Mergers: Commission approves acquisition of Greek airline Olympic Air by Aegean Airlines

LOGO CE_Vertical_EN_quadriThe European Commission has cleared under the EU Merger Regulation the proposed acquisition of Olympic Air by Aegean Airlines, both Greek air carriers. The Commission’s in-depth investigation has shown that Olympic Air would be forced to exit the market in the near future due to financial difficulties if not acquired by Aegean. Once Olympic would be out of business, Aegean would become the only significant domestic service provider and would capture Olympic’s current market shares. Therefore, with or without the merger, Olympic would soon disappear as a competitor to Aegean. Thus the merger causes no harm to competition that would not have occurred anyway.

The Commission’s vice-president in charge of competition policy, Joaquín Almunia, said: “It is clear that, due to the on-going Greek crisis and given Olympic’s own very difficult financial situation, Olympic would be forced to leave the market soon in any event. Therefore we approved the merger because it has no additional negative effect on competition.”

The Commission has examined the effects of the proposed acquisition on competition in the affected markets for the domestic air transport of passengers. Aegean is Olympic’s closest competitor on these markets in Greece. The Commission initially expressed concerns and opened an in-depth investigation in April 2013 (IP/13/361).

The Greek crisis has seen a drop of 26% in demand for domestic air passenger transport from Athens: from 6.1 million passengers in 2009 to 4.5 million passengers in 2012. This decline has continued during the first half of 2013 (6.3% decrease compared to the preceding year).

Furthermore, the number of routes served by both Aegean and Olympic has decreased substantially over recent years. When the Commission blocked Aegean’s previous attempt to merge with Olympic in 2011, the parties provided competing services on 17 routes, nine of which raised competition concerns (see IP/11/68). Currently, Aegean and Olympic have overlaps on seven routes of which the following five domestic routes are served only by them: Athens–Chania; Athens–Mytilene; Athens–Santorini; Athens–Corfu (Aegean only operates in the summer); Athens–Kos (Aegean only operates in the summer).

The market investigation has revealed that entry in the immediate future by other airlines is unlikely on any of those routes. This is due to a variety of reasons: potential entrants see more profitable opportunities elsewhere, they consider the costs of entry too high or they stay away from the Greek domestic market due to Greece’s current dire economic situation.

However, the Commission’s in-depth investigation has also clearly demonstrated that, in any event, Olympic is a failing firm and would go out of business soon. Olympic has never been profitable since its privatisation in 2009 and has received considerable financial support from its sole shareholder, Marfin Investment Group (“MIG”), ever since. A thorough analysis of Olympic’s business prospects has confirmed that the company is highly unlikely to become profitable in the foreseeable future under any business plan. MIG had therefore decided to discontinue its support of Olympic, should it not be sold to Aegean. This would lead to Olympic’s permanent shutdown in the short term.

Furthermore, the market investigation has confirmed that there is no other credible purchaser other than Aegean interested in acquiring Olympic. There has also been no expression of any credible interest in the acquisition of Olympic’s assets including its brand. Consequently, the most likely scenario is that absent the transaction Olympic’s assets would leave the market completely.

The Commission has therefore concluded that any competitive harm caused by Olympic’s disappearance as an independent competitor is not caused by the merger. As a consequence, the merger is compatible with the internal market and must be authorised.

The transaction was notified to the Commission on 28 February 2013.

Companies and products

Aegean is a Greek airline providing air transport of passengers and, to a more limited extent, cargo services. Since 1999, Aegean has been offering scheduled flights on Greek domestic routes and international short-haul routes. It operates a base at Athens International Airport. It currently serves approximately 50 international and domestic short-haul destinations. Aegean is a member of the Star Alliance.

Olympic is a Greek airline active in air transport of passengers and cargo. Like Aegean, Olympic operates a base at Athens International Airport and currently serves approximately 30 short-haul destinations, mainly within Greece. Olympic does not belong to any airline alliance.

Merger control rules and procedures

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 effective competition in the EEA 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 a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). There is currently no other open phase II investigation.

More information will be available on the competition website, in the Commission’s public case register under the case number M.6796.


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