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Does US Have To Approve AF/KL Merger?

Thu Jun 03, 2004 12:25 am

Can anyone please tell me for sure if the US has to approve the AF/KL merger?
I thought it had already done so based on the Netherlands and France having signed openskies with the US. I have a friend that works for NW and he tells me that he thinks the US has, so far, not even been approached by AF/KL regarding the merger, but intends to do so within a few months. Can anyone with absolute certainty provide insight? Many thanks.
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RE: Does US Have To Approve AF/KL Merger?

Thu Jun 03, 2004 12:35 am

Should, eventually, EU have to approve a merger between american carriers?

The answer is no so US don't have get its finger on AF/KL merger (although perhaps they've already done it)

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RE: Does US Have To Approve AF/KL Merger?

Thu Jun 03, 2004 12:35 am

this isn't with absolute certainty, but no the US does not have to approve the AF/KL merger. Having open skies with both countries gives them the option of ending that agreement if they were reeeeeeeeally unhappy with the merger, but really it's not going to affect the US that much, other then with the NW codeshare.
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RE: Does US Have To Approve AF/KL Merger?

Thu Jun 03, 2004 7:40 am

Should, eventually, EU have to approve a merger between american carriers?

Actually, the EU has authority to approve mergers between any US company with assets and physical plant that is owned inside the EU member states, just as the US has the same authority in for EU companies with assets in the US.

The EU has blocked mergers of US corporations one more than one occasion. I am unaware of any US-blocked EU mergers (but that doesn't mean they haven't happened).

Of course, if AF and KL don't have physical assets owned in the US (if all their ground operations are done by other airlines or other FBOs and aircraft are registered to their home countries or leased if registered in the US), then I don't think the US could block such a merger.

But somehow, I doubt the current administration would block it. They're not the trust-busting type. And if they did, it would be a remarkable act of hypocrisy on their part.

Now waiting for someone to make a political statement.
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RE: Does US Have To Approve AF/KL Merger?

Thu Jun 03, 2004 8:20 am

It would be kind of sad if the US had to approve this merger, as neither of the airlines are based here or pay taxes here. But I can see why you might think that the US would want to have a say in it. Fortunately I'm almost certain that they don't.

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RE: Does US Have To Approve AF/KL Merger?

Thu Jun 03, 2004 10:27 am


Chill man... Don't hate the US.. Don't hate the people in the US... you must not get the American politics confused with the American people. Politics is politics, but people are people. It will be okay.
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RE: Does US Have To Approve AF/KL Merger?

Thu Jun 03, 2004 1:37 pm

The only agency that might have a say is the Department of Transportation since they regulate international flight arrangements. I highly doubt they would block the merger, although they may request that any slots freed up be given to US based carriers. The Department of Justice might have a say, but they most likely would not since the two airlines combining would not sugnificantly affect the US air transportation market.

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RE: Does US Have To Approve AF/KL Merger?

Thu Jun 03, 2004 3:34 pm

Solnabo - Being the fair and open minded person you are, I'm sure you were just as upset with the EU when they threw a fit over the exclusivity agreements that Boeing signed with AA, DL and CO a few years back?  Insane

Unfortunately, nosing around in each others business is something that both the US and the EU seem to excel at.

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RE: Does US Have To Approve AF/KL Merger?

Thu Jun 03, 2004 4:09 pm

Not exactly approval, BUT does the merger invalidate/contravine any treates between the US & France, Netherlands? Most bilateral treaties define that airline from one country must be X% owned by national of that country. I do not know if anything like this applies here, even if the two countries have open skies treaties (does France?) they usually have some defination of an airline being from a particular country.

Elwood64151 - not eaxctly blocked the merger between US companies, rather they blocks the merger between the companies intrests WITHIN the EU. I think in both case this made the merger impractical, but two US companies could still merge the rest of their operations, just not their EU ones, say sell off the EU business of one of the companies.

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RE: Does US Have To Approve AF/KL Merger?

Fri Jun 04, 2004 1:30 pm

Based on sales, assets, revenue, market share, market capitalization, net worth, etc. of either or each of the parties to a merger, a transaction that takes place among two foreign entities might need the authorization of a country's antitrust regulators if the parties to the transaction have assets or businesses exceeding a certain amount in such country. Just to give you an example, the European Commission (the executive "branch" of the European Union's "central government") blocked the takeover of Honeywell by General Electric even though both companies are U.S. corporations organized under U.S. laws and paying taxes in the U.S. An even clearer example was the acquisition of CadburySchweppes by Coca-Cola. The competition regulators of several countries (Australia and Mexico come to my mind right now) blocked the transaction, even though the parties were U.S. and U.K. companies. A third example, the merger of Interbrew and AmBev will almost certainly need the approval of the U.S. regulators.

I don't know if the specific AF/KL transaction needs the approval of the U.S. antitrust authorities (Department of Justice and/or Federal Trade Commission) or not, but I would not be surprised if that were the case.
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