In May, the German holiday airline Condor filed a lawsuit against the European Commission to annul the approval of the merger between Lufthansa and the Italian airline Ita Airways.
The details of this lawsuit, case number T-320/25, were recently published in the Official Journal of the European Union. Condor is challenging the Commission's decision of July 3, 2024, which conditionally approved Lufthansa's acquisition of the Italian state-owned airline Ita Airways. This legal step underscores ongoing concerns about competition in the European aviation market, particularly with regard to the market power of the major network carriers.
The controversial approval and Condor's core arguments
The European Commission gave the green light for Lufthansa's entry into Ita Airways in July 2024. The agreement stipulated that Lufthansa would initially acquire 41 percent of Ita's shares and could subsequently gradually increase this stake. However, this transaction was subject to extensive commitments designed to preserve competition in certain markets. Such commitments are a standard tool in EU merger control to minimize the negative impact of mergers on the market.
Condor bases its action on five key arguments and accuses the Commission of violating the EU Merger Regulation Specifically, the holiday airline complains that not all affected markets were identified and not all relevant facts were taken into account in the decision. A key aspect of merger control is the precise definition of relevant markets in order to identify distortions of competition. Condor apparently argues that the Commission took an overly narrow or incorrect perspective here.
Another point of criticism from Condor is the Commission's assessment of Ita Airways' long-term economic competitiveness. Condor describes this assessment as "obvious error of judgmentThis could indicate that Condor considers ITA's financial situation and future viability without Lufthansa's stake to be more critical than the Commission did. An overly optimistic assessment of the viability of a company being acquired can lead to the impact on competition being underestimated.
Competition concerns on long- and short-haul routes
Condor also sees the Commission’s accepted Commitment offers for long-haul connections as unsuitable to allay competition concerns. Such commitments, so-called "remedies," are common in large mergers in the aviation sector. They often include the surrender of take-off and landing rights (slots) or the obligation to offer feeder services to competitors. Condor, itself a major long-haul airline, apparently fears that its competitiveness on certain long-haul routes, particularly to and from Italy, will be impaired by the merger. Deutsche Lufthansa, Air France-KLM, and IAG are the three largest European network airlines whose growing market shares are being viewed particularly critically by antitrust authorities, as the lengthy approval process for Lufthansa's entry into ITA demonstrated.
Further criticisms of Condor concern the Short-haul commitments and their impact on the connection of long-haul traffic. The integration of short- and long-haul routes is essential for network carriers, as short-haul flights serve as feeder routes for intercontinental flights. Excessive dominance on feeder routes could limit competition on long-haul routes, even if other airlines operate there.
Condor also pays special attention to the Transfer of slots at Milan Linate Airport to other providers. Milan Linate is a smaller but strategically important city airport, which is extremely popular with business travelers and tourists due to its proximity to the city center. Slots at busy airports are extremely valuable and play a key role in determining the ability of new and existing airlines to offer routes. The Commission had made its clearance of the merger conditional, among other things, on Lufthansa and ITA Airways giving up takeoff and landing rights at Milan Linate and Rome Fiumicino airports to allow competitors access. Other low-cost airlines such as Wizz Air and EasyJet had already expressed interest in these coveted slots. Luxair, the Luxembourg airline, has also filed a lawsuit against the EU Commission's clearance of Lufthansa's takeover of ITA Airways, although its lawsuit is specifically directed against the slot allocation condition at Milan's city airport, which it criticizes as factually unfounded.
The context of EU merger control in aviation
Merger control in the aviation sector by the European Commission is a complex process aimed at preventing excessive concentration of market power and protecting competition in the interests of consumers. In airline mergers, the Commission particularly examines whether monopolization or a dominant position could arise on certain routes, which could lead to higher prices, reduced capacity, or poorer service quality. Historically, the European Commission has blocked mergers in the aviation sector or only approved them subject to strict conditions. A prominent example was the prohibition of Ryanair's planned takeover of Aer Lingus in 2013, as this would have led to a dominant position on 46 routes.
Condor's current actions are not unusual. Competitors have the right to appeal against Commission decisions before the Court of the European Union to sue if they believe that the review was flawed or that the conditions imposed are insufficient to offset competitive disadvantages. Such actions are part of the judicial review mechanism under European competition law. There are precedents in which courts have annulled Commission decisions or referred them back for re-examination.
Following the insolvency of the former state-owned airline Alitalia, the Italian aviation market has been restructured with the establishment of ITA Airways. ITA Airways, which has been operating since 2021, was originally intended to be a fresh start, but ongoing financial difficulties led to the search for a strategic partner. Lufthansa's stake is intended to stabilize ITA Airways and enable the group to establish Italy as another "home market." This is part of a larger wave of consolidation in European air transport, in which the three major airline groups – Lufthansa, Air France-KLM, and IAG – are strengthening their market positions through acquisitions. This development is viewed critically by consumer advocates and independent airlines, as it fuels fears of rising prices and reduced choice.
The role of holiday airlines in competition
Leisure airlines like Condor operate in a different segment than traditional network carriers. While network carriers use hubs to connect passengers from around the world via a complex system of feeder and long-haul flights, leisure airlines often focus on direct connections to tourist destinations. They are therefore more dependent on demand for package holidays and direct point-to-point traffic.
Competing with large airline groups that offer not only a dense network of routes but also extensive frequent flyer programs and related services poses a challenge for independent leisure airlines. The ability of network carriers to channel passengers through their global network and cross-subsidize between different routes can make it more difficult for smaller or specialized airlines to operate profitably on certain routes. Condor is also in dispute with Lufthansa over feeder flights to Frankfurt. Although the Federal Cartel Office discontinued the corresponding proceedings for interim measures, the Commission is continuing to examine the compatibility of the transatlantic joint venture A++ between Lufthansa, United, and Air Canada with EU competition rules. This demonstrates the intertwined relationships and competition issues in the industry.
Condor's lawsuit is therefore not only an objection to a specific merger approval, but also an expression of concern about the future competitive landscape in European air transport, in which the market power of large corporations could continue to increase. Condor's lawsuit against the EU Commission in the Lufthansa-Ita merger is a significant event that once again draws attention to the critical role of competition authorities in shaping the European air transport market. The outcome of this court case will be of great importance not only for the airlines involved, but also for the entire industry and consumers. It could set precedents for future mergers and redefine the standards for assessing market power. It remains to be seen how the General Court of the European Union will assess Condor's arguments and what consequences this could have for the already approved Lufthansa-Ita transaction.