EU antitrust regulators warned that Lufthansa’s intention to buy a minority stake in ITA Airways could harm competition and raise prices, intensifying pressure on the German airline to present remedies in the coming weeks.
The Commission announced in January that it would fully investigate Lufthansa’s plan to buy a 41% stake in state-owned ITA from the Italian government for €325 million. euros ($351 million), announced in May 2023.
“The risk of a competition issue is of course that prices rise and services go down,” said European Union Commissioner Margrethe Vestager. “That’s what we mean when we say risk to competition: that users will have to pay,” he added.
The EU’s antitrust authority said the deal threatened competition on short-haul routes between Italy and Central European countries, as well as on long-haul routes between Italy and the United States, Canada and Japan.
It would also strengthen ITA’s dominant position at Milan’s main airport.
The Commission stated, however, that its concerns focus only on a small number of short- and long-haul routes and passengers served by the two airlines and their joint venture partners.
Lufthansa said it would submit corrective measures to the Commission “in a timely manner” and that in its view the deal would boost competition in Europe and Italy.
The deadline to submit corrective measures is 26 April, while the EU has until 6 June to decide whether to approve or block the deal.
“We remain confident that ITA will become part of the Lufthansa Group family this year,” the German national carrier said in a statement.
Italy’s finance ministry said it would present corrective measures as soon as possible to secure the EU’s “green light” for the successor airline of bankrupt Alitalia.
The European Commission has informed Deutsche Lufthansa AG and the Italian Ministry of Economic Affairs and Finance of its preliminary view that the proposed agreement may restrict competition on certain routes in the market for air passenger services within and outside Italy.
The Statement of Objections
On 23 January 2024, the Commission launched an in-depth investigation to assess whether the acquisition of a stake in ITA by Lufthansa may restrict competition in the provision of passenger air transport services within and outside Italy.
The investigation included, inter alia, an analysis of internal documents and detailed information provided by the parties and a collection of information and opinions from competing airlines, airports, slot coordinators and customers.
As a result of this in-depth investigation, the Commission is concerned that the transaction may:
- To reduce competition on a certain number of short-haul routes connecting Italy with Central European countries. On such routes, Lufthansa and ITA compete or will compete head-on mainly with direct but also indirect flights. Competition on such routes appears limited and comes mainly from low-cost carriers such as Ryanair, which in many cases operate from more remote airports.
- To reduce competition on a certain number of long-haul routes between Italy and the USA, Canada and Japan. On such routes, ITA on the one hand and Lufthansa and its joint venture partners on the other hand compete head-to-head with direct or indirect flights. Competition from other airlines seems insufficient on these routes.
- To create or strengthen ITA’s dominant position at Milan-Linate airport, which could make it more difficult for competitors to provide passenger air transport services to and from Milan-Linate.
A Statement of Objections is a formal stage of the investigation, during which the Commission informs the companies concerned in writing of the objections raised against them. However, sending a Statement of Objections does not prejudge the outcome of the investigation.
Now, Lufthansa and the Italian Ministry of Finance have the opportunity to reply to the Commission’s Statement of Objections, consult the case file and request an oral hearing.
They also have the possibility to propose remedies to address the preliminary competition concerns identified by the Commission. Whereas, they can decide to file appeals at any time of the proceedings until the appeal deadline, which expires on April 26, 2024.
