On January 23, the European Commission opened an investigation into Lufthansa’s proposed ITA acquisition. Today, the findings have been published, with a Statement of Objections.
The summary states: The Commission is concerned that the transaction may
- Reduce competition on a certain number of short-haul routes connecting Italy with countries in Central Europe. On such routes, Lufthansa and ITA compete or will compete head-to-head mainly with direct, but also with indirect flights. Competition in such routes appears limited and comes primarily from low-cost carriers, such as Ryanair, who in many cases operate from more remote airports.
- Reduce competition on a certain number of long-haul routes between Italy and the US, 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 appears insufficient on those routes. In its assessment, the Commission treats the activities of ITA, Lufthansa and its joint venture partners as those of a single entity after the merger.
- Create or strengthen ITA’s dominant position at the Milan-Linate airport, which could make it harder for rivals to provide passenger air transport services from and to Milan-Linate.
Earlier this month, European Competition Commissioner Margrethe Vestager said the EU executive’s approval of the deal depends on how the companies aim to resolve problems regarding routes. Lufthansa and the Ministero dell’Economia e delle Finanze have until April 26 to respond to the EC’s objections and propose solutions.  The deadline for a final decision from Brussels is June 6.
The history of investing in Italian airlines must be taught repeatedly because nobody learns from the history. We have looked into this deal. In January, we reviewed the Brussels initial review. By March, we wondered whether Lufthansa would abandon the deal.
