EU expresses concerns that Lufthansa-ITA deal will reduce competition

The European Union (EU) has stated that the agreement involving the purchase of shares of Italy’s flag carrier airline ITA by the German airline company Lufthansa could potentially harm competition.

The EU Commission announced that an objection statement containing formal allegations has been sent to the company and the Italian Ministry of Economy regarding the competition investigation into Lufthansa’s offer to acquire ITA.

In the statement, it was indicated that the Commission has a preliminary view that the acquisition could particularly restrict competition in both domestic and international passenger air transport in Italy, and there are concerns that prices could rise and service quality could decrease as a result of the acquisition.

The statement reminded that Lufthansa and ITA operate a wide flight network from their respective centers in Austria, Belgium, Germany, Switzerland, and Italy, and it was emphasized that Lufthansa has joint ventures with United Airlines and Air Canada for transatlantic routes, and with All Nippon Airways for routes to Japan.

While competition between Lufthansa and ITA exists on certain short-haul routes connecting Italy to Central European countries, the statement expressed that the acquisition could reduce competition. It was also mentioned that competition on certain long-haul routes between Italy and the United States, Canada, and Japan may also weaken.

The statement pointed out the possibility that the acquisition could make it difficult for ITA’s competitors to provide services at Milan Airport.

Following this stage, Lufthansa and the Italian government can propose measures to alleviate competition concerns by April 26.

ITA was established in 2021 following the closure of the 75-year-old Alitalia airline.

Lufthansa announced last year its plan to acquire 41% of ITA’s shares, which were entirely owned by the Italian Ministry of Economy, for 325 million euros.

In January, the EU Commission initiated a competition investigation to evaluate the ITA-Lufthansa agreement.

Monitoring mergers and acquisitions in large-scale companies operating in European countries is among the powers of the EU Commission.

The EU Commission evaluates whether there is a violation of competition in its examinations and investigations. If anticompetitive situations are identified, the EU Commission can prevent mergers or acquisitions.

source: prepared by Melisa Beğiç

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