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(Reuters) - Britain's competition watchdog on Thursday raised objections against UK airport services and logistics group John Menzies' (MNZS.L) acquisition of some operations of BBA Aviation (BBA.L), saying the deal could lessen competition in the market.
The Competition and Markets Authority (CMA) said since Menzies and ASIG, BBA's ground handling and fuelling unit, were close competitors at Aberdeen airport, a merger of the two businesses could leave Swiss air cargo handler Swissport as the only other credible bidder for airlines located there.
Menzies had in September agreed to buy ASIG in a deal that was expected to make it the world's largest interplane fueller, doubling its existing North American operations and adding significant scale at major international gateways, including London's Heathrow airport.
The Scottish firm has been under pressure to revamp its business, as a string of warnings and the departure of top executives attracted criticism from three investors who have advocated separating its aviation services and printed media distribution units.
Menzies said it would consider its position with regard to its operations at Aberdeen airport and respond to the CMA accordingly.
The CMA said Menzies would have until Dec. 22 to offer a remedy to avoid the merger being referred for an in-depth investigation and that it would consider whether to accept an undertaking.
The antitrust regulator has already opened an investigation into the deal in October, but has not detailed its specific concerns.
The update from CMA would allow the companies to work towards completing the deal, BBA said in a statement.
For BBA, the ASIG sale marks a well-flagged disposal of a smaller unit, allowing it to focus on growing Signature, its largest unit that provides services such as passenger handling, office rentals and hangaring.
The deal was originally expected to close by year-end.
Menzies shares were up 1.1 percent at 562 pence at 0814 GMT on the London Stock Exchange, while BBA shares were down 0.6 percent at 269.6 pence.
Reporting by Esha Vaish in Bengaluru; Editing by Sunil Nair and Gopakumar Warrier