Air Berlin filed for insolvency in August 2017. The insolvency administrator launched an asset sales process for Air Berlin, and received a number of bids for various assets. Two airlines showed a keen interest: easyJet and Lufthansa. They both notified the European Commission of their plan to acquire certain assets from Air Berlin under the EU merger regulation.
As previously reported in LawNow, the European Commission approved the easyJet transaction on 12 December 2017, considering it would not adversely affect competition in the EU single market.
Due to Lufthansa’s competitive position in the German market, its proposed transaction raised more concerns. The sale and purchase agreement concluded on 12 October 2017 by Air Berlin and Lufthansa concerned the acquisition of:
- the leisure airline NIKI with its aircraft, crew and slots (i.e. permission to land and take off at specific times);
- the regional airline LGW, which (prior to Air Berlin's insolvency) primarily provided feeder traffic for Air Berlin's short- and long-haul operations at Berlin and Düsseldorf airports; and
- additional Air Berlin aircraft, crew and slots at several EU airports, in particular in Austria, Germany and Switzerland, which were transferred to LGW.
The Commission believed Lufthansa’s acquisition of NIKI would mean reduced choice and higher prices for consumers, the Commission noting that Lufthansa and NIKI overlapped on around 130 routes. The takeover would severely limit competition on around 70 of those 130 routes, and about 50 of those would give Lufthansa a quasi-monopoly on seats for tour operators and passengers.
Lufthansa submitted remedies to address these competition concerns. However, based on feedback from market participants, the Commission issued a preliminary position stating these remedies to be insufficient.
Lufthansa then exercised its pre-negotiated right to drop NIKI from the transaction. On the same day, NIKI filed a petition with the court of Berlin-Charlottenburg in Germany to open insolvency proceedings.
The insolvency administrator launched a sales process for NIKI, which is ongoing. Ryanair showed interest, and IAG (British Airways’ subsidiary) made an offer at the end of December 2017 for EUR 20 million ($24 million) with an aim to provide up to EUR 16.5 million in additional liquidity to the company. In early January 2018, a passenger rights group seeking to recover EUR 1 million took legal action to shift insolvency proceedings to Austria from Germany.
To meet the Commission’s concerns regarding the acquisition of LGW, relating mainly to slots at Düsseldorf airport, Lufthansa again submitted remedies. Moreover, acting on the market feedback, Lufthansa submitted an improved set of commitments to amend its sale and purchase agreement with Air Berlin, whereby the transfer of slots at Düsseldorf airport was limited for the summer season to those used by two aircraft. As a result, at Düsseldorf airport Lufthansa's slot holding would only increase by 1%, and 50% of slots would still be held by Lufthansa's competitors.
On 21 December 2017, the Commission decided that the modified transaction would no longer raise competition concerns. Clearance was granted, conditional upon full compliance with the modified commitments.