CELEX: 32019M9270
Language: en
Date: 2019-03-15 00:00:00
Title: Commission Decision of 15/03/2019 declaring a concentration to be compatible with the common market (Case No COMP/M.9270 - VINCI Airports / GATWICK AIRPORT) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                Brussels, 15.3.2019
                                                                C(2019) 2135 final
                                                                              PUBLIC VERSION
                                                                 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                                                                 information omitted has been replaced by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.
                                                                To the notifying party
Subject:            Case M.9270 — VINCI Airports / Gatwick Airport
                    Commission decision pursuant to Article 6(1)(b) of Council
                    Regulation No 139/20041 and Article 57 of the Agreement on the
                    European Economic Area2
Dear Sir or Madam,
(1)         On 8 February 2019, the European Commission received notification of
            a proposed concentration pursuant to Article 4 of the Merger Regulation by
            which VINCI Airports (the 'Notifying Party', France), belonging to the VINCI
            Group, which is ultimately controlled by VINCI S.A. (France), acquires within
            the meaning of Article 3(1)(b) of the Merger Regulation sole control of the
            whole of Ivy Topco Limited (Cayman Islands), a holding company indirectly
            controlling Gatwick Airport Limited ('GAL', United Kingdom), by way of
            purchase of shares (the 'Transaction' ).3
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    OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement').
3    Publication in the Official Journal of the European Union No C 66, 19.02.2019, p. 16.
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak--- 1.       THE PARTIES
(2)      VINCI Airports manages and operates airports in a number of territories, namely
         France, Portugal, the United Kingdom (only in Northern Ireland - Belfast),
         Sweden, Serbia, Cambodia, Japan, Dominican Republic, Chile, Brazil, Costa Rica
         and the United States of America. VINCI Group, ultimately controlled by
         VINCI S.A., is a diversified group notably active in the fields of (i) concessions
         and infrastructures (mainly motorways and airports), (ii) building, public works
         and civil engineering, (iii) energy and information technology services and (iv)
         road works.
(3)      Ivy Topco Limited is a holding company that indirectly controls GAL, which
         owns and operates Gatwick Airport, the second largest airport of the London area.
2.       THE OPERATION AND THE CONCENTRATION
(4)      Pre-Transaction, Ivy Topco Limited is owned by Ivy Guernsey Holdings, a
         consortium that is solely controlled by the private equity fund Global
         Infrastructure Partners ('GIP'), which in turn is managed by Global Infrastructure
         Management LLC.4
(5)      Pursuant to a Share Purchase Agreement concluded on 27 December 2018,
         VINCI Airports acquires, via a special purpose vehicle, 50.01% of the shares in
         Ivy Topco Limited. [details about other shareholders]5 [details about the
         composition of Ivy Topco Limited’s Board of Directors]6 [details about the
         decision making process]7 [further details about the decision making process]8
         Therefore, Ivy Topco Limited will be solely controlled by VINCI Airports.
(6)      The Transaction therefore constitutes a concentration within the meaning of
         Article 3(1)(b) of the Merger Regulation.
3.       EU DIMENSION
(7)      The undertakings concerned have a combined aggregate world-wide turnover of
         more than EUR 5 000 million9 (VINCI Airports (VINCI Group): EUR 40 248
         million, Ivy Topco Limited: EUR […] million). Each of them has an EU-wide
         turnover in excess of EUR 250 million (VINCI Airports (VINCI Group): EUR
4   Short Form Co, paragraphs 3 and 5.
5   Short Form Co, paragraph 8 et seq.; Annex 5.1.a, Share Purchase Agreement concluded on 27
    December 2018.
6   [further details about the composition of Ivy Topco Limited’s Board of Directors]
7   [further details about the decision making process] (see Short Form Co, paragraph 53 et seq.;
    [reference to internal document].
8   Short Form Co, paragraph 49.
9   Turnover calculated in accordance with Article 5 of the Merger Regulation.
                                                        2
 ---pagebreak---         […] million, Ivy Topco Limited: EUR […] million), but they do not both achieve
        more than two-thirds of their aggregate EU-wide turnover within one and the
        same Member State. The notified operation therefore has an EU dimension
        pursuant to Article 1(2) of the Merger Regulation.
