The UK competition watchdog today raised concerns that John Menzies’ deal to buy a US rival could lead to higher costs at Aberdeen Airport.
The Competition & Markets Authority (CMA) said that Menzies’ acquisition of aviation services group ASIG may lead to a “substantial lessening of competition” in the supply of ground services at Aberdeen, including de-icing and baggage, cargo, ramp and passenger handling.
It is important that airlines at Aberdeen Airport are protectedKate Collyer
It said: “Menzies and ASIG are close competitors at Aberdeen Airport and, following the merger, only Swissport will remain as a credible bidder for airlines located there.
“In contrast, at the other airports where both 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.”
Kate Collyer, the CMA decision-maker in the case, added: “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.”
Edinburgh-based Menzies said in September that it had struck a “transformational” $202 million (£161m) cash deal to buy Florida-based ASIG from BBA Aviation in a move that would add plane fuelling to its aviation arm’s range of services and double the size of its operations in North America. The acquisition is expected to complete around the end of this month.
Forsyth Black, managing director of Menzies Aviation, said today: “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 and the CMA as we look to work through the issues raised in regards to Aberdeen Airport.”
The CMA said that Menzies can avoid the ASIG deal being referred for an in-depth investigation if it can offer a remedy to address its concerns within a week.
BBA Aviation said it welcomed the CMA statement “which, as anticipated, allows us continue to work towards the successful completion of the transaction”.