Sky Chefs Modifies Purchase of In-flight Catering Competitor to Resolve FTC Antitrust Concerns

The Federal Trade Commission announced today that Sky Chefs, Inc., one of the largest providers of in-flight food services to the airline industry, will not acquire Ogden Corporation’s in-flight catering operation at the McCarran International Airport in Las Vegas, Nevada, in response to the agency’s concern that the acquisition would eliminate competition because Sky Chefs would become the only caterer at that airport. The companies restructured their proposed transaction to exclude Ogden’s operation in Las Vegas from the assets Sky Chefs will acquire, and Ogden subsequently sold its Las Vegas operation to a third in-flight caterer, Dobbs International Services, Inc.

In-flight food service companies provide catering services to airlines. These services include preparing food, stocking beverage carts, and delivering the food and carts to the aircraft at airports.

Sky Chefs, Inc., which is headquartered in Arlington, Texas, and its parent corporation, Onex Corporation, are involved in chain restaurant food service, electronics, manufacturing, and other businesses. During 1997, Sky Chefs reported total revenues of over $1 billion.

The reported 1997 revenues for Ogden’s in-flight catering subsidiaries were $164 million.

According to the FTC’s complaint, the consolidation of services at McCarran International Airport would likely lead to increased prices for the airlines operating in Las Vegas because they cannot readily or economically find an alternative caterer. In addition, the agency’s complaint alleges that a new caterer is unlikely to enter the market because of substantial sunk costs and the need to capture a large market share to become profitable.

Under the terms of the proposed consent order, for 10 years, Sky Chefs would be prohibited from acquiring any concern that controls the Las Vegas catering operations formerly operated by Ogden without prior approval from the Commission. In addition, for 10 years, Sky Chefs is required to provide prior notice to the FTC before it acquires its only in-flight catering competitor at any airport in the United States.

The Commission vote to accept the proposed consent order and publish it for public comment was 4-0.

An announcement regarding the proposed consent agreement will be published in the Federal Register shortly. The agreement will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

Copies of the complaint, proposed consent order, and an analysis to aid public comment are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. 981-0211)