The Belgian Competition Council approves the take-over of Flightcare by Swissport Handling subject

Flightcare is one of the undertakings at the Brussels National Airport (Zaventem) which, acting upon instructions from airlines, loads and unloads cargo in an out of airplanes, transports cargo to and from airplanes, stores this cargo temporarily, and the like, in one word handles cargo on the ground. Untertakings like Flightcare are called suppliers of groundhandling services.

The activities of suppliers of groundhandling services which are performed on tarmac (services on the airside) are regulated by the Belgian government in the sense that The Brussels Airport Company designates two suppliers of groundhandling services for a certain period of time. Beyond the tarmac (services on the landside), any undertaking can freely enter the market for supplying groundhandling services for cargo to airlines.

Flightcare is one of the two suppliers of groundhandling services who in the past and at present are active on the airside under a license granted by the Belgian government. Flightcare is also active on the landside. Swissport Handling has thus far only been active on the landside.

The merger the Belgian Competition Council had to decide upon consists in the taking over of Flightcare by Swissport Handling, a company under Spanish law which belongs to a Swiss group. On 31 August 2012 the Competition Council has approved the merger, subject to two conditions relating to the Brussels National Airport (Zaventem) only.

Firstly, Swissport Handling is prohibited to render its supplying of services on the airside subject to its supplying of services on the landside to the same airline. Swissport Handling is also prohibited to offer a discount for the mere reason that an airline purchases its services on the airside as well as its services on the landside from Swissport Handling.

In that way, the Council aims to prevent that Swissport Handling, who, thanks to the take-over of Flightcare, can be active on the airside as well as on the landside, will abuse its market power on the airside in order to exclude competitors from the market on the landside or in order to prevent new competitors from entering the latter market. That risk exists because the market power of Swissport Handling on the airside is considerable. Owing to government regulation Swissport Handling has to support the competition of not more than one supplier of groundhandling services on the airside. In addition, Flightcare, which is taken over by Swissport Handling after the merger, has a considerable market share in the duopolistic market on the airside.

This condition will only be maintained if the other supplier of groundhandling services on the airside who is granted a license by the Belgian government is, just like Swissport Handling, vertically integrated (i.e. active both on the market on the airside and on the market on the landside), and bound by the same of by a farther reaching commitment. If this were not the case, Swissport Handling would in the long run be subject to too important a competitive disadvantage towards this competitor. The condition will also cease to apply if the government decides that more than two suppliers of ground handling services can be active on the airside.

According to the second condition, Swissport Handling nor any other undertaking belonging to the same group is allowed to hold more than one of the licenses provided by the government for supplying groundhandling services for cargo on the airside. If two undertakings belonging to the same group would each hold one such license, this would in fact result in a monopoly on the market on the airside, having negative effects on competition on the market on the airside, and, as a consequence, exclusionary effects on the market on the landside.