CELEX: 32013M7008
Language: en
Date: 2013-10-09 00:00:00
Title: Commission Decision of 09/10/2013 declaring a concentration to be compatible with the common market (Case No COMP/M.7008 - AENA INTERNACIONAL / AXA PE / LLAGL) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

                                        Brussels, 9.10.2013
                                        C(2013) 6749

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|To the notifying parties:                                              |                                                                       |
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Dear Sir/Madam,

Subject:    Case No COMP/M.7008 – AENA INTERNACIONAL/ AXA PE/ LLAGL
         Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1]

    1) On 5 September 2013, the European Commission received a notification of a proposed concentration pursuant  to  Article  4  of  the  Merger
       Regulation by which AENA Desarrollo Internacional, S.A. ("Aena Internacional", Spain) and AXA Investment Managers Private Equity,  S.A.[2]
       ("AXA PE", France) (together the "Parties") acquire, within the meaning of Article 3(1)(b) of the  Merger  Regulation,  joint  control  of
       London Luton Airport Group Limited ("the Target", United Kingdom) by way of purchase of shares.

       THE PARTIES

    2) Aena Internacional is a wholly-owned subsidiary of Aena Aeropuertos, S.A. (Aena Aeropuertos), which in turn is wholly owned by the Spanish
       statutory corporation “Entidad Pública Empresarial Aeropuertos Españoles y Navegación Aérea (AENA)”. AENA and its Group of companies  (the
       AENA Group) form the public Spanish entity in charge of the civil air navigation services and airport management in Spain. The Aena  Group
       does not have any controlling interest in any airport outside Spain. It is active in the provision of airport infrastructure  services  in
       Spain to airlines through its ownership and operation of a network of 47 airports.

    3) AXA PE is an international private equity firm and subsidiary of the AXA Group[3]. AXA PE manages and controls private  equity  funds,  in
       which private investors participate as limited partners. Other than via AXA PE, the AXA Group is not  engaged  in  activities  related  to
       those in which the Target is engaged; in particular AXA Group does not own any airports in the UK or anywhere else, nor does it  have  any
       controlling interest in an activity that is vertically related to the Target.

    4) The Target's wholly owned subsidiary London Luton Airport Operations Limited (LLAOL) is the concessionaire company  operating  the  London
       Luton Airport ("Luton"), located 32 miles northwest of central London and the  UK's  5th  largest  passenger  airport.  Among  the  London
       airports, Luton is a major base for low cost or “no frills” air travel. It operates primarily as a low cost, scheduled  airport,  offering
       scheduled and charter flights to a wide range of mainly European destinations.

       THE OPERATION

    5) Aena Internacional and AXA PE intend to acquire the entire issued capital of the Target  from  its  current  owner  TBI  Airport  Holdings
       Limited, ultimately controlled by Abertis  Infraestructuras,  S.A.  (Abertis).  Pursuant  to  the  transaction,  AENA  Internacional  will
       indirectly hold 51% of the Target's shareholding, while AXA PE will indirectly hold the remaining 49%.

       THE CONCENTRATION

    6) According to a shareholders' agreement entered into on 31 July 2013, Aena Internacional and AXA PE will exercise joint  control  over  the
       Target through TopCo. [Information regarding the Target's governance's structure].[4]

    7) [Information regarding the Target's governance's structure].[5],[6]

    8) [Information regarding the Target's governance's structure].[7]

    9) Therefore the contemplated transaction would lead to the acquisition of joint control by Aena Internacional and AXA PE over the Target. It
       is hereafter referred to as the Transaction.

       EU DIMENSION

   10) The undertakings concerned – namely Aena Internacional, AXA PE and the Target - have a combined aggregate world-wide turnover of more than
       EUR 5 000 million (EUR 3 307 million for Aena Internacional, EUR 90 126 million for AXA PE and EUR 145 million for  the  Target).  Two  of
       them have an EU-wide turnover in excess of EUR 250 million (EUR […] for Aena Internacional and EUR […] for AXA PE).  There  is  no  Member
       State where each of the undertakings concerned achieves more  than  two-thirds  of  its  aggregate  EU-wide  turnover.[8]  Therefore,  the
       Transaction has an EU dimension in the sense of Article 1(2) of the Merger Regulation.

