The Commission for the Protection of Competition (hereafter the “Commission”) at its meeting held on the 13/01/2023, examined the notification of a concentration concerning the transfer of the aircraft cleaning services division (hereafter the “Aircraft Cleaning Division”) and the machinery and special equipment used for the provision of ground handling services (hereafter the “Aircraft Ground Handling Machinery.”) of L.G.S. Handling Ltd (hereafter the “L.G.S.”) and Swissport Cyprus Ltd (hereafter the “Swissport”) in their joint venture S & L Airport Services Ltd (hereafter the “S & L”).
The Commission at its meeting, having taken into consideration the written report of its Service, concluded that the above notified concentration falls within the provisions of the Control of Concentrations between Undertakings Law of 2014, Law no. 83(I)/2014 (hereafter the «Law»), and raises serious doubts as to its compatibility with the functioning of competition in the market.
The Commission, took into account all the relevant information that constitutes the proposed concentration and unanimously decided that the concentration raises doubts as to its compatibility with the functioning of competition in the market for the provision of ground handling services at Larnaca airport and at Paphos airport and at the sub-markets of:
(i) the provision of Aircraft Cleaning Services at Larnaca airport and at Paphos airport, and
(ii) the rental market of Aircraft Ground Handling Machinery at Larnaca airport and at Paphos airport.
Particularly,
i) The notified concentration may significantly impede competition in relation to the horizontally affected market for the provision of Aircraft Cleaning Services and the horizontally effected market of rental market of Aircraft Ground Handling Machinery by eliminating significant competitive pressures as Swissport and L.G.S. are the only ones operating in this markets through S&L (apart from a small competitor), and moreover both are vertically active in the in the ground handling sector. S&L will hold a dominant position in the market of the provisioning of Aircraft Cleaning Services and the rental market of Aircraft Ground Handling Machinery at the airports of Larnaca and Paphos. Therefore, S&L may have the ability and the incentive to take advantage of its dominant position and make it difficult for other companies and potential competitors to enter or expand in the markets, and there may be a significant impediment to competition as a result of the creation of a dominant position.
ii) Through vertical integration, S&L and its shareholders may gain access to commercially sensitive information regarding the activities of potential competitors, in the provision of ground handling services since they will be renting relevant equipment from S&L. When a potential competitor in the above said market requests from S&L the rental of Aircraft Ground Handling Machinery, Directors, who may be the same as the Directors of Swissport and L.G.S., may obtain sensitive information thus placing their potential competitors at a competitive disadvantage, and eventually discourage their entry or expansion into the ground handling market. Additionally, S&L shall provide its services at arm’s length to all of the customers including Swissport and L.G.S. and at cost-oriented pricing policy.
iii) The neighboring relationship between the services offered by S&L and the services offered by Swissport and L.G.S. may facilitate the latter to agree on the terms of their coordination in the relevant ground handling market and/or to exclude their potential competitors, since the Directors of Swissport and L.G.S. that are essentially competitors with each other may be appointed on the Board of Directors of S&L.
The Commission, on the basis of all the relevant information before it, concluded unanimously that there is a need to proceed to an in-depth investigation of the notified concentration, according to the provisions of the Law.
It is noted that according to Section 26 of the Law, in the case of a concentration for which a full investigation is carried out, entities who may be affected directly by the decision of the Commission but who do not participate in the concentration, may apply and be granted the opportunity to submit their views regarding the concentration in such a manner and at such time as not to violate the time limit set in Section 27 of the Law.
COMMISSION FOR THE PROTECTION OF COMPETITION
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