The UK’s Competition and Markets Authority (CMA) ruled yesterday that CHC’s acquisition of Babcock International’s offshore oil-and-gas aviation business last year is anti-competitive and has ordered CHC to divest it.
CHC and Babcock finalized the acquisition in September, which expanded CHC’s fleet by 30 aircraft across the UK, Denmark, and Australia. Babcock’s operations there were being held separately and operated independently while CHC sought merger approval from competition authorities in the UK and Australia.
The CMA ruled the acquisition was anti-competitive because “the parties were two of just four suppliers of oil and gas offshore helicopter services in the UK and provided an important competitive constraint on each other. The loss of this constraint would significantly reduce rivalry between an already limited number of suppliers. As a result, the CMA has found that the merger would lead to significant competition concerns in the UK’s oil and gas offshore helicopter services market.” The other two providers that the CMA alluded to are the Bristow Group and NHV.
Babcock sold its offshore business, formerly known as Bond Helicopters, to CHC in part because it was a perennial money-loser and because it consistently underbid its competitors. In 2020, parent Babcock International took a $118.5 million charge related to its offshore aviation business, and then-CEO Archie Bethel said the company was “restructuring [its] aviation sector to address the cost-base as the oil-and-gas revenues reduce.”
The CMA acknowledged operator “challenges” but said it made the ruling to “ensure that four effective competitors remain in the market.”
“UK customers continue to spend hundreds of millions of pounds on offshore helicopter services each year. Competition is vital to avoid higher prices or poorer quality, problems that ultimately increase costs to UK consumers,” said Kip Meek, chair of the CMA’s inquiry group.