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OFT accepts undertakings instead of reference in Flybe / BA Connect merger

88/07    20 June 2007

The OFT has decided today to accept the undertakings offered by Flybe Group Limited to address the competition concerns which arose from the anticipated acquisition by Flybe Group Limited of the BA Connect business of British Airways plc. This transaction will not now be referred to the Competition Commission.
 
Following consultation, the OFT is satisfied that these undertakings will prevent any substantial lessening of competition in the supply of scheduled passenger air transport services between Southampton (SOU) and Manchester (MAN) airports.

Simon Pritchard, Director of Mergers at the OFT, said:

'We are pleased that on the specific facts of this case, this remedy proves to be a suitable means to restore competition and protect passengers on the Southampton - Manchester route, while avoiding an unnecessary reference to the Competition Commission.'

NOTES

1. The Reference Test - The OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

2. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.
  
3. Under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate. In doing so, the OFT will have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it.

4. Before accepting any such undertakings the OFT shall give notice of the proposed undertakings under Schedule 10 of the Enterprise Act 2002, and considered any representations made in accordance with that notice.

5. The full text of this decision will appear in the mergers section.

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