Competition concerns on Menzies ASIG deal

The UK’s Competition and Markets Authority (CMA) said on Thursday that Edinburgh-based John Menzies’ acquisition of ASIG may give rise to competition concerns over ground handling services at Aberdeen Airport.

Menzies said in September it agreed to buy Orlando, Florida-based aviation and fuel services company ASIG from BBA Aviation for up to £153 million in what it called a “transformational” deal that would make the Edinburgh firm the world’s largest interplane fueller.

Menzies, the aviation logistics and news distribution firm, said the deal — its biggest ever transaction — would double the size of Menzies Aviation’s existing North American operations and grow Menzies Aviation’s staff numbers from 23,000 to 31,000.

The CMA said it found that the merger “may lead to a substantial lessening of competition in the supply of ground handling services at Aberdeen Airport including baggage, ramp, passenger, airside cargo handling and de-icing.”

It said Menzies and ASIG are close competitors at Aberdeen Airport and, following the merger, only Swissport would remain as a credible bidder for airlines located there.

By contrast, at the other airports where Menzies and ASIG are active — Manchester and London Heathrow — the CMA found that there would be a number of credible competitors that could bid for future contracts.

The CMA said Menzies can avoid the merger being referred for an in-depth investigation if it can offer a remedy to address the CMA’s competition concerns at Aberdeen Airport.

Menzies has until December 22, 2016 to do so.

Kate Collyer, CMA decision-maker in this case, said: “It is important that we ensure that airlines transporting passengers to and from Aberdeen Airport are protected against any reduced service quality or increased costs as a result of this merger.

“We hope that Menzies will respond to our competition concerns and ensure that effective competition between ground handling service providers at Aberdeen Airport is restored.”

Menzies acknowledged the CMA announcement and said: “We are pleased that this announcement allows us to continue to progress towards completion which will occur on satisfaction of all the remaining conditions precedent.

“With regards to operations at Aberdeen Airport, Menzies will now consider their position and respond to the CMA accordingly.”

Forsyth Black, Managing Director of Menzies Aviation said: “I am delighted to acknowledge the CMA’s announcement.

“Our team are ready to take control of the overall business and we are excited by the opportunities that exist.

“We will work with BBA Aviation plc and the CMA as we look to work through the issues raised in regards to Aberdeen Airport.”