ISLAMABAD: In a major development, the Competition Commission of Pakistan (CCP) has passed a merger order, approving the acquisition of the 100 percent shareholding of Pakistan International Airlines Corporation Limited (PIACL) by PIA Holding Company Limited (Holdco). The merger order clears the path for the privatization of PIA.

Holdco now holds all the liabilities, and subsidiaries of PIA, including its business, property, rights, and obligations both domestically and internationally. The future owners of PIA will own just the core aviation activities and allied services including engineering, handling, cargo, flight kitchen, and training. The Non-Core Assets and Non-Core liabilities will split from PIA and it will be transferred to Holdco.

In a statement, the CCP said: “The Competition Commission of Pakistan (CCP) has approved a Scheme of Arrangements for the acquisition of 100% shareholding of Pakistan International Airlines Corporation Limited (PIA) by PIA Holding Company Limited (Holdco). This approval is part of the Government of Pakistan’s ongoing privatization process for PIA.”

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Holdco, a public limited company wholly owned by the Government of Pakistan, was recently incorporated to succeed to specified assets, liabilities, and subsidiaries of PIA, including its business, property, rights, and obligations both domestically and internationally. PIA, a publicly listed company, provides aviation and allied services such as engineering, handling, cargo, flight kitchens, and training.

The Federal Government approved the transaction based on the Divestment of PIACL - Legal Segregation Plan and Transaction Structure; submitted by the Privatisation Division on February 6, 2024. As per the approved Scheme, Holdco will acquire 100% shareholding of PIA, and Non-Core Assets and Non-Core liabilities of PIA will also be transferred to Holdco.

The relevant market identified in this case is the real estate market in Pakistan, as PIA owns properties across the country with homogenous competition conditions. However, core aviation activities and allied services of PIA will remain with the company and will not be transferred to Holdco.

The CCP’s assessment concluded that the proposed transaction will not lead to the dominance of Holdco in the relevant market post-transaction, as defined under Section 2(1)(e) read with Section 3 of the Act. Therefore, the CCP has authorized the merger in Phase I.

The CCP’s prompt approval of this merger demonstrates its commitment to furthering the Government of Pakistan’s economic revival plan, particularly in attracting investment through the Special Investment Facilitation Council (SIFC).

Copyright Business Recorder, 2024