The Jersey Competition Authority fined Lufthansa for not notifying the acquisition of British Midland

By a decision taken on 15 October 2009 the Jersey Competition Regulatory Authority (JCRA) imposed a £ 25,000 fine on Lufthansa for not having notifying its acquisition of British Midland (BMI).
The Jersey Competition law provides for prior mandatory notification of mergers and pending the JCRA approval mergers cannot be executed by the parties. A merger is caught within the jurisdiction of the Jersey competition law, with the ensuing merging parties’ obligation to notify it to the JCRA, when one or more parties to the transaction satisfy the 40% share of supply in Jersey.
Both Lufthansa and BMI operated air routes to/from Jersey. On the basis of a city pair approach the JCRA found that the 40% share of supply was met at least on one, and most likely on two city pairs operated by BMI. Interestingly, as a measure of share of supply, the JRCA did not limit to the actual sales of goods, but it considered the capacity of merging parties.
Having said that, the JCRA found that Lufthansa was negligent in not notifying the acquisition of BMI, notwithstanding that the JCRA informed Lufthansa in November 2008 that the acquisition of BMI were likely to be subject to the JCRA regulatory approval. Moreover, Lufthansa should have known that in January 2008 the JCRA in a similar case fined TUI for failing to notifying its acquisition of First Choice.
In an age where there exist about 100 merger control regimes, the JCRA decision in the Lufthansa/BMI case clearly illustrates the difficulties merging parties have to face when establishing to which national competition authorities notify a merger operation. Importantly, they may have to notify a transaction even to the competition authorities of jurisdiction where the merger is unlikely to give rise to anti-competitive effects. This is what happened in the Lufthansa/BMI case. On the one hand, the merger met the thresholds which triggered the notification obligation; on the other hand, the JCRA unconditionally cleared the merger because the outcome of the SLC test rule out that the merger would have substantially lessened competition on any of the city pairs connected by the parties.

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