BA’s owner IAG could face investigation over Air Europa’s takeover
British Airways’s owner IAG could face a formal investigation by the UK Competition and Markets Authority (CMA) over the proposed takeover of Spanish carrier Air Europa.
The watchdog announced today that it is “considering whether this transaction, if carried into effect, will result in the creation of a relevant merger situation” that could lead to “a substantial lessening of competition” in the UK market.
The CMA launched on 19 November an enquiry into the £420m merger, inviting all stakeholders involved to send their comments between today and 29 November. The watchdog will announce its decision by 19 January, even though the CMA “cannot guarantee that the decision will be announced on or before this current deadline, as the deadline of a given case may change during the merger assessment process due to different reasons.”
“We will collaborate with the CMA,” said a company spokesperson. “The London-Madrid route is highly competitive and is already part of the European Commission process.”
According to David Warnock-Smith, professor of aviation management at Buckinghamshire New University, the takeover could have serious consequences for the London-Madrid market.
“When looking at market share, however, it is clear that IAG group already wields significant market power on this route pairing with as much as 66 per cent of all seats offered in the month of November 2021,” he told City PM
“Ryanair, Air Europa and easyJet only offered 20, 10 and 4 per cent of total seat capacity respectively in November, leading to an overall near duopolistic market situation despite the presence of four carrier groups.
“An expanded IAG group to include Air Europa, could see IAG’s market share increase further to 76 per cent, though it is possible that other carriers in the market would try and alter capacity offered in response to such a takeover, assuming there are slots available allowing them to expand, which at Heathrow and Madrid particularly might pose a problem for non-IAG carriers.”
The CMA is not the first body to probe into AG’s deal. In June, the European Commission opened an investigation in the purchase, claiming there were concerns regarding the transaction reducing competition for Spanish domestic and international routes, City PM reported.
Late last month, the company – which owns BA as well as two of the three main Spanish carriers, Iberia and Vueling – offered concessions to address the EU antitrust concerns, which resulted in the Commission extending the deadline for a decision to 4 January.