The European Commission has started an investigation into Lufthansa’s part-acquisition of ITA Airways, under EU merger regulations.
The EU’s executive arm explained it had “preliminary concerns that the transaction may reduce competition in the market for passenger air transport”.
The probe by competition tsar Margrethe Vestager’s team will look into the existing and future competition between airlines on domestic Italian routes, and pan-European flights originating in or destined for Italy.
It will also inspect the potential for decreased choice of transatlantic flights to and from Italy, due to Lufthansa’s existing codeshare with United and Air Canada.
Although competition for routes and passengers is the key area where the Commission is seeking to ensure competition remains, the airlines’ relationship with certain airports will also come under the microscope.
Vestager is asking if the deal will “strengthen ITA’s dominant position at the airport Milan-Linate, which could make it harder for rivals to provide passenger air transport services from and to Milan-Linate.”
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Executive vice-president in charge of competition policy Vestager explained: “By opening the in-depth investigation, we want to further assess the transaction and ensure that the acquisition of ITA does not reduce competition in short-haul and long-haul traffic and that it will not lead to higher prices, less capacity or lower quality for passenger air transport services in and out of Italy.”
The transaction was notified to the Commission on 30 November 2023.
Although Lufthansa has engaged with the Commission since the deal was signed, and in January responded to a request for “commitments” to ensure competition is not affected, this was not satisfactory.
“These commitments were insufficient, in terms of both scope and effectiveness, to clearly dismiss the Commission’s preliminary concerns,” the latest statement explained.
Under EU regulations the Commission has 90 days (until 6 June 2024) to make a decision on whether or not the deal breaches its rules.