EU Investigating Lufthansa’s Bid for ITA Airways Stake

“By opening the in-depth investigation, we want to further assess the transaction and ensure that the acquisition of ITA does not reduce competition in short-haul and long-haul traffic and that it will not lead to higher prices, less capacity or lower quality for passenger air transport services in and out of Italy,” said Margrethe Vestager, Executive Vice-President in charge of competition policy.

The Commission’s preliminary concerns

Following a preliminary investigation, the Commission announced the following:

• The transaction may reduce competition on short-haul routes connecting Italy with countries in Central Europe. On certain such routes, Lufthansa and ITA compete head-to-head with non-stop connections with only limited competition, primarily from low-cost carriers, such as Ryanair, who in many cases operate from more remote airports. Moreover, the Commission will also examine routes where one of the parties is already offering services and the other is expected to enter soon, and those where one or both of the parties has a convenient one-stop connection and where non-stop connections are limited or only offered by the other party.
• In relation to long-haul routes between Italy and North America, the Commission will assess further whether the activities of ITA, Lufthansa and its joint venture partners United Airlines and Air Canada should be treated as those of a single entity after the merger.
• The transaction could reduce competition on certain several long-haul routes between Italy and the US, Canada, Japan and India, due to close competition between ITA, Lufthansa or Lufthansa’s joint venture partners – through non-stop or convenient one-stop connections and convenient airport locations – and due to potentially limited competition from other airlines with attractive connections.
• The transaction could create or strengthen ITA’s dominant position at the airport Milan-Linate, which could make it harder for rivals to provide passenger air transport services from and to Milan-Linate.
• The Commission will also examine possible negative effects on routes on which other airlines rely on access to ITA’s domestic and short-haul network for their own operations, which could affect their services to international destinations also served by Lufthansa.

The transaction was notified to the Commission on 30 November 2023.

On 8 January 2024, Lufthansa submitted commitments to address some of the Commission’s preliminary concerns. According to the Commission, Lufthansa’s commitments were “insufficient, in terms of both scope and effectiveness, to clearly dismiss the Commission’s preliminary concerns”. The Commission therefore did not test them with market participants.

The Commission now has 90 working days, until 6 June 2024, to take a decision.

The opening of an in-depth investigation does not prejudge the outcome of the investigation.