Ita-Lufthansa wedding, all the EU’s concerns about the acquisition
The European Commission he informed Lufthansa and the Mef of its preliminary opinion that the proposed acquisition of joint control of Ita Airways could narrow the competition on some routes in the market for passenger air transport services in and out of Italy. The Commission fears that customers may face a price increase or one decrease in the quality of services after the transaction.
The Commission fears that the operation could: reduce competition on a certain number of short-haul routes connecting Italy with Central European countries; reduce competition on a number of long-haul routes between Italy and the United States, Canada and Japan; create or strengthen the Ita’s dominant position at Milan-Linate airport.
In detail, on the short-haul routes that connect Italy with the countries of central Europe, Lufthansa e Ita – explains the European executive – they compete or will compete head to head mainly with direct flights, but also with indirect flights. Competition on these routes appears limited and comes mainly from low-cost carriers, such as Ryanairwhich in many cases operate from more remote airports.
On long-haul routes between Italy and the United States, Canada and Japan, Ita on the one hand and Lufthansa and its joint venture partners on the other, compete head-to-head with direct or indirect flights. On these routes, competition from other airlines appears insufficient, according to the European Commission.
In its assessment, the Commission considers the activities of Ita, Lufthansa and its joint venture partners as those of a single entity after the merger. Finally, Ita’s dominant position at Milan-Linate airport could make it more difficult for competitors to provide air passenger transport services to and from Milan-Linate.
“Every year millions of passengers travel on those routes for a total annual expenditure of over 3 billion euros. The Commission’s objective is to ensure that the operation does not lead to negative effects for customers – consumers and businesses – in terms of increased costs prices or decrease in the quality of services”, highlights the European executive.
“Ita has had a positive start to its operations. The Commission is concerned that, in the absence of adequate solutions, the elimination of ITA as an independent airline could have negative effects on competition in these already concentrated markets. The routes giving rise to potential concerns represent a small percentage of the total routes and short- and long-haul passengers served by both parties and their joint venture partners, and the potential concerns do not affect the vast majority of routes operated by Ita”, they specify from Brussels.
The Statement of Objections is a formal step in an investigation, where the Commission informs the companies concerned in writing of the objections raised against them. Sending a communication of findings does not prejudge the outcome of the investigation. Lufthansa e Mef they now have the opportunity to respond to the Commission’s statement of objections, to consult the Commission’s file and to request an oral hearing.
Lufthansa and Mef also have the opportunity to propose solutions to address preliminary competition concerns identified by the Commission. They can decide to submit remedies at any point in the proceedings until the appeal deadline, which currently falls on 26 April 2024.