The European Commission (EC) says it has approved the proposed acquisition of joint control over Virgin Atlantic by Air France-KLM, Delta Air Lines, and Virgin Group on the grounds the deal would raise no competition concerns in the European Economic Area.

Finalized in May 2018, the agreement will see Air France-KLM Royal Dutch Airlines acquire a 31% stake in Virgin Atlantic currently held by Virgin Group for GBP220 million pounds (USD283 million). Virgin Group will retain a 20% stake and Chairmanship of Virgin Atlantic with Delta retaining its 49% stake. Once done, the trio would then enhance the scope of their existing “metal neutral” joint venture arrangements.

In its ruling issued on February 12, the EC said its investigation had focussed on the impact the transaction would have on the passenger, cargo, and MRO sectors.

With regards to the air transport of passengers, the EC said the transaction would give rise to overlaps in direct/indirect flights (i.e. one of the companies provides a direct flight from one city to another, while the other provides a one-stop flight for the same route) and on indirect/indirect flights (i.e. the companies provide one-stop flights between two cities) on routes from the UK to North America, Africa, Asia and the Caribbean, and from Continental Europe/Ireland to North America.

However, it said none of the overlapping routes raised any competition concerns, despite a small number of them having high combined market shares, because the overlapping routes were direct/indirect overlaps and because Virgin Atlantic, Delta and Air France-KLM are not close competitors. In addition, they continue to face significant competition from other carriers on the routes where the activities of both airlines overlap. The regulator also stated that the increase in their combined slot portfolio was unlikely to have a negative effect on passengers at London Heathrow and Manchester Int'l airports.

With regards to the cargo air transport market, the EC said the transaction was unlikely to raise competition concerns notably because Air France-KLM, Delta and Virgin Atlantic are not close competitors and continue to face strong competition on the affected cargo routes (e.g. from Lufthansa Cargo or Cargolux).

Finally, with regards to maintenance, repair and overhaul services, the transaction does not raise any competition concerns because of its limited impact on this particular market.

The Commission, therefore, concluded that the proposed transaction would raise no competition concerns in any of the relevant markets and cleared the case unconditionally.