CMA Block Heathrow Corporation's Luton Corporation Acquisition
Yesterday, Heathrow Corporation attempted to purchase the now insolvent Luton Corporation and was blocked by the Competition & Markets Authority “due to concerns that a monopoly may arise in the local airport industry.” The now-public deal would have had Heathrow pay $1 for the company and absorb $886,400 of debt. The sales deal included negotiations estimating the value of Luton Airport’s land, with Heathrow’s ‘most optimistic estimate’ placing it at $150,000 and its ‘least optimistic estimate’ at $0.
This rejection means that while Heathrow Corp. cannot purchase Luton Corp. without proving that the sale will not result in a monopoly, other companies (potentially unrelated ones looking to branch out) will be able to make the sale before they do - a significant competitive advantage that may bear fruit. However, the very real possibility that the demand for the airport’s land is non-existent remains. Such a small airspace is guaranteed to cause the same problems that got Luton shattered in the first place, and the public are still reeling from the disaster and are unlikely to break the association anytime soon, if ever.