EU doubts on Ita-Lufthansa deal, in-depth analysis undertaken

Brussels – The sale of Ita to Lufthansa can wait. The Commission has doubts about compatibility with the functioning of the single market and competition, so it is launching an in-depth analysis of the proposed merger notified on 30 November 2023. “We want to assess the transaction in more detail,” cuts short Margrethe Vestager, Competition Commissioner. “We want to make sure,” she explains, “that any go-ahead does not reduce competition in short- and long-haul traffic and does not lead to higher prices, lower availability, or lower quality of air passenger services to and from Italy.”

After an initial assessment, there is doubt that a merger between Ita and Lufthansa could “reduce competition on short-haul routes connecting Italy with central European countries”. Especially on some such routes, the two airlines are currently direct competitors for nonstop connections, with limited competition from other