Case No COMP/M.5440- LUFTHANSA/ AUSTRIAN AIRLINES REGULATION
Total Page：16
File Type：pdf, Size：1020Kb
EN This text is made available for information purposes only. A summary of this decision is published in all Community languages in the Official Journal of the European Union. Case No COMP/M.5440- LUFTHANSA/ AUSTRIAN AIRLINES Only the English text is authentic. REGULATION (EC) No 139/2004 MERGER PROCEDURE Article 8 (2) Date: 28/08/2009 1 Commission Decision of 28.8.2009 declaring a concentration to be compatible with the common market and the EEA Agreement (Case No COMP/M.5440 – Lufthansa/ Austrian Airlines) (Only the English text is authentic) (Text with EEA relevance) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to the Agreement on the European Economic Area, and in particular Article 57 thereof, Having regard to the bilateral Agreement between the European Community and the Swiss Confederation on Air Transport,1 Having regard to Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of 2 concentrations between undertakings, and in particular Article 8(2) thereof, Having regard to the Commission's decision of 1 July 2009 to initiate proceedings in this case, 3 Having regard to the opinion of the Advisory Committee on Concentrations, 4 Having regard to the final report of the Hearing Officer in this case, 1 OJ L 114, 30.4.2002, p. 73. 2 OJ L 24, 29.1.2004, p. 1. 3 OJ 2010/C 16 p.8 4 OJ 2010/C 16 p.10 2 WHEREAS: I. THE PARTIES AND THE TRANSACTION (1) On 8 May 2009, the Commission received a notification of a proposed concentration pursuant to Article 4 of Regulation (EC) No 139/2004 (hereinafter "the Merger Regulation"), by which the undertaking Deutsche Lufthansa AG (hereinafter "LH") acquires sole control, within the meaning of Article 3(1)(b) of that Regulation, of the undertaking Austrian Airlines (hereinafter "OS") by way of purchase of shares. (2) LH is the largest German airline. It provides scheduled passenger and cargo transport and related services (maintenance, repair and overhaul services ("MRO"), in-flight catering and IT services). In 2008, LH carried 45 million passengers to more than 200 destinations in 85 countries with its 272 aircraft. It has hubs at Frankfurt International Airport and Munich airport and a base at Düsseldorf airport. LH also controls Swiss International Air Lines Ltd. ("LX")5 based at Zurich airport, Air Dolomiti, Eurowings, and Eurowings' subsidiary, the low-cost carrier Germanwings ("4U"), and it recently acquired British Midland ("BMI") and Brussels Airlines ("SN").6 In addition, LH holds 19% of the shares of Jet Blue, a low-cost airline active in the United States of America. Both LH and LX are members of the Star Alliance. (3) OS is the Republic of Austria's largest airline with its principal hub in Vienna. It provides scheduled passenger and cargo transport and related services, and serves 121 destinations in 63 countries (including code-sharing). Its subsidiaries include Lauda Air and Tyrolean Airways. In addition, it holds a stake of 22.5% of the shares of Ukraine International Airlines, a Ukrainian network carrier. OS is a member of the Star Alliance. (4) LH intends to acquire sole control over OS. On 5 December 2008, in the context of the privatisation process of OS, LH agreed to indirectly acquire a 41.56% shareholding in OS from the publicly owned Österreichische Industrieholding Aktiengesellschaft ("ÖIAG"). In addition, on 27 February 2009, LH launched a public offer for all remaining free-floating shares in OS, for which it received more than the required amount of declarations of acceptance. Together with the shares it acquired from ÖIAG, LH will be able to acquire an at least 85% shareholding in OS. 5 See Commission Decision of 4 July 2005 in Case No. COMP/M.3770 - Lufthansa/Swiss, OJ C 240, 20.8.2005, p. 3. 6 The Commission authorized the proposed acquisition of SN by LH subject to conditions on 22 June 2009, see Case No. COMP/M.5335 – Lufthansa/SN Airholdings (Brussels Airlines), not yet published. The Commission approved the proposed acquisition of BMI by LH without conditions on 14 May 2009, see Commission Decision of 14 May 2009 in Case No. COMP/M.5403 - Lufthansa/BMI, OJ C 158, 11.7.20009, p. 1. 