4.      MARKET DEFINITION
(8)     While both, VINCI Airports and Ivy Topco Limited, through its operating
        company GAL, are active in the management and operation of airport
        infrastructures, the Transaction does not give rise to horizontally affected
        markets.10 The Transaction creates vertical relationships and vertically affected
        markets between VINCI Group’s upstream activities in the market for
        construction and maintenance services as well as in the market for electrical and
        mechanical services, and, GAL’s activities in the downstream market for the
        management and operation of airport infrastructures.11
4.1.    Management and operation of airport infrastructures (downstream)
              4.1.1.    Product market
(9)     While leaving the exact definition of the product market open, the Commission
        has in its previous decisional practice considered that the market for the
        management and operation of airport infrastructures can be subdivided into three
        distinct product markets:12
              a) the provision of airport infrastructure services, which includes the
                  development, maintenance, use and provision of the runway facilities,
                  taxiways and other airport infrastructure as well as the coordination and
                  control of the activities performed on these infrastructures. It was
                  considered if the market could be further segmented according to the
                  categories of customers of airline infrastructure services (full service
                  airlines, low cost airlines and charter airlines) or according to the type of
                  service provided by the airports (short-haul or long-haul);
              b) the provision (or contracting) of ground-handling services, which includes
                  ramp handling, passenger and baggage handling, fuel and oil handling,
10  GAL only operates one airport, Gatwick Airport in London. VINCI Airports manages and operates
    airports throughout the world, but only operates one airport in the United Kingdom, Belfast airport in
    Northern Ireland. The Transaction does not give rise to a horizontal overlap even under the widest
    plausible geographic market definition for the management and operation of airport infrastructures (a
    catchment area of 300 km around Gatwick Airport).
11  Apart from GAL, none of the companies controlled by Ivy Topco Limited (which are, apart from
    GAL, Ivy Midco Limited, Ivy Property Holdings Limited, Ivy Holdco Limited, Gatwick Funding
    Limited, Ivy Bidco Limited, Gatwick Airport Pension Trustees Limited) is active in a market that
    might be horizontally or vertically related to a market in which an undertaking controlled by VINCI
    Group is active (see Short Form CO, paragraphs 76 and 77).
12  See Cases M.7398 – Mirael / Ferrovial / NDH1, paragraph 19; Case M. 7008 – AENA Internacional /
    AXA PE/LLAGL, paragraph 12; Case M. 6862 – VINCI / Aeroportos de Portugal, paragraph 16.
                                                        3
 ---pagebreak---                 aircraft maintenance, ground administration and supervision and crew
                administration; and
           c) the provision (or contracting) of associated commercial services, which
                includes catering facilities, car parking services, car hire and sale of
                advertising space.
(10)   The Notifying Party agrees with the Commission’s approach.13
           4.1.2.     Geographic market
(11)   As regards the market for the provision of airport infrastructure services, the
       Commission has left the exact geographic market definition open in its prior
       decision practice and, in the case of London, considered the following different
       plausible geographic markets: a) limited to a certain London airport (Gatwick)14;
       b) a wider area comprising some or all of the London airports15; or c) the
       catchment area of individual airports, which was considered no larger than 300
       km for international airports or 100 km for regional airports.16
(12)   As regards the market for the provision (or contracting) of ground-handling
       services, the Commission has in its prior decisional practice considered that the
       geographic scope of the market is restricted to a specific airport.17
(13)   For the market for the provision (or contracting) of associated commercial
       services, it was considered that the market is limited to a specific airport or its
       immediate surroundings.18
(14)   The Notifying Party agrees with the Commission’s approach.19
           4.1.3.     Conclusion on the market definition
(15)   The Commission considers that the exact definition of the product and geographic
       market can be left open for the purpose of the present case, as the Transaction
       does not raise serious doubts as to its compatibility with the internal market under
13 Short Form CO, paragraphs 104 et seq.
14 See Case M.5652 – GIP / GATWICK AIRPORT, paragraph 15.
15 See Case M.5652 – GIP / GATWICK AIRPORT, paragraph 15.
16 See Case M. 7008 – AENA International / AXA PE/LLAGL, paragraph 12; Case M. 7398 – Mirael /
   Ferrovial / NDH1, paragraph 21.