       MARKET DEFINITION

   11) The AENA Group and the Target are engaged in the management of airports and in activities related to the operation of airports.

1 Management and operation of airport infrastructures

   12) As regards the management and operation  of  airport  infrastructures,  by  relying  on  previous  Commission  decisions,[9]  the  Parties
       distinguish between three categories of services:

     i. the provision of airport infrastructure services, which  includes  the  development,  maintenance,  use  and  provision  of  the  runway
        facilities, taxiways and other airport infrastructures. The geographic scope of these markets has been considered to  be  the  catchment
        areas of individual airports.[10]. As regards London airports specifically, the Commission has in the past left open whether the  market
        for the provision of airport infrastructure services to airlines should comprise all London airports, or should be limited to a  certain
        airport in London. Anyhow, the radius of the catchment area of an airport has been found to  be  no  larger  than  300  kilometres  (for
        international airports).[11]

    ii. the provision (or contracting) of ground-handling services, which includes notably ramp-handling, passenger and baggage  handling,  fuel
        and oil handling, aircraft maintenance, ground administration and supervision, crew administration. In its practise the  Commission  has
        repeatedly found that the geographic dimension of these markets was limited to individual airports, or was at most local.[12]

   iii. the provision (or contracting) of associated commercial services, which includes notably catering facilities, car parking, car hire  and
        sale of advertising space. The Commission has repeatedly concluded that the geographic  scope  of  such  a  market  was  limited  to  an
        individual airport and its immediate surroundings.[13]

   13) The product market delineation proposed by the notifying party can be used as a  starting  point  for  the  competitive  analysis  of  the
       Commission in the present case. However, and in any event, the precise definition of the product market for the management  and  operation
       of airport infrastructures can be left open since the Transaction does not raise any competition  concerns  under  any  plausible  product
       market definition.

   14) With respect to the geographic market definition, the precise determination  of  the  geographic  markets  can  be  left  open  since  the
       activities carried out by the Parties are located in different, non-neighbouring countries with no potential geographic overlap given  the
       distance between Luton and the airports operated by Aena Internacional in Spain.

2 Airport air traffic services

   15) The Commission has in its practice drawn a distinction between "en route" and "airport" air traffic  services.[14]  "Airport  air  traffic
       services" relate to the approach and departure of aircrafts within  a  certain  distance  of  an  airport  on  the  basis  of  operational
       requirements. In the United Kingdom airport managers are responsible for contracting with providers of airport air traffic  services.  "En
       route" services are provided by a designated service provider on an exclusive basis for the airspace which for the case at hand  comprises
       the United Kingdom. For that reason "en route" traffic services are not vertically linked to  the  management  and  operation  of  airport
       infrastructures.

   16) The Notifying Parties support the distinction between "en route" and "airport" air traffic services.

   17) In the Airline Group/NATS case, the Commission also came to the conclusion that that market was probably no larger than national in  scope
       and even considered the possibility that each individual airport would constitute separate relevant markets in relation  to  "airport  air
       traffic services".[15]

   18) The Parties argue that the market for "airport air traffic services" is at most national.

   19) However, the implementation of the Single European Sky legislation[16] is enhancing  competition  between  airport  air  traffic  services
       providers. Therefore an EEA-wide dimension cannot be fully excluded.

   20) In the case at hand, the geographic scope of the market for airport air traffic services can be left open since the Transaction  does  not
       raise any competition concerns under any plausible product and geographic market definition.

3 Automatic handling material systems and accompanying services for baggage handling at airports

   21) AXA PE jointly controls the Fives Group,[17] an industrial engineering group whose  division Fives  Cinetic  supplies  automatic  handling
       material systems and accompanying services. These services are an input for the downstream market for airport infrastructure  services  in
       which the Target is active.

   22) The Parties submit that in relation to the production of automatic handling material systems and accompanying services  used  for  baggage
       handling at airports, distribution centres and express parcel sorting facilities, the narrowest possible market definition  would  be  the
       supply of automatic handling material systems and accompanying services for baggage handling at airports (BHS).[18]

   23) The Parties submit that the potential geographic market is at least EEA-wide in scope.

