18th Jan 2008 12:00
Office of Fair Trading18 January 2008 11/08 18 January 2008 OFT CLEARS EASYJET'S ACQUISITION OF GB AIRWAYS The OFT today cleared the anticipated acquisition by easyJet plc (easyJet) of GBAirways Limited (GB Airways). The OFT has decided that the merger raises no competition concerns in anymarket. easyJet and GB Airways overlap in the supply of scheduled passengerflights on certain routes from London Gatwick airport to 'sun and ski'destinations popular with leisure travellers, such as the Balearics (Ibiza,Palma and Mahon) and Innsbruck. GB Airways operates these routes in accordancewith a franchise agreement with British Airways plc (BA). This fact wassignificant in ruling out concerns based on the loss of potential competition ontotally new routes in the future, because under the franchise agreement BA has aveto over new routes by GB Airways. As to the loss of actual competition on overlap routes, the OFT had initialconcerns because the combined market shares were over 40 per cent in every caseand there was some evidence to suggest that entry onto a route was difficultbecause it is hard to obtain additional capacity at London airports, or to moveexisting capacity from one route to another (so-called 'slot-flexing'). Chloe MacEwen, OFT Deputy Director of Mergers said: 'This is a prime example of how actual entry on all overlap routes can clearlyresolve initial concerns. These examples demonstrate that when it comes to theseroutes, easyJet and its rivals - such as BA, Ryanair and Monarch - have beenable to overcome any barriers to entry at various London airports. Some entryappears to be in response to the merger announcement itself, and there is everyreason to conclude that expansion or further entry by rivals would detersustained prices rises by easyJet post-merger.' ENDS MEDIA enquiries: 020 7211+Corinne Gladstone 8899 Alex Hunter 8900Jonathan Marciano 8898 Nnenna Oleforo 8993Out of hours: mobile: 07774 134814 fax messages: 020 7211 8961Copies of press notices: Ext. 8993http://www.oft.gov.uk PUBLIC enquiries: 0845 7224499 [email protected] reports and consumer information leaflets are available free from:OFT, PO Box 366, Hayes UB3 1XB 0800 389 3158 [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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