The anticipated joint venture between Alpha Group Limited (Alpha) and LSG Lufthansa Service Holding AG (LSG) has been referred by the Office of Fair Trading (OFT) to the Competition Commission (CC). LSG and Alpha are both major suppliers of in-flight catering and the OFT stated that the merger would lead to a high combined market share at ten UK airports and reduce the number of national major suppliers from three to two.
The OFT stated that there are competition concerns particularly in relation to long-haul operators (where a traditional full service meal is provided) as, although there is evidence that there is some competitive constraint for short-haul flights, it is not clear that this constraint would be sufficient to replace the loss in competition which would be likely to arise from the creation of the joint venture. The OFT felt there was a particular risk to longhaul operators who fly out of Manchester Airport as the merger would lead to a monopoly in this supply chain.
The CC has invited the submission of evidence from third parties by 26 October 2011 and, with a 24 week statutory deadline for reporting, a decision is expected before 25 March 2012.