   24) According to the Parties, the supply-side conditions are such that suppliers compete for airport contracts across the EEA  or  the  world.
       For instance, MacDonald Humfrey (Automation) Ltd., the current supplier of the Target has, in addition to other  airports  in  the  United
       Kingdom, supplied the Larnaca Airport in Cyprus, the Otopeni Airport in Romania and the Paphos Airport in Cyprus. On the other hand,  Five
       Cinetic provided BHS services to customers in the United States and in Italy.

   25) The Parties argue that procurement of BHS services takes place on a very wide  geographic  area  which  is  at  least  EEA-wide,  with  no
       regulatory barriers to trade within the EEA.

   26) In the case at hand, there is no need to reach a final view regarding the precise definition of a potential market for the supply  of  BHS
       at airports since the Transaction does not raise competition concerns under any plausible product and geographic market definition.

       COMPETITIVE ASSESSMENT

1 Horizontal overlaps : management and operation of airport infrastructures

   27) AENA Group, through Aena Aeropuertos[19], operates airports in Spain while the Target is active in the markets for airport  infrastructure
       services in Luton. There is therefore no geographic overlap between the Parties' activities in relation to the markets for  the  provision
       of airport infrastructure services, regardless of any further sub-segmentation . Indeed, the catchment areas between the airports operated
       by the Parties do not overlap, nor do the Parties offer associated services in the same specific airport or its immediate surroundings.

   28) The Commission therefore considers that the Transaction does not raise serious doubts as to its compatibility  with  the  internal  market
       with respect to its horizontal effects on the markets for the provision of airport infrastructure services, regardless of any further sub-
       segmentation.

2 Vertical relationships

   29) The AENA Group is active in Spain and the Target in the United Kingdom. Vertical relationships arise because  of  the  activities  of  the
       parents (AENA Group and AXA PE) and the Target. AENA Group provides "airport air traffic services"; AXA PE owns  a  controlling  stake  in
       Fives Cinetic, a company which supplies automatic handling material systems and accompanying services.  Both  of  these  services  can  be
       considered as inputs for the downstream market for airport infrastructure services in which the  Target  is  active.[20]  The  Transaction
       therefore gives rise to vertical relationships (i) between airport air traffic services and airport infrastructure services  (ii)  between
       handling material systems and accompanying services  and airport infrastructure services.

   30) These minimal vertical relationships resulting from the Transaction are not capable of  raising  competition  concerns  (either  input  or
       customer foreclosure) as explained in the paragraphs that follow.

   31) The Target's market share on the downstream market for the provision of airport  infrastructure  services  would  vary  depending  on  the
       precise definition of the catchment area but could reach up to 100% if the relevant market is considered to be limited to  Luton  airport.
       The Transaction could give rise to vertical relationships as regards upstream services provided by  the  Parties  and  in  particular  (i)
       "airport air traffic services" provided by the AENA Group in Spain (if these services are to be considered as part of an EEA-wide  market)
       and (ii) the supply of automatic handling material systems and accompanying services for baggage handling at airports provided by  AXA  PE
       (if these services are to be considered as part of an EEA-wide market).

1 Automatic handling material systems and accompanying services for baggage handling at airports

   32) As regards the supply of automatic handling and material systems and accompanying services for baggage handling at airports,  the  Parties
       submit that Fives Cinetic's market is in any event less than 1% both on a UK-wide and a EEA-wide market. Moreover,  airports  represent  a
       minor part of Fives Cinetic's  sales,  the  major  part  being  generated  through  transportation  and  courier  companies  (posts)  and,
       increasingly, from ecommerce companies. Therefore, the Parties appear unable to engage into a successful input foreclosure  strategy  with
       respect to BHS.

   33) Besides, Luton accounts for a limited share of the overall demand for BHS both in the United Kingdom, where this share does not exceed [5-
       10%], and in the whole of the EEA, where it is negligible. Therefore  the  Transaction  does  not  give  rise  to  any  risk  of  customer
       foreclosure.

