The
European Commission on Thursday approved both Delta Air Lines' acquisition of 49
percent of Virgin Atlantic and a proposed transatlantic joint venture between
the two carriers. Simultaneously, the U.S. Department of Justice announced that
it closed its investigation without raising objections to either the
acquisition or the JV.
"After
a thorough investigation of the competitive effects of the proposed equity
investment and joint venture, the Antitrust Division concluded that the facts
and circumstances did not warrant further investigation or action,"
according to a DOJ statement.
However,
the U.S. Department of Transportation still is reviewing the antitrust immunity
application for the joint venture, which was filed by the carriers in April. According
to a DOT spokesperson, the deadline for a decision on the application is
November 30. Last week, DOT authorized Delta and Virgin to share codes for their
services.
The
European Commission concluded that the tie-up between the two airlines does not
raise competition concerns. "Delta and Virgin Atlantic's nonstop services
overlap on the London-New York and London-Boston routes. In addition, Delta's
one-stop services overlap with Virgin Atlantic's nonstop services on several
routes between the U.K. and North America," according to an EC statement. "On
each of the transatlantic routes where both Virgin and Delta operate,
sufficiently strong players—in particular British Airways and American
Airlines, which joined forces in a joint venture—are present and capable of
exercising a significant competitive constraint on the combined entity.
Moreover, Delta and Virgin are currently not particularly close competitors,
but primarily compete against British Airways and American Airlines."
A
spokeswoman for Virgin said, "This is the first important step towards entering a joint venture with
Delta Air Lines. We will be revealing more information about the customer
benefits to this merger in the coming days."
The proposed tie-up
between the two carriers, including Delta's acquisition of the 49 percent stake
in Virgin held by Singapore Airlines, was announced in December 2012. Together,
they fly nine times daily between London Heathrow and New York JFK/Newark, the
world's busiest long-haul air route. The request to DOT for antitrust immunity
also covered a "multilateral coordination agreement" with existing
Delta joint venture partners Air France, KLM and Alitalia.