European Union and United Kingdom Competition Law Developments in the Aviation Sector: January to June 2020

As a direct result of the Coronavirus Disease-2019 (COVID-19) pandemic, the first half of 2020 has seen almost unparalleled developments in the application of competition law across the EU aviation sector. This article summarizes the main developments over the past six months and provides the reader with an overview of the details of each of these developments. The first six months of 2018 have seen potentially unparalleled developments in the aviation sector as a direct result of the COVID-19 pandemic. Travel restrictions forced all EU based airlines to ground almost their entire fleets with only essential repatriation travel being permitted for several weeks in March-April 2020. The knock-on effect on commercial transactions in the aviation sector was not foreseeable in January/February 2020, but the impact of the COVID-19 pandemic (COVID-19 crisis) was certainly significant. It is not overstating the position that the outcome of the COVID-19 crisis on aviation will be felt for years to come, and in view of the cliff-edge drop in passenger traffic in the EU, it is to be expected that further State aid is likely to be necessary to address the underutilization of aircraft, and rationalization of commercial operations. At least fourteen applications for State aid were made to the European Commission ('Commission') and cleared in record time, with occasionally successive applications for the same airlines (Finnair and Scandinavian Airlines (SAS) being two examples). While some State aid decisions insist on repayment of State aid within six months, it remains to be seen whether this is achievable by the airlines or even desirable for the Commission given that the long-lasting impact of the COVID-19 crisis will likely result in significant long-term impact on the sector. In addition, no sooner had the ink dried on the Commission's approval decisions that Ryanair launched legal challenges to those decisions. On the merger front, out of eleven mergers reviewed herein, three EU mergers were abandoned as a direct or indirect result of the COVID-19 crisis, and a further three merger reviewed by the UK Competition and Markets Authority ('CMA') were abandoned. Of these abandoned mergers, the Sabre/Farelogix merger by the CMA is worthy of specific mention: it highlights the merger control risks in global mergers, where a merger can be jeopardized by a single competition authority.