   34) The Commission therefore considers that the Transaction does not raise serious doubts as to its compatibility  with  the  internal  market
       with respect to the vertical links between the market for automatic handling  material  systems  and  accompanying  services  for  baggage
       handling at airports and the market for the provision of airport infrastructure services.

2 Airport air traffic services

   35) AENA Group, through AENA, provides "airport air  traffic  services"  at  34  Spanish  airports.  Therefore,  there  would  be  a  vertical
       relationship between a market where AENA Group operates and a market where the Target operates only with an  EEA-wide  dimension  for  the
       market for airport air traffic services.

   36) AENA Group's market share on a hypothetical EEA-wide upstream market for "airport air traffic services" would equate [10-20%]. Such market
       shares are under the circumstances of the present case not capable of raising any risk of input foreclosure. In the  wake  of  the  Single
       European Sky legislation, airports can obtain airport air traffic services  from  any  licensed  air  navigation  services  provider.  For
       example, most airports in United Kingdom – including the Target – are  nowadays  supplied  by  NATS  Services  Limited  (NSL).  Therefore,
       airports competing against the Target could easily find alternative suppliers of airport air traffic services if AENA were to engage  into
       an input foreclosure strategy.

   37) Moreover, the Transaction does not give rise to any risk of customer foreclosure either given that  the  Target  only  operates  a  single
       airport in the EEA.

   38) The Commission therefore considers that the Transaction does not raise serious doubts as to its compatibility  with  the  internal  market
       with respect to the vertical links between a hypothetical EEA- wide market for airport  air  traffic  services  and  the  market  for  the
       provision of airport infrastructure services.

3 Conglomerate effects

   39) One of the Target's customers raised issues concerning the routes from Luton to other airports controlled by AENA in  Spain,  particularly
       about AENA's alleged ability and incentives to increase fares for access to the airports at both ends of these routes.  This  third  party
       indicated that it had no concerns in relation to AXA PE’s investment in Luton airport.[21]

   40) The Parties contest these arguments, noting in particular that the airport charge setting mechanisms in  place  at  Spanish  airports  and
       Luton will not allow them to raise or bundle airport charges in Spain and at Luton. They also argue that the airlines flying between Luton
       and Spain have significant countervailing buyer power and could threaten to switch to other airports if the  Parties  attempted  to  raise
       airport charges.

   41) The Commission considers that airport charge setting mechanisms in place at Spanish airports and Luton, which are  subject  to  regulatory
       control and contain safeguards against undue discrimination between carriers, would indeed make it very difficult for the Parties to raise
       charges selectively for the airlines flying between Luton and Spanish airports.[22] Moreover, in view of the  profile  of  these  airlines
       (low-cost and scheduled leisure carriers), the risk that they move from Luton to another London airport or would exit the routes concerned
       altogether if the Parties were to raise airport charges appears sufficiently high to deter the Parties from attempting to  implement  such
       increases. Besides, the Transaction appears to have no specific effect on the ability of Luton to increase  airport  charges  and  on  the
       ability of AENA to increase airport charges in Spain. In particular, the Transaction has no effect  on  the  ability  and  willingness  of
       airlines to switch away from Luton to another London airport (or exit routes from that airport) when they face higher airport  charges  at
       that airport. In view of these elements, the Transaction does not raise serious doubts as to its compatibility with  the  internal  market
       with respect to the hypothetical conglomerate effects evoked by the above-mentioned third party.

       CONCLUSION

   42) For the above reasons, the European Commission has decided not to oppose the notified operation and to  declare  it  compatible  with  the
       internal market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the Merger Regulation.

                                        For the Commission
                                        (Signed)
                                        Joaquín ALMUNIA
                                        Vice-President

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[1]   OJ L 24, 29.1.2004, p. 1 ('the Merger Regulation'). With effect from 1 December 2009, the Treaty on the Functioning of the  European  Union
      ('TFEU') has introduced certain changes, such as the replacement of 'Community' by 'Union' and 'common market' by  'internal  market'.  The
      terminology of the TFEU will be used throughout this decision.
[2]   Via AXA Infrastructure Fund III S.C.A. SICAR (AXA Infrastructure Fund III), a fund managed by its general partner  AXA  Infrastructure  III
      S.à.r.l., a company indirectly controlled by AXA PE.

