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EU Approves Acquisition Of Northwest Airlines By Delta Airlines

by Ulrika Lomas, for LawAndTax-News.com, Brussels

08 August 2008


The European Commission has this week cleared under the EU Merger Regulation the proposed acquisition of Northwest Airlines by Delta Airlines, both US carriers.

After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Delta is a network airline providing domestic and international scheduled air passenger and cargo transport. Delta has hubs in Atlanta, Cincinnati, New York-JFK, and Salt Lake City.

It is a member of the SkyTeam alliance and flies to 119 international destinations including 32 cities in the EU.

NWA is also a network airline providing domestic and international scheduled air passenger and cargo transport. NWA has hubs in Detroit, Memphis, Minneapolis-St.Paul and Tokyo-Narita. It is also a member of SkyTeam alliance and flies to 50 international destinations including 15 cities in the EU.

From the European perspective, the activities of the parties overlap in the provision of scheduled air passenger and cargo transport between Europe and the US.

The EC observed that for transatlantic cargo transport, the proposed transaction would have only a limited impact because of the parties' limited presence in this market.

For transatlantic scheduled air passenger transport, the Commission's assessment of the proposed merger takes into account the fact that Delta and Northwest are both SkyTeam members, and already cooperate extensively on transatlantic routes with the European SkyTeam member airlines, namely Air France, KLM, CSA Czech Airlines and Alitalia, as set out in several Commission decisions, notably in the Air France/KLM case.

To the extent that the Commission had previously found that the members of the SkyTeam alliance could not to be considered as effective competitors on transatlantic routes as a result of their membership of SkyTeam, its assessment focused on the possible impact of the creation of a permanent structural link between Delta and Northwest as a result of the proposed merger.

The Commission's decision on this transaction is without prejudice to its ongoing investigation of the SkyTeam alliance.

The parties' activities in the scheduled air transport of passengers on transatlantic routes are mainly complementary as they have hubs in different US cities.

Most of the overlap activities relate to routes where one party offers direct and the other indirect services. There are only 3 routes where both parties offer a direct service, namely Amsterdam/Atlanta, Amsterdam/New York and Paris/Detroit.

In light of the SkyTeam members' extensive cooperation on transatlantic routes independently of this merger, the mainly complementary nature of Delta's and Northwest's respective networks as regards transatlantic routes, and the results of the market investigation which did not identify any concerns on the overlap routes, the Commission has concluded that the present transaction would not raise competition concerns.


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