground handling services at Aberdeen Airport.
The Competition and Markets Authority (CMA) has found that the merger may lead to a substantial lessening of competition (SLC) in the supply of ground handling services at Aberdeen Airport (including baggage, ramp, passenger, airside cargo handling and de-icing).
Menzies and ASIG are close competitors at Aberdeen Airport and, following the merger, only Swissport will remain as a credible bidder for airlines located there.
In contrast, at the other airports where both Menzies and ASIG are active (Manchester and London Heathrow), the CMA found that there would be a number of credible competitors that could bid for future contracts.
Menzies Aviation plc and Menzies Aviation Inc. (Menzies) agreed to acquire ASIG Holdings Limited and ASIG Holdings Corp. (ASIG) from BBA Holdings Limited and BBA Aviation USA Inc. Both Menzies and ASIG provide a range of services to airlines at UK and international airports.
Menzies can avoid the merger being referred for an in-depth investigation if it can offer a remedy to address the CMA’s competition concerns at Aberdeen Airport. Menzies has until 22 December 2016 to do so.
Kate Collyer, the CMA decision-maker in this case, said:
It is important that we ensure that airlines transporting passengers to and from Aberdeen Airport are protected against any reduced service quality or increased costs as a result of this merger. We hope that Menzies will respond to our competition concerns and ensure that effective competition between ground handling service providers at Aberdeen Airport is restored.
All other information relating to this investigation can be found on the case page.
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. For more information on the CMA see our homepage or follow us on Twitter @CMAgovuk, Flickr, LinkedIn and like our Facebook page. Sign up to our email alerts to receive updates on merger cases.
- Under the Enterprise Act 2002 (the Act) the CMA has a duty to make a merger reference, resulting in an in-depth phase 2 merger investigation, if the CMA believes that it is or may be the case that a ‘relevant merger situation’ has been created, or arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and that the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
- Under the Act a ‘relevant merger situation’ is created if 2 or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million (‘the turnover test’) or as a result of the transaction, in relation to the supply of goods or services of any description, a 25% share of supply in the UK (or a substantial part of the UK) is created or enhanced (‘the share of supply test’).
- The CMA considers that it is under a duty to make a phase 2 merger reference in this case under the Act. However, the duty to refer is not exercised while the CMA is considering whether to accept undertakings in lieu of a reference. Menzies has until 22 December 2016 to offer undertakings that might be accepted by the CMA. If no undertaking is offered or accepted, the CMA will by 3 January 2017 refer the merger for a phase 2 merger investigation.
- All the CMA’s functions in phase 2 merger investigations are performed by inquiry groups chosen from the CMA’s panel members. The appointed inquiry group are the decision-makers on merger investigations. The CMA’s panel members come from a variety of backgrounds, including economics, law, accountancy and/or business; the membership of an inquiry group usually reflects a mix of expertise and experience (including industry experience).
- The text of this decision will be placed on the case page in due course.
- Media enquiries should be directed to Neil Kernohan (neil.kernohan@cma.gsi.gov.uk, 020 3738 6170).