EU approves take over Vueling and Clickair by Iberia

[LX-LGX]

The European Commission has approved under the EU Merger Regulation the proposed acquisition of the two Spanish low-cost airlines Vueling and Clickair by the Spanish flag-carrier Iberia on condition that commitments to safeguard competition and passenger choice are implemented. The Commission's clearance is conditional upon the parties releasing slots in Barcelona and other European airports to address competition concerns on several Spanish and other European routes where the proposed concentration would have led to a restriction of competition. In the light of these commitments, which encourage competing airlines to enter or expand on those routes, the Commission has concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it. The Spanish competition authority submitted a request for the concentration to be referred to them for consideration but subsequently withdrew their request.

Competition Commissioner Neelie Kroes said: "The commitments given by Iberia will permit other airlines to enter new routes or expand their services in competition with the merged company. My priority is to ensure that airline consolidation does not lead to higher prices or reduced services, so that consumers can continue to enjoy the benefits of liberalisation of air transport in the EU. "

Iberia Líneas Aéreas de España, S.A. is the Spanish "flag"-carrier, based at the airport of Madrid-Barajas. It provides long and short-haul scheduled air transport of passengers, covering 108 routes. In 2007 it transported around 26.8 million passengers. Iberia also provides air cargo transport, aircraft maintenance and handling services.

Vueling Airlines, S.A. is a Spanish "low-cost" airline based at the airports of Barcelona-El Prat and Madrid-Barajas. It operates scheduled air transport of passengers on short-haul routes in Spain and to other European countries. Vueling covers 56 routes and in 2007 carried 6.2 million passengers.

Clickair S.A. is a Spanish "low-cost" airline based at the airport of Barcelona-El Prat. It provides scheduled air transport of passengers on short-haul Spanish and European routes. Prior to the proposed transaction, Iberia had a 20% stake in Clickair but did not control it. Clickair covers 49 routes and transported 4.5 million passengers in 2007.

Under the proposed concentration, to be carried out through several interdependent transactions, Vueling and Clickair would merge into "Nueva Vueling" over which Iberia would acquire control.

In line with previous airline merger cases, the Commission analysed the effects of the merger on a route-by-route basis. The investigation found that the merger as initially notified would have raised serious doubts as to its compatibility with the Single Market because it was likely to restrict competition or even lead to a monopoly on 19 routes (see table attached), used by almost five million passengers every year, from Spain to other European countries (in particular Italy, France and Greece) or within Spain,. The strong position of the merged entity on these routes in terms of passengers transported would have been further strengthened by its high combined shares of slots at the airports of Barcelona-El Prat and Madrid-Barajas.

In order to remove these serious doubts, the parties offered to transfer slots (i.e. the landing and take-off rights at airports at specific times) free of charge at several airports, in particular Barcelona and Madrid, where congestion at peak hours is most significant. These slots cover all routes where competition concerns were identified and would create the conditions for new entrants or existing competitors to operate more than 150 additional roundtrips per week. . The Commission considers that these remedies are likely to considerably facilitate entry for competitors, maintain competitive pressure on the merged entity and thereby benefit Spanish and other European passengers on the affected routes.

In the light of the results of the market test on these remedies, the Commission concluded that the submitted commitments were likely to result in entry by one or more competitors on the routes where competition concerns were found and that these routes would remain competitive. The Commission therefore considered that the proposed remedies would remove the competition concerns.

More information on the case can be found at:
http://ec.europa.eu/competition/mergers ... tml#m_5364

Source: Press Release European Commission IP/09/29
http://europa.eu/rapid/pressReleasesAct ... anguage=en
(language change possible into fr - de - es - it - el)

[sn26567]

Will the new airline resulting from the merger really be called "Nueva Vueling"? Why not simply Vueling?

I also wonder which slots will be given up. This is a less drastic measure than to abandon some routes altogether. The Commission has been very lenient (as usual) in this case.