The European Commission has approved under the EU Merger Regulation the proposed acquisition of joint control over Czech Airlines by Travel Service and Český Aeroholding.
The Commission’s investigation confirmed that the proposed transaction would not lead to any anticompetitive effects on the market for air transport of passengers as Czech Airlines and Travel Service will continue to face sufficient competitive pressure from other carriers on the overlapping routes which are all out of Prague airport.
The Commission’s investigation also confirmed the absence of any anti-competitive effects resulting from the relationship between Český Aeroholding‘s activities in ground handling, fuel supply, maintenance, repair and overhaul services and Czech Airlines’ and Travel Service’s air transport operations. Indeed, the companies will have no incentive to shut out competitors from access to Český Aeroholding‘s services, because the interests of Český Aeroholding and Travel Service are not identical and their benefit from such strategies, if any, will be very limited.
The Commission, therefore, concluded that the transaction would not raise any competition concerns in the European Economic Area (EEA).
Czech Airlines welcomed the European Commission’s decision as the carrier believes that this step will help stabilize the company and enhance its further development.
Upon completion of the transaction, expected to be finalized within the next few weeks, the shareholding structure of Czech Airlines will be as follows: Korean Air 44 %, Travel Service 34 %, Czech Aeroholding 19.74 % and Česká Pojišťovna 2.26 %.
At the end of 2013, the Korean Air Lines company informed Czech Aeroholding, current holder of 53.74% share in Czech Airlines, about its requirement to use an option to exercise its right to purchase additional 34% of Czech Airlines’ stock from Czech Aeroholding. This step is in line with the Purchase Agreement about the sale of 44 % of Czech Airlines’ share (entered into by Korean Air and Czech Aeroholding in April 2013). Korean Air has previously indicated its intention to subsequently sell the purchased 34% stake to Travel Service.
The transaction had to be reviewed by four respective national antimonopoly offices and then by the European Commission.