The EU Commission has announced that Lufthansa's planned entry into Ita Airways will be examined in more detail. The concessions suggested by Kranich were not even forwarded to the auditors because they only apply to short-haul business.
The competition authority said there are significant concerns that the takeover could lead to a further reduction in competition on short- and long-haul routes to/from Italy. Lufthansa and Ita Airways would jointly occupy a dominant position, particularly on the routes to/from Milan-Linate. In this context, the Kranich Group offered to hand over take-off and landing rights, but the EU Commission would not have forwarded the paper to the auditors because it does not contain any concessions on long-haul flights.
It has already been apparent for a few weeks that a Phase II test could be initiated. The EU Commission is now also taking a close look at Star Alliance codeshare connections, namely United Airlines and Air Canada. A likely move by Ita Airways into this aviation alliance would further expand the capacity available to the Lufthansa Group.
Competition watchdog with numerous test points
According to the EU Commission, there are concerns that the takeover could reduce competition on routes between Italy and Central Europe. The concerns lie in the overlap between Lufthansa and Ita Airways' services, which could lead to potential monopolies on certain routes. The fact that Ryanair, for example, has a strong presence on the Italian market should hardly play a role. For example, the competitor does not fly to Milan-Linate airport at all.
In general, the presence of Ita Airways and Lufthansa at this airport plays a major role. This was once literally dominated by its predecessor Alitalia, although some take-off and landing rights had to be given up as part of the switch to Ita Airways. The EU Commission is of the opinion that the planned takeover could lead to the dominant market position being strengthened even further.
The EU Commission also wants to examine to what extent the transaction could negatively impact competition on carriers that rely on Ita Airways' route network as part of interline and/or codeshare agreements. This could impact services to international destinations also served by Lufthansa.
The Commission is particularly focusing on long-haul routes between Italy and North America and is examining whether the merged entity should be treated as a single entity. The aim of this audit is to maintain fair competition and avoid potential monopolistic practices.
The concessions offered by Lufthansa so far were obviously not sufficient. The EU Commission now has to decide by June 6, 2024 whether the deal will be approved or not. It is also conceivable that the green light could be given under (tough) conditions.
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