3 (5) OS is currently encountering financial difficulties.7 In July 2008, OS's management considered that the stand-alone option was no longer maintainable, and its supervisory board concluded that it would be difficult to continue operating OS as a stand-alone business. Consequently, OS' supervisory board asked that Austria privatise the company and the Austrian Government issued a privatization mandate ("Privatisierungsauftrag") pursuant to which ÖIAG was authorised to dispose of all of its shares in Austrian Airlines. On 19 January 2009, the Commission approved rescue aid in the form of a 100% guarantee on a loan amounting to EUR 200 million for OS.8 In parallel to its assessment of the transaction under the Merger Regulation, the Commission assessed the terms and conditions of the intended acquisition of Austria's shareholding in OS by LH and a EUR 500 million capital increase in OS under Articles 87 and 88 of the Treaty. (6) Collectively, LH and OS are referred to as "the parties" in this Decision. II. CONCENTRATION (7) As a result of the proposed transaction, LH would acquire sole control over OS. This transaction thus constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation. III. COMMUNITY DIMENSION (8) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 billion (LH: EUR 27 870 million; OS: EUR 2 530 million).9 LH and OS both have a Community-wide turnover in excess of EUR 250 million each (LH: EUR […]*; OS: EUR […]*), but neither achieves more than two-thirds of its aggregate Community-wide turnover within one and the same Member State. The methodology used by the notifying party to calculate the parties' turnover is the "point of sale" methodology, although in any event the thresholds would also be met under the "point of origin" method or "50/50 split" method.10 The proposed transaction therefore has a Community dimension within the meaning of Article 1(2) of the Merger Regulation. IV. PROCEDURE (9) After examination of the notification, the Commission concluded on 1 July 2009 that the transaction fell within the scope of the Merger Regulation and that it raised serious doubts as to its compatibility with the common market and the EEA Agreement, despite the * Parts of this text have been edited to ensure that confidential information is not disclosed; those parts are enclosed in square brackets and marked with an asterisk. 7 In 2008, OS generated losses of EUR 430 million. According to OS' half-year 2009 financial report, the net result for the period January to June 2009 amounted to a loss of EUR 166.6 million. 8 Commission Decision of 19 January 2009 on State aid NN 72/2008, Austrian Airlines – Rescue aid. 9 Turnover calculated in accordance with Article 5(1) of the Merger Regulation. 10 These three methodologies are explained in Commission Decision of 27 June 2007 in Case No. COMP/M.4439 Ryanair/Aer Lingus, OJ C 47, 20.2.2008, p. 9-20, paragraph 13 et seq. 4 commitments submitted in phase 1. The Commission therefore initiated proceedings in accordance with Article 6(1)(c) of the Merger Regulation. (10) LH submitted commitments on 10 July 2009 pursuant to Article 8(2) of the Merger Regulation. On 17 July 2009 and 27 July 2009, LH submitted revised versions of the commitments. Following the submission of the revised version of the commitments on 27 July 2009, the Commission launched a market test in order to gather competitors', customers' and other market participants' views on these commitments. In light of the results of the market test, LH presented a final version of commitments on 31 July 2009 ("the Commitments"). According to Article 10(2) of the Merger Regulation, decisions pursuant to Article 8(2) of the Merger Regulation shall be taken as soon as it appears that any serious doubts referred to in Article 6(1)(c) of the Merger Regulation have been removed, particularly as a result of modifications made by the undertakings concerned. Accordingly, if parties offer commitments before the Commission has completed its in-depth investigation and issued a Statement of Objections, those commitments must be sufficient to rule out the existence of serious doubts.11 V. RELEVANT PRODUCT AND GEOGRAPHIC MARKETS A. Scheduled air transport of passengers (1) Point of origin/point of destination ("O&D") city pairs (11) The Commission has in the past defined the relevant market for scheduled passenger air transport services on the basis of the "point of origin/point of destination" (hereinafter "O&D") city-pair approach.12 This market definition reflects the demand-side perspective whereby customers consider all possible alternatives (including different modes of transport) of travelling from a city of origin to a city of destination. On this basis, every combination of a point of origin and a point of destination is considered to be a separate market. (12) More particularly, with regard to network carriers, the Commission has nevertheless taken into consideration supply-side elements such as network competition between airlines based on the hub and spoke structure of traditional carriers. Although from a supply-side perspective a network carrier could in theory fly from any point of origin to any point of destination, in practice network carriers build their network and decide to fly almost exclusively on routes connecting to their hubs.