Commission Again Authorizes Acquisition On "Failing Firm" Grounds

On Oct. 9, 2013, following a Phase II investigation, the European Commission cleared, under the EU Merger Regulation, the acquisition of Olympic Air by Aegean Airlines under the "failing firm" defense, whereby the Commission may approve a merger if deterioration in the competitive market structure would result even if the merger did not occur, through the forced exit of a market operator. Clearance was granted despite the fact that the merger was found to create a quasi-monopoly on five Greek domestic routes from Athens, and that new entry in the near future was unlikely.

A previous attempt to conclude the same merger was prohibited by the Commission in 2011 on similar grounds: the merger would have created a quasi-monopoly on nine domestic routes from Athens. At that time, the Commission rejected the arguments put forward that Olympic was a "failing firm." However, in its re-examination of the case, the Commission found that, although Aegean continues to be