Case M.8672 - EASYJET / CERTAIN AIR BERLIN ASSETS
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EUROPEAN COMMISSION DG Competition Case M.8672 - EASYJET / CERTAIN AIR BERLIN ASSETS Only the English text is available and authentic. REGULATION (EC) No 139/2004 MERGER PROCEDURE Article 6(1)(b) NON-OPPOSITION Date: 12/12/2017 In electronic form on the EUR-Lex website under document number 32017M8672 EUROPEAN COMMISSION Brussels, 12.12.2017 C(2017) 8776 final In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC) No 139/2004 PUBLIC VERSION concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus […]. Where possible the information omitted has been replaced by ranges of figures or a To the notifying party: general description. Dear Sir or Madam, Subject: Case M.8672 - EASYJET / CERTAIN AIR BERLIN ASSETS Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/20041 and Article 57 of the Agreement on the European Economic Area2 (1) On 07 November 2017, the European Commission received notification of a proposed concentration pursuant to Article 4 of the Merger Regulation by which easyJet Airline Company Limited, as the principal operating subsidiary of easyJet PLC ("easyJet", the United Kingdom), acquires from Air Berlin PLC & Co. Luftverkehrs KG ("Air Berlin", Germany) control within the meaning of Article 3(1)(b) of the Merger Regulation of parts of Air Berlin's airline operations at Berlin Tegel airport (the "Target", Germany) by way of purchase of assets (the "Transaction").3 easyJet and the Target are collectively referred to as the "Parties". 1. THE PARTIES (2) easyJet is a low-cost point-to point airline domiciled in the United Kingdom that operates in the European short-haul aviation market and is focused primarily on Western and Northern Europe. It operates domestic and international scheduled services over 800 routes in more than 30 countries from/to 132 airports, and 1 OJ L 24, 29.1.2004, p. 1 (the "Merger Regulation"). With effect from 1 December 2009, the Treaty on the Functioning of the European Union ("TFEU") has introduced certain changes, such as the replacement of "Community" by "Union" and "common market" by "internal market". The terminology of the TFEU will be used throughout this Decision. 2 OJ L 1, 3.1.1994, p. 3 (the "EEA Agreement"). 3 Publication in the Official Journal of the European Union No C 383, 14.11.2017, p. 11. Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË Tel: +32 229-91111. Fax: +32 229-64301. E-mail: [email protected]. operates three licensed airlines within the EU and Switzerland. Between August 2016 and August 2017, easyJet carried more than 79 million passengers. easyJet has a dedicated workforce of over 10 000 people and a total fleet of 279 aircraft in 2017. (3) Within Germany, easyJet deploys 15 A319/A320 Airbus aircraft to Hamburg and Berlin, of which 12 are based in Berlin Schoenefeld airport, where easyJet employs a total of over 500 people, including crew and management.4 (4) The Target consists of assets and rights held by Air Berlin for part of its airline operations at Berlin Tegel airport, including in particular (i) slots5 at Berlin Tegel airport and at some destination airports (e.g. Palma de Mallorca), (ii) overnight parking stands associated with the acquired slots, (iii) Air Berlin's customer bookings in respect of the relevant operations (if any), (iv) historic data relating to the Target, and (v) certain aircraft furnishings and related equipment. (5) In addition, easyJet intends to enter into new leases on the open market for approximately 25 aircraft conditional upon the closing of the Transaction, in order to replace the leases of the aircraft previously leased by Air Berlin for part of its airline operations at Berlin Tegel airport. easyJet would also hire crew on the open market to operate the newly leased aircraft, subject to closing taking place. The individuals which would be offered employment would include former employees of Air Berlin engaged in its operations at Berlin Tegel airport, who were made redundant on 1 November 2018. 2. THE CONCENTRATION 2.1. Context of the Transaction (6) For several years, Air Berlin, Germany's second largest airline, has faced significant financial difficulties. On 15 August 2017, Air Berlin filed for insolvency after its largest shareholder, Etihad Airways, ceased providing financial support. All Air Berlin's assets had been for sale since that date. (7) On 15 September 2017, all interested bidders submitted their binding offers for the acquisition of (parts of) Air Berlin. (8) On 21 September 2017, Air Berlin's creditors' committee discussed the binding offers received. On 25 September 2017, following the meeting of its Supervisory Board, Air Berlin announced that negotiations will continue with two bidders, including with easyJet for the acquisition of certain parts of Air Berlin as described in paragraph (4) above. 