17 See Cases M. 8470 – DAAM / INFRAVIA / FIH / AI, paragraph 19; Case M. 7398 – Mirael / Ferrovial
   / NDH1, paragraph 22.
18 See Case M.7398 – Mirael / Ferrovial / NDH1, paragraph 23.
19 Short Form CO, paragraphs 111 and 114.
                                                    4
 ---pagebreak---         any plausible product and geographic market definitions, including under the
        narrowest plausible geographic scope consisting of Gatwick Airport only.
(16)    The only product market segments affected by the present Transaction are the
        market segments for (i) provision of airport infrastructure services, and (ii)
        provision (or contracting) of ground-handling services. The Commission will
        therefore only assess these two market segments in the following.
4.2.    Construction and maintenance services (upstream)
            4.2.1.   Product and geographic market
(17)    Within construction services,20 the Commission has considered to distinguish
        between (i) the construction of residential buildings covering blocks of flats, other
        multi-household buildings and single household buildings; (ii) the construction of
        non-residential buildings (such as, e.g., industrial buildings, offices, shopping
        centres and hospitals); and (iii) the construction of infrastructure/civil engineering
        (such as roads, bridges, railroads, sewage systems). The exact product market
        definition was ultimately left open.21 Concerning the geographic scope, the
        Commission has considered that the markets for construction services are likely
        national, but ultimately left the market definition open.22
(18)    The Notifying Party agrees with the Commission’s approach.23
            4.2.2.   Conclusion on the market definition
(19)    The Commission considers that the exact product and geographic market
        definition can be left open for the purpose of the present case, as the Transaction
        does not raise serious doubts as to its compatibility with the internal market under
        any plausible product and geographic market definition.
(20)    The only market segments affected by the present transaction are the market
        segments for (i) construction and maintenance of non-residential buildings in the
        United Kingdom and (ii) construction and maintenance of infrastructure/civil
        engineering in the United Kingdom. The Commission will therefore only assess
        these two market segments in the following.
20
   As concerns maintenance services, these are ancillary to the construction services.
21  See Cases M.6020 – ACS / HOCHTIEF, paragraph 6; M.6841 – GOLDMAN SACHS / TPG LUNDY /
    TULLOCH HOMES GROUP LIMITED, paragraph 17.
22  See Cases M.6020 – ACS / HOCHTIEF, paragraph 7; M.6841 – GOLDMAN SACHS / TPG LUNDY /
    TULLOCH HOMES GROUP LIMITED, paragraph 18.
23  Short Form CO, paragraph 133 and 135.
                                                        5
 ---pagebreak--- 4.3.    Electrical and mechanical engineering services (upstream)
             4.3.1.     Product market
(21)    While leaving the exact market definition open, the Commission has in its
        previous decisional practice considered a segmentation of the product market
        according to (i) the nature of the service (electrical engineering, mechanical
        engineering and air-condition services), (ii) the type of work (installation and
        maintenance), and (iii) the customer group (residential and non-residential
        engineering, with the latter sub-divided into infrastructure, industry and the
        tertiary sector.)24
(22)    The Notifying Party agrees with the Commission’s approach.25
             4.3.2.     Geographic market
(23)    The Notifying Party submits that the relevant geographic markets for electrical
        and mechanical engineering services are national.26
(24)    The Commission has in its previous decisional practice considered the electrical
        engineering markets to be at least national in scope, while for some sub-segments
        within electrical engineering the Commission also considered regional markets,
        given that there were several regional players in France.27
             4.3.3.     Conclusion on the market definition
(25)    The Commission considers that the exact product and geographic market
        definition can be left open for the purpose of the present case, as the transaction
        does not raise serious doubts as to its compatibility with the internal market under
        any plausible product and geographic market definition.
(26)    VINCI Group is not active in the market for the provision of air-condition
        services in the UK. The only market segments affected by the present transaction
        are (i) the non-residential markets for the installation and maintenance of
        electrical engineering services in the infrastructure and tertiary sectors and (ii) the
        non-residential markets for the installation and maintenance of mechanical
        engineering services in the infrastructure and tertiary sectors. The Commission
        will therefore only assess these two market segments for the national (UK-wide)
        and the regional (England-wide) market in the following.
24  See Cases M.6623 – VINCI/EVT Business, paragraphs 7 et. seq; M.5701 – VINCI/Cegelec,
    paragraphs 9 et seq.; M.3004 – Bravida/Semco/Prenad, paragraphs 8 et. seq.
25  Short Form CO, paragraph 136 et seq.
26  Short Form CO, paragraph 141.
27  See Cases M.6623 – VINCI/EVT Business, paragraph 14; M.5701 – VINCI/Cegelec, paragraphs 26 –
    32.
                                                     6
 ---pagebreak--- 5.   COMPETITIVE ASSESSMENT
5.1.     Legal framework
(27)    In the absence of any horizontal overlap between the parties' activities, the
        Commission will examine whether the Transaction is likely to result in
        foreclosure in any of the markets that are vertically affected by the Transaction.
(28)    According to the Non-Horizontal Merger Guidelines,28 foreclosure occurs when
        actual or potential rivals' access to markets is hampered, thereby reducing those
        companies' ability and/or incentive to compete.29 Such foreclosure can take two
        forms: (i) input foreclosure, when access of downstream rivals to supplies is
        hampered;30 and (ii) customer foreclosure, when access of upstream rivals to a
        sufficient customer base is hampered.31
(29)    For input or customer foreclosure to be a concern, three conditions need to be met
        post-transaction: (i) the merged entity needs to have the ability to foreclose its
        rivals; (ii) the merged entity needs to have the incentive to foreclose its rivals; and
        (iii) the foreclosure strategy needs to have a significant detrimental effect on
        competition on the downstream market (input foreclosure) or on customers
        (customer foreclosure).32 In practice, these factors are often examined together
        since they are closely intertwined.
5.2.    Vertically affected markets
(30)    The Transaction leads to vertical relationships between the parties' activities,
        namely between
             a) the upstream markets for construction and maintenance services
                 (construction and maintenance of non-residential buildings and
                 construction and maintenance of infrastructure/civil engineering), on
                 which VINCI Group is active, and the downstream markets for the
                 management and operation of airport infrastructures (provision of airport
                 infrastructure services and provision (or contracting) of ground-handling
                 services), on which Ivy Topco Limited, via GAL, is active; and
             b) the upstream non-residential markets for electrical and mechanical
                 engineering services in the infrastructure and tertiary sectors, on which
                 VINCI Group is active, and the downstream markets for the management
                 and operation of airport infrastructures (provision of airport infrastructure
                 services and provision (or contracting) of ground-handling services), on
                 which Ivy Topco Limited, via GAL, is active.
28  Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control
    of concentrations between undertakings, OJ C 265, 18.10.2008, p. 7.
29  Non-Horizontal Merger Guidelines, paragraphs 29.
30  Non-Horizontal Merger Guidelines, paragraph 31.
31  Non-Horizontal Merger Guidelines, paragraph 58.
32  Non-Horizontal Merger Guidelines, paragraphs 32 and 59.
                                                       7
 ---pagebreak---             5.2.1.     Construction and maintenance services (upstream) / management
                       and operation of airport infrastructures (downstream)
(31)   VINCI Group's construction and maintenance services are an input for the market
       for the provision of airport infrastructures, as well as for the market for the
       provision (or contracting) of ground-handling services. GAL is active on those
       markets through the operation and management of Gatwick Airport and has –
       considering the narrowest plausible geographic market definitions consisting of
       Gatwick Airport only – a market share of 100%. The Notifying Party submits that
       these inputs are not airport specific and do not require a particular expertise or set
       of skills nor any special equipment.33
(32)   Based on data submitted by the Notifying Party, 34 any foreclosure risks seem
       unlikely. First, the new entity could not restrict access to supplies (input
       foreclosure). The market shares of VINCI Group on the relevant upstream
       markets would be at most [0-5]% in the UK in 2017 ([0-5]% on the market
       segment for the construction and maintenance of non-residential buildings; [0-
       5]% on the market segment for the construction and maintenance of
       infrastructure/civil engineering; [0-5]% on the overarching market for
       construction and maintenance services).35 Moreover, there are several other
       alternative suppliers active in the United Kingdom.36
(33)   Second, the input from the upstream construction markets is not airport-specific
       and does not require a particular expertise nor any special equipment.37 Therefore,
       providers of construction and maintenance services competing with VINCI Group
       have many possible outlets for their services. GAL represented a share of
       purchases of less than [0-5]% in 2017 on the UK-wide market for construction
       and maintenance of non-residential buildings and less than [0-5]% in 2017 on the
       UK-wide market for the construction and maintenance of infrastructure and civil
       engineering. On the overarching market for construction and maintenance
       services, GAL purchased less than [0-5]% in 2017 in the UK. Therefore, GAL
       does not represent a significant customer base for providers of construction and
       maintenance services in the UK. Consequently, there is no risk that the merged
       entity will restrict access to downstream markets (customer foreclosure).38
33 Short Form CO, paragraph 169.
34 Short Form CO, paragraph 168; source of the data is VINCI Group’s estimates and Hewes’ market
   analysis. All financial data provided in this section have been converted based on the ECB average
   annual conversion rate for 2018: £1 = EUR 1.1304.
35 Short Form CO, paragraph 168.
36 Short Form CO paragraph 171.
37 Short Form CO, paragraph 170.
38 See also case M. 6862 – VINCI / Aeroportos de Portugal, paragraph 36.
                                                        8
 ---pagebreak--- (34)   Based on the considerations above and all evidence available to it, the
       Commission concludes that post-Transaction an input foreclosure or customer
       foreclosure strategy by VINCI Group is unlikely.
(35)   The Commission therefore concludes that the Transaction does not raise serious
       doubts with respect to the vertical relationships between the upstream markets for
       construction and maintenance services and the downstream markets for the
       management and operation of airport infrastructures, under any plausible product
       and geographic market definitions.
            5.2.2.    Electrical and mechanical services (upstream) / management and
                      operation of airport infrastructures (downstream)
(36)   VINCI Group's electrical and mechanical services are an input for the market for
       the provision of airport infrastructures as well as for the market for the provision
       (or contracting) of ground-handling services. GAL is active on those markets
       through the operation and management of Gatwick Airport and has – considering
       the narrowest plausible geographic market definitions consisting of Gatwick
       Airport only – a market share of 100%.
(37)   Based on data submitted by the Notifying Party, any foreclosure risk stemming
       from these links seems unlikely. First, the new entity could not restrict access to
       supplies (input foreclosure). The market shares of VINCI Group in the market for
       electrical and mechanical services as well as in the sub-segments of (i) the non-
       residential market for electrical services in the infrastructure and tertiary sectors
       and (ii) the non-residential market for mechanical services in the infrastructure
       and tertiary sectors were less than [0-5]% in the UK in 2017.39 If these markets
       were considered to be regional (encompassing England), the market shares of
       VINCI Group would be less than [0-5]% in these markets.40
(38)   Second, the input from the upstream markets is not airport-specific and could be
       used with little changes in other industries as well.41 Therefore, providers of
       electrical and mechanical services competing with VINCI Group have many
       possible outlets for their services. GAL represented a share of purchases of less
       than [0-5]% in 2017 on the UK-wide market for electrical and mechanical
       services and less than [03-5]% if the sub-segments for (i) non-residential market
       for electrical services in the infrastructure and tertiary sectors and (ii) non-
       residential market for mechanical services in the infrastructure and tertiary sectors
       were considered. Therefore, GAL does not represent a significant customer base
       of electrical and mechanical services in the UK. Consequently, there is no risk
       that the merged entity will restrict access to downstream markets (customer
       foreclosure).42
39 Short Form CO, paragraphs 180-181.
40 In 2018, see Notifying Party’s response to RFI 1, question 2.
41 Short Form CO, paragraph 182.
42 See also case M. 6862 – VINCI / Aeroportos de Portugal, paragraph 36.
                                                       9
 ---pagebreak--- (39)    Based on the considerations above and all evidence available to it, the
        Commission concludes that post-Transaction an input foreclosure or customer
        foreclosure strategy by VINCI Group is unlikely.
(40)     The Commission therefore concludes that the Transaction does not raise serious
        doubts with respect to the vertical relationships between the upstream markets for
        electrical and mechanical services and the downstream markets for the provision
        of airport infrastructure services and for the provision (or contracting) of ground-
        handling services.
     6. CONCLUSION
(41)    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 and Article 57 of the EEA Agreement.
                                                        For the Commission
                                                        (Signed)
                                                        Margrethe VESTAGER
                                                        Member of the Commission
                                                 10