Mergers: Commission Approves Acquisition of the European Catering Business of LSG by Gategroup, Subject to Conditions

European Commission - Press release Mergers: Commission approves acquisition of the European catering business of LSG by Gategroup, subject to conditions Brussels, 3 April 2020 The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of the European business of Lufthansa Service Group (“LSG”) by Gategroup. The approval is conditional on full compliance with commitments offered by Gategroup. As a result of this transaction, Gategroup would acquire sole control of the European business of LSG (“LSG EU”) by way of purchase of shares and assets. The transaction excludes LSG's retail on-board business. Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The markets for in-flight catering services need to function well in order to allow airlines that operate in Europe, to provide air transport services to passengers. In particular in these difficult days due to the coronavirus outbreak, we need to ensure that competition remains once the market picks up. With our approval today of Gategroup's purchase of the European business of LSG subject to remedies we make sure that airlines will continue enjoying quality and innovative in-flight catering services at fair prices to the benefit of passengers.” The Commission's investigation The Commission's investigation found that the transaction, as initially notified, would have led to a quasi-monopoly or left at most only one remaining viable competitor in the markets for in-flight catering services at Brussels, Berlin-Tegel, Cologne, Dusseldorf, Frankfurt, Hamburg, Hannover, Munich, Paris Charles de Gaulle, and Rome Fiumicino airports. The Commission had concerns that entry of competitors would be difficult. Barriers to entry in the in- flight catering market are relatively high and switching between in-flight catering suppliers is difficult for airlines, especially if the new supplier is not yet present in in-flight catering or at the concerned airport. The Commission also investigated the effects of the transaction on the markets for in-flight equipment services, lounge management services, ready-made food products to the commercial food sector, retail-on-board services and passenger air transport services. The Commission found no competition concerns in any of these other relevant markets. The proposed remedies To address the Commission's concerns, Gategroup offered a set of commitments. The Commission consulted with market participants on the commitments to allow them to submit their views. Taking into account these market views, Gategroup then submitted an improved set of commitments. In this final set of commitments, Gategroup committed to divest the overlap businesses in order to facilitate the entry or expansion of competing in-flight caterers at the airports where competition concerns were identified. The divested businesses include customer in-flight catering contracts as well as facilities, other tangible assets such as high-loaders, personnel and certain intangible assets. The final commitments address the competition concerns identified by the Commission regarding Gategroups' acquisition of LSG EU. The Commission therefore concluded that the proposed transaction, as modified by the final commitments, would no longer raise competition concerns. This decision is conditional upon full compliance with the commitments. Companies and products Gategroup is headquartered in Switzerland and provides airline catering, retail on-board and other related services to airlines in around 60 countries, including the European Economic Area. LSG EU is the European business of the LSG Group, which is headquartered in Germany and belongs to the Lufthansa Group. LSG EU comprises the European airline and train catering business of LSG, the global lounge business of LSG, the European frozen food production of LSG (operated through the brand Evertaste), the equipment business of LSG and airport retail services in Germany (through the retail store chain Ringeltaube). In-flight catering services comprise the provision and delivery of food and beverage solutions to airlines, which will be served to passengers on an aircraft during the flight. Gategroup provides in-flight catering services through its subsidiaries Gate Gourmet and Servair. LSG EU is active in the market for in-flight catering services through its brand LSG Sky Chefs. Merger control and procedure The transaction was notified to the Commission on 14 February 2020. 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 competition in the European Economic Area or any substantial part of it. The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). If commitments are proposed in Phase I, the Commission has 10 additional working days, bringing the total duration of a Phase I case to 35 working days. More information will be available on the competition website, in the Commission's public case register under the case number M.9546. IP/20/594 Press contacts: Arianna PODESTA (+32 2 298 70 24) Maria TSONI (+32 2 299 05 26) Giulia ASTUTI (+32 2 295 53 44) General public inquiries: Europe Direct by phone 00 800 67 89 10 11 or by email.

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