Avianca and Viva Air investigated for alleged integration without Aerocivil’s approval
The Superintendence of Industry and Commerce (SIC) issued a statement of charges and opened an investigation against the companies Avianca (Aerovías del Continente Americano S.A.), Viva Air (Fast Colombia S.A.S.) and Viva Perú (Viva Airlines S.A.C.) for allegedly having carried out a business integration without the authorization of the Colombian Civil Aeronautics (Aerovicil).
The commercial authority based its investigation on the “acquisition of the economic rights of Viva Air and Viva Perú by Investment Vehicle 1 Limited, the controlling company of Avianca”.
This business, added the SIC, was neither informed nor authorized prior to its execution by the authorities.
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According to the control entity, this would have been enough to constitute a business integration or, at least, “the beginning of the execution of the business integration between the airlines mentioned”.
If found guilty, the airlines could receive a penalty of 100,000 legal minimum wages in force or 20% of their operating revenues or up to 20% of their equity.
In the same case, the SIC formulated a statement of charges against Richard Galindo Sánchez. The reason for this decision is to determine “whether he violated the provisions of Article 68 of Law 2195 of 2022, for allegedly having facilitated, collaborated, authorized, promoted, encouraged, executed or tolerated the conduct imputed to the market agents”.
What did Avianca say?
Avianca assured, through a statement, that it has not been formally notified of the initiation of the investigation. However, it assured that it complies and has complied with all applicable merger control regulations, and that the transaction over Viva’s economic rights did not constitute a merger. “Avianca and Viva continue to be fully independent airlines, which compete vigorously in the market for the benefit of users,” it stated.
In addition, he mentioned that the arguments used by the SIC, promoted by other competing airlines, are erroneous and inaccurate in both substance and form.
“Avianca has provided the public and the respective authorities with all the information it is obliged to submit. At the time, in a timely manner, the legitimate request for integration with Viva was submitted to the Aerocivil”.
According to the company, each company has maintained independence while the Aerocivil’s definition is issued. In addition, it assured that they continue to compete. “To date, Avianca has no influence or control over Viva, and contrary to what is stated in the fragments of the resolution of the SIC to which the company has had access, the figures show the strong competition between the two airlines”.
Finally, the airline said that the competing airlines that have promoted the opening of the investigation by the SIC, “have the clear purpose of hindering the outcome of this operation and seek to remove Viva from the market”.
Aerocivil’s decision
At the beginning of November 2022, the Civil Aeronautics did not approve, in the first instance, the request for the integration of Viva Air, Viva Peru and Avianca, a request made last April 2022.
The alliance was not approved under the terms requested by the companies, which argued that Viva was a company in crisis.
“Although it was proven that Viva is currently facing a relevant financial situation, Avianca and Viva did not prove that Viva’s economic crisis is of such magnitude as to affect its viability in the market and, therefore, that it is doomed to exit the market imminently and inevitably,” the entity reported.
“The Colombian Aeronautical Authority has concluded that the integration represents risks to competition in the sector and consumer welfare,” he added.
With information from El Espectador and Portafolio.
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