4 Form CO, paragraph 2. 5 Under Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for the allocation of slots at Community airports (the "Slot Regulation"), slots are defined as the permission given to an air carrier to use the full range of airport infrastructure necessary to operate an air service at a coordinated airport on a specific date and time for the purpose of landing or take-off (see Article 2(a) of the Slot Regulation). A coordinated airport is defined as an airport with a high level of congestion where demand exceeds capacity during the relevant period and where, in order to land or take off, it is necessary for an air carrier to have a slot allocated by a coordinator. 2 (9) On 28 October 2017, insolvent Air Berlin fully ceased its airline operations and grounded its fleet. This implied the termination of all existing contracts, notably the aircraft lease agreements with Air Berlin's lessors and the employment contracts with Air Berlin's personnel. (10) On 1 November 2017, the local district court of Berlin-Charlottenburg opened the insolvency proceedings concerning the assets of Air Berlin. (11) Air Berlin is expected to be wound up at the end of the insolvency proceedings.6 2.2. The Transaction constitutes a concentration (12) On 27 October 2017, easyJet and Air Berlin entered into an asset purchase agreement pursuant to which easyJet will take over the Target, corresponding to certain assets and rights held by Air Berlin for parts of its airline operations at Berlin Tegel airport. The transfer of the slots that are part of the Target is subject to compliance with the Slot Regulation, which permits the transfer of slots with the express confirmation by the slot coordinator, in the case of a total or partial take-over of an air carrier when the slots are directly related to the air carrier taken over. (13) As previously mentioned, easyJet also intends to enter into new leases on the open market for approximately 25 aircraft conditional upon the closing of the Transaction, in order to replace the leases of the aircraft previously leased by Air Berlin for part of its airline operations at Berlin Tegel airport.7 (14) easyJet would also hire crew on the open market to operate the newly leased aircraft, subject to closing taking place. The individuals which would be offered employment would likely include former employees of Air Berlin engaged in its operations at Berlin Tegel airport, which were made redundant on 1 November 2018. (15) According to the Commission Consolidated Jurisdictional Notice ("CJN"),8 the acquisition of control over assets can only be considered as a concentration if those assets constitute a business with a market presence, to which a market turnover can be attributed. In relation to outsourcing, the CJN clarifies that the assets transferred should include at least core elements that would allow the acquirer to build up a market presence in a time-frame similar to the start-up period for joint ventures (i.e. three years). Similarly, the acquisition of control over assets will constitute a concentration if the acquisition includes the core elements allowing the acquirer to build up a market presence within a relatively short time period.9 6 State Aid Case SA.48937 Rescue aid in favour of Air Berlin PLC & Co. Luftverkehrs KG. 7 Such new leases will likely include new leases concerning aircraft previously used by Air Berlin. 8 Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings, OJ C 95, 16 April 2008, p. 1, paragraph 24. 9 CJN, paragraph 24 and, in relation to outsourcing, paragraph 26. 3 (16) As further described in section 4.1.1, in the airline industry, slots are a particularly important right, since those slots give access to congested airports.10 The acquisition by easyJet of the Target will result in the transfer of slots and ancillary assets indispensable for the use of the slots (such as overnight parking stands). These slots will enable easyJet to develop its airline operations at the airports at which Air Berlin used to provide air transport services, in particular at Berlin Tegel airport and at some destination airports. The Transaction therefore results in the transfer of Air Berlin's market position at the relevant airports. (17) In view of the above, the acquisition of the Target constitutes the transfer of a business with a market presence, to which a turnover can be attributed. 2.3. Conclusion (18) As a result of the Transaction, easyJet will acquire sole control over assets and rights of Air Berlin, which constitute parts of an undertaking as defined in paragraph 24 CJN.