Clearance Is Subject To Certain Conditions

The European Commission has cleared under the EU Merger Regulation the proposed merger between US Airways Group and AMR Corporation, including its main subsidiary American Airlines, Inc. The decision is conditional upon the release of one daily slot pair at London Heathrow and of other commitments in order to induce entry on the London-Philadelphia route. In light of these comprehensive commitments, the Commission concluded that the transaction would not raise competition concerns.

The commission expressed concerns that the transaction would lead in particular to a monopoly on the London-Philadelphia route, where US Airways and American Airlines, through its membership in a metal neutral joint venture with British Airways and Iberia, are the only carriers offering non-stop flights. The route is de facto operated by British Airways.

"The Commission could clear this transaction in the first phase given the commitments offered by the parties which address the competition concern we identified on the London-Philadelphia route," said Commission Vice President in charge of competition policy Joaquín Almunia. "The commitments include a corresponding slot at London Heathrow as well as far-reaching feeder arrangements to induce entry by a new competitor on the route. We are therefore satisfied that the competitive dynamics will be maintained so as to ensure choice and quality of air services for passengers on this route."

The Commission examined the competitive effects of the proposed merger on numerous transatlantic routes, one non-stop/non-stop overlap on the London-Philadelphia route, 27 non-stop/one-stop overlap routes and 39 one-stop/one-stop overlap routes. The Commission's investigation confirmed that on all other transatlantic routes affected by the merger the combined entity will continue to face competition from other strong competitors, notably from other metal neutral joint ventures such as the North Atlantic Joint Venture, a partnership including Delta, Air France/KLM, and Alitalia, and the A++ JV, a transatlantic partnership including Lufthansa, Air Canada and United Airlines. In addition, for certain routes it will continue to face strong competition from Virgin Atlantic, in particular following Delta's acquisition of joint control over the Virgin Group and from other air scheduled carriers not belonging to transatlantic metal-neutral joint ventures.

US Airways and American Airlines submitted commitments to release one daily slot pair at London Heathrow and Philadelphia airports, and also provided further incentives such as the possibility for a new entrant to acquire grandfathering rights after a certain period of time. Furthermore, the parties, supported by their joint venture partners of the Transatlantic Joint Business, committed to entering into special feed traffic agreements with the likely entrant airline.

These commitments adequately address the competition concerns identified by the Commission and should facilitate new entry on the London-Philadelphia route. The Commission therefore concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or a substantial part of it. This decision is conditional upon full compliance with the commitments.

FMI: http://europa.eu