The European Commission published on March 25, 2024, its preliminary findings of the in-depth investigation it initiated on January 23, 2024, into the Lufthansa Group’s proposed acquisition of a controlling stake in ITA Airways.
European competition authorities said they were concerned that if the acquisition was to go ahead in its current proposed form, it could reduce competition on a number of short-haul routes between Italy and Central Europe as well as on long-haul routes linking Italy to the United States, Canada and Japan.
In the case of intra-EU flights, the report noted that, while these markets are served by a number of low-cost carrier, they are considered to be insufficient to guarantee a fair amount of competition. This is due to their different business model and the fact that they often operate from secondary airports.
In the long-haul market, European authorities have considered not only the combined frequencies operated by Lufthansa Group airlines and ITA Airways, but also those of their alliance and codeshare partners, which have been considered as part of a whole.
Another area of concern is the dominant position that ITA Airways and Lufthansa would hold at Milan-Linate Airport (LIN), the closest to the city center of Italy’s financial capital.
Altogether, the routes subject to scrutiny generate revenues north of €3 billion per year, although, the regulators noted, they only generate a relatively small part of the merging entities’ business.
The European Commission has now sent a document called ‘Statement of Objections’ to the two interested parties, which will have until April 26, 2024, to respond to these allegations and suggest ways to remedy the issues that have been identified.
