“AVIA INVEST” LLC FINED BY THE COMPETITION COUNCIL WITH ABOUT 17.48 MILLION MDL FOR INDIRECTLY ACQUIRING CONTROL OVER THE ENTERPRISE “AEROPORT HANDLING” LLC, WITHOUT NOTIFYING THE COUNCIL

On 30.06.2022, the Competition Council issued the Decision No. DCE 14/20-45, whereby it sanctioned the enterprise "Avia Invest" LLC for the infringement of Article 20 para. (1) and (2) letter b) and Article 22 para (1) of the Competition Law No. 183/2012, by a fine of 17 480 027.66 MDL (seventeen million four hundred and eighty thousand twenty-seven MDL). 

Within the investigation, the Competition Council analyzed the relations between the enterprises "Avia Invest" LLC (an enterprise that since 2013 manages the patrimonial complex of Chisinau International Airport) and "Aeroport Handling" LLC (provides ground handling services at Chisinau International Airport).

It was found that an economic concentration had taken place between the enterprises concerned, which had not been notified to the Competition Council, and which consisted in the acquisition of indirect control by "Avia Invest" LLC over "Aeroport Handling" LLC. It took place in several stages and started in May 2014.

The Council found that control was acquired through the economic dependence of "Aeroport Handling" LLC towards "Avia Invest" LLC.  Such dependence was determined, inter alia, by:

   - airport infrastructure lease agreements (infrastructure essential to the activity of "Aeroport Handling" LLC in providing ground handling services),

   - loan agreements (interest-free) granted to the company "Aeroport Handling" LLC and its sole shareholder, to company "Air Handling" LLC, and

   - structural ties - e.g. the administrator of "Aeroport Handling" LLC has been appointed member of the Board of "Avia Invest" LLC.

As a result of the unnotified economic concentration, the Competition Council found that the acquisition of indirect control by "Avia Invest" LLC over "Aeroport Handling" LLC led to the vertical integration of the enterprises involved. As a result, this integration gave the controlling party the possibility to create pressure on the sole competitor of the company "Aeroport Handling" LLC on the ground-handling services market.

In line with the provisions of the Competition Law (Article 20 para. (1)), the implementation of an economic concentration falling under the Competition Law is prohibited until the economic concentration has been declared compatible with the competitive environment.

Article 20 para. (2) letter b) of the Competition Law indicates that, an economic concentration occurs where the change in the duration of control results from the acquisition of direct or indirect control of one or more enterprises or parts thereof. Therewith, the Regulation on economic concentrations, paragraph 16(3)(a), provides as a common form of acquisition of control for relationships of economic dependence which may be brought about by important long-term supply contracts or loans from suppliers or consumers, combined with structural links which ultimately confer decisive influence on the partner. Such relations of economic dependence between "Avia Invest" LLC and "Aeroport Handling" LLC have also been found in this case.

Therefore, the company "Avia Invest" LLC was sanctioned for non-notification of the economic concentration, which, as a result, negatively affected the competitive environment.