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Nicholas W. Burlingham, Esq.
Mark. S. Shipman, Esq.
Dear Mr. Burlingham and Mr. Shipman:
This letter responds to your request for the issuance of a business review letter pursuant to the Department of Justice’s Business Review Procedure, 28 C.F.R. § 50.6. (1) You have requested, on behalf of Columbia Fuel Services, Inc. (“CFS”) and Lanmar Aviation, Inc. (“LA”), a statement of the Department’s present enforcement intentions regarding the proposed joint venture between fixed-base operators (“FBOs”) CFS and LA for flight support services at the Groton-New London Airport (the “Airport”) in Groton, Connecticut. FBOs provide an array of flight support services to general aviation customers, including fuel, ramp and hangar rentals; office space rentals; and other services, such as pilot lounges, baggage handling, and flight planning support. Fuel sales account for the vast majority of an FBO’s revenue. CFS and LA propose to form a joint venture, named Mystic Jet Center (“MJC”), which will combine CFS’s and LA’s flight support services assets at the Airport.
The Department has no present intention to challenge the proposed joint venture.
You have made the following representations in your letter to the Department:
CFS has provided flight support services at the Airport since 1983 and was the sole FBO at the Airport for the period from 1984 to 2003. LA has been an FBO at the Airport since 2003.
Flight operations at the Airport have been declining, and have fallen over 36% between 2006 and 2011. This decline in flight operations has also resulted in decreased fuel sales by both CFS (51% decline since 2007) and LA (10% decline since 2010). You represent that this decline in fuel sales has greatly affected the profitability of both companies, and that each has required substantial infusions of cash from third parties since 2003.
Furthermore, you represent that, although the combination will result in MJC being the “solitary (but not exclusive)” FBO at the Airport, MJC will not be able to impose supra-competitive prices due to sufficient competitive pressure from three sources: (1) the pricing and availability of aviation fuel and hangar storage at surrounding airports; (2) the ability of modern private aircraft to tanker fuel; and (3) the availability of developable land for future and additional FBOs at the Airport.
Based on your representations and our investigation of the particular facts and circumstances relating to competitive conditions for flight support services at the Airport, it does not appear likely that the proposed joint venture between CFS and LA will produce anticompetitive effects.
The Department has no present intention to challenge the proposed joint venture of CFS and LA. This letter expresses the Department’s current enforcement intentions and is predicated on the accuracy of the information and assertions you have presented to us in your October 11, 2012 letter, November 1, 2012 e-mail (2), and in oral communications to the Department.
This statement is made in accordance with the Department’s Business Review Procedure, 28 C.F.R. § 50.6. Pursuant to its terms, your business review request and this letter will be made publicly available immediately, and any supporting data will be made publicly available within thirty (30) days of the date of this letter, unless you request that any part of the material be withheld in accordance with Paragraph 10(c) of the Business Review Procedure.
1. October 11, 2012 Letter from Nicholas W. Burlingham to Acting Assistant Attorney General Joseph Wayland.
2. Email from Mark S. Shipman to Andrew Garver on November 1, 2012, at 4:27 pm.