Mergers: Commission clears proposed joint acquisition of Virgin Atlantic by Delta and Virgin Group

Brussels, 20 June 2013

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of joint control over Virgin Atlantic by Delta and Virgin Group. Delta will replace Singapore Airlines as a 49% minority shareholder in Virgin Atlantic, while Virgin Group will retain its 51% stake. Furthermore, Delta and Virgin Atlantic will enter into a fully integrated joint venture in order to bring together their passenger air transport operations on routes between the United Kingdom and North America. The Commission's investigation confirmed that in all markets the combined entity would continue to face competition from several strong competitors, notably British Airways and American Airlines.

Delta and Virgin Atlantic's non-stop services overlap on the London-New York and London-Boston routes. In addition, Delta's one-stop services overlap with Virgin Atlantic's non-stop services on several routes between the UK and North America¹.

On each of the transatlantic routes where both Virgin and Delta operate, sufficiently strong players – in particular British Airways and American Airlines, which joined forces in a joint venture - are present and capable of exercising a significant competitive constraint on the combined entity. Moreover, Delta and Virgin are currently not particularly close competitors, but primarily compete against British Airways and American Airlines.

The Commission has therefore concluded that the proposed transaction did not raise competition concerns.

The transaction was notified to the Commission on 15 May 2013.

The Commission closely co-operated with its US counterparts, including the Department of Justice and the Department of Transportation, with contact with the agencies throughout the course of its investigation. This cooperation, facilitated by the parties, made for a more efficient review process.

Companies

Virgin Group is the holding company of a group of companies active in a wide range of products and services worldwide, such as gyms, health care, mobiles and transport.

Virgin Atlantic is a UK air carrier flying to 34 destinations worldwide, including locations across North America, the Caribbean, Africa, the Far East and Australia. Virgin has no integrated joint ventures and is not a member of any global airline alliance.

Delta (and the Delta Connection carriers) offer passenger air transport services to more than 350 destinations in 66 countries on six continents. Headquartered in the US, Delta is a founding member of the SkyTeam global alliance. Delta participates in a trans-Atlantic joint venture with Air France-KLM and Alitalia.

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 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).

More information on the case will be available on the Commission's competition website, in the public case register under the case number M.6828.

IP/13/587