[3]   The AXA Group received an irrevocable offer to sell substantially its entire stake in AXA PE to a group of investors, a  transaction  which
      is expected to be closed in the third or fourth quarter of 2013. […].
[4]         […].

[5]   […].

[6]   […].
[7]   OJ C 95, 16 April 2008, p.1

[8]   In accordance with Article 5(4) of the Merger Regulation, AXA PE's turnover is the turnover of the whole of AXA Group.

[9]   See decisions of  the  European  Commission  n°COMP/M.4164  -  Ferrovial/Québec/GIC/BAA,  recital  10  and  subsequent  and  COMP/M.6862  –
      Vinci/Aeroportos de Portugal, recital 16 and subsequent.

[10]  See decisions of the European Commission n°COMP/M.4164 - Ferrovial/Québec/GIC/BAA, recital 15 to  24,  COMP/M.6862  –  Vinci/Aeroportos  de
      Portugal, recital 19 and 20.

[11]  See decisions of  the  European  Commission  n°COMP/M.2315  –  The  Airline  Group/NATS,  recital  20  and  n°COMP/M.3823  –  MAG/Ferrovial
      Aeropuertos/Exeter Airport, recital 18.

[12]  See decisions of the European Commission n°COMP/M.4164 - Ferrovial/Québec/GIC/BAA, recital 15 to  24,  COMP/M.6862  –  Vinci/Aeroportos  de
      Portugal, recital 19 and 20.
[13]  See decisions of the  European  Commission  n°COMP/M.2262  Flughafen  Berlin  II,  paragraph  17;  n°COMP/M.4164,  Ferrovial/Quebec/GIC/BAA
      paragraph 24, n°COMP/M.6862 – Vinci/Aeroportos de Portugal, recital 19 and 20.
[14]  See decision of the European Commission n°COMP/M.2315 – The Airline Group/NATS, recital 13 and following.
[15]  See decision of the European Commission n°COMP/M.2315 – The Airline Group/NATS, recitals18- 20.
[16]  The Single European Sky legislative framework consists of four Regulations (framework Regulation No 549/2004, service provision  Regulation
      No 550/2004, airspace Regulation No 551/2004 and the interoperability Regulation No 552/2004). It covers the provision  of  air  navigation
      services, the organisation and use of airspace, and the interoperability of the European Air Traffic Management Network.  It  aims  at  de-
      fragmenting the European airspace, reducing delays, increasing safety standards and flight efficiency and  at  reducing  costs  related  to
      service provision.

[17]  The acquisition of joint control by AXA PE over the Fives Group was notified to the Commission in the case n°COMP/M.6691 - AXA IMPEE/FIVES

[18]  The only precedent in this sector is case n°COMP/M.5362 - SHV/ Vanderlande which involved the acquisition by SHV  Holdings  N.V.  (SHV)  of
      Vanderlande Industries B.V. However, the SHV/Vanderlande case was treated under the simplified procedure.
[19]  In the United Kingdom, neither Aena Internacional nor AXA PE control any interest  in  airports.  Although  the  AENA  Group  does  control
      airports in the EEA, this does not give rise to any horizontally affected markets.

[20]  Indeed automatic handling material systems are necessary for the baggage handling at airports. As for the provision of airport air  traffic
      services, no aircraft can land or take-off without them.

[21]  The Commission is of the view in this regard that AXA PE, which is jointly controlling the  Target,  has  indeed  no  incentive  to  accept
      diversion of flights or bundling practices from Luton to AENA's airports, or vice-versa.

[22]  Airport charges are regulated by EU Directive 2009/12/EC of the European Parliament and of the Council of 11 March 2009 on airport  charges
      (OJ L 70, 14.3.2009) which was implemented in Spain by Law N° 1/2011 and in the United Kingdom by the Airport Charges Regulation 2011.

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 In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC)  No  139/2004
 concerning non-disclosure of business secrets and other confidential information.  The  omissions  are  shown  thus  […].  Where  possible  the
 information omitted has been replaced by ranges of figures or a general description.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE