Brussels, 20 July 2006 - The European Commission has approved the proposed joint venture between LSG, a subsidiary of Deutsche Lufthansa AG and the Swiss company Gate Gourmet under the EU Merger Regulation. Both companies intend to combine their respective airline food catering businesses in Paris Charles de Gaulle airport via a full-function joint venture. The Commission has concluded that the transaction would not significantly impede effective competition in the in-flight catering market in the Paris airports region.
Both LSG (under the brand LSG/Sky Chefs) and Gate Gourmet are worldwide providers of airline catering and related business activities in many countries. Through the proposed joint venture LSG and Gate Gourmet intend to combine their airline food catering businesses in Paris Charles de Gaulle airport, limiting the JV to servicing airlines operating flights to and from the Paris airports.
The proposed transaction would lead to an overlap between the parties’ activities in the market for in-flight catering services in Charles de Gaulle airport and possibly on a wider market for airports in the Paris region, but it would not result in the creation of a single dominant firm. Although the proposed joint venture and Servair (the catering firm of Air France) would be the only two major airline catering providers at Charles de Gaulle, the market investigation has shown that recent new entrants exert competitive pressure on the two market leaders. In addition, these recent entrants seem to indicate low barriers to market entry.
The Commission has also ruled out the risk of coordination of activities between the joint venture and Servair. The in-flight catering market is a bidding market and possible collusion would be difficult because of the non- transparency of competitive conditions and the asymmetry between the two operators’ activities. In addition, any possible coordination is not likely to be sustainable over time.
Finally, the market investigation has provided no evidence that the creation of the joint venture would have as its object or its effect the co-ordination of the parties’ competitive behaviour.