Antitrust Law Daily Wrap Up, TOP STORY: Tie-up of aviation services providers approved subject to divestitures, (Feb 3, 2016)

By Jeffrey May, J.D.

BBA Aviation plc, the parent company of Signature Flight Support, has agreed to divest fixed base operator assets (FBOs) at six U.S. airports in order to win Department of Justice Antitrust Division approval of its proposed $2.065 billion acquisition of Landmark Aviation. The divestitures required by the proposed consent decree are intended to resolve Antitrust Division concerns raised in a complaint filed today in the federal district court in Washington, D.C. The proposed consent decree requires court approval (U.S. v. BBA Aviation plc, Case No. 1:16-cv-00174).

According to the government’s complaint, the proposed acquisition would likely substantially lessen competition for full-service FBO services at Washington Dulles International Airport (IAD), outside Washington, D.C.; Scottsdale Municipal Airport (SDL), in Scottsdale, Arizona; Fresno Yosemite International Airport (FAT), in Fresno, California; Jacqueline Cochran Regional Airport (TRM), in Thermal, California; Westchester County Airport (HPN), in White Plains, New York; and Ted Stevens Anchorage International Airport (ANC), in Anchorage, Alaska. An FBO is a commercial business that is granted the right by a local airport authority to sell fuel and provide related support services to general aviation customers, including charter, private, and corporate aircraft operators.

United Kingdom-based BBA operates in the United States through its subsidiary Signature Flight Support. Signature Flight Support has the largest FBO network in the world. It owns or operates approximately 70 FBO facilities in the United States, including FBO operations at IAD, SDL, FAT, TRM, HPN, and ANC.

U.S.-based Landmark has the third-largest FBO network in the United States, with approximately 60 FBO facilities. Landmark also has FBO operations at IAD, SDL, FAT, TRM, HPN, and ANC. At these six airports, Signature and Landmark are either the only two competitors, or two of only three competitors, according to the government.

Under the terms of the proposed consent decree, BBA would be required to divest Landmark’s FBO assets at each of the six impacted airports to a buyer approved by the Antitrust Division. The settlement is intended to preserve competition by maintaining an independent and economically viable competitor at each of the divestiture airports. The consent order also would require BBA to provide advance notification of certain future acquisitions that would not otherwise be reportable under the Hart-Scott-Rodino Antitrust Improvements Act at other airports.

“The merger would have subjected general aviation customers at six airports to a monopoly or duopoly for critical fueling and support services,” said William Baer, Assistant Attorney General in charge of the Antitrust Division, in announcing the settlement. “Higher prices and lower quality services were the likely result. Today’s proposed settlement will ensure that customers at these airports will continue to receive the benefits of vigorous competition.”

FBO industry consolidation. The settlement announced today comes just 18 months after the Antitrust Division approved Landmark’s $330 million acquisition of smaller rival Ross Aviation. Under a consent decree allowing that transaction to move forward, Landmark was required to divest Ross’s FBO assets at Scottsdale Municipal Airport to either Signature Flight Support or another government-approved buyer. In 2013, the Antitrust Division announced that it would not challenge a joint venture between the only FBOs at Groton-New London Airport in Groton, Connecticut, even though the venture between Columbia Fuel Services Inc. and Lanmar Aviation Inc. would result in a single FBO serving the airport.

Attorneys: Patricia L. Sindel for Department of Justice. Steven L. Holley (Sullivan & Cromwell LLP) for BBA Aviation plc. David P. Wales (Jones Day) for Landmark US Corp.

Companies: BBA Aviation plc; Landmark U.S. Corp. LLC; Signature Flight Support Corp.; Columbia Fuel Services Inc.; Lanmar Aviation Inc.

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