OFT rules out review of BMI takeover despite ‘significant concern’

The Office of Fair Trading (OFT) has decided against asking the European Commission to allow a UK review of the takeover of BMI by International Airlines Group (IAG).

However, the OFT said it would work closely with the EC on assessing the takeover given a “significant level of concern” about the impact on passengers, particularly those travelling between Scotland and Heathrow.

British Airways’ parent IAG agreed a £172-million deal for BMI with current owner Lufthansa before Christmas.

Lufthansa and IAG hope the deal will be signed off by the end of this month.

BMI has separately agreed provisional deals with two interested parties for the sale of regional low-cost operation Bmibaby, which IAG does not want. BMI announced the second of these deals, with an unnamed EU airline group, yesterday.

The OFT said it reached its decision following “careful consideration and extensive dialogue with the EC”. It concluded the EC would be best placed to consider the deal as “some of the issues require a comprehensive review of routes across many jurisdictions and the EC has extensive expertise in handling airline merger cases”.

OFT director of mergers Sheldon Mills said: “The proposed acquisition of BMI by IAG has generated a significant level of concern especially in Scotland, the north west of England and Northern Ireland.

“We consider the transaction should be subject to careful and detailed review to ensure UK airline passengers will not lose out.”

Virgin Atlantic made a formal complaint to the commission about the deal last month, saying competition on some European routes would diminish and that fares would increase

A spokesman for the airline said: “We’re very disappointed that the OFT has failed to take responsibility for competitiveness in the UK aviation market.

“The passing of slots from BMI to BA will fundamentally change the landscape of UK aviation for good, harming competition and disadvantaging consumers.

“We are surprised that the OFT has not taken up this challenge in the best interests of the UK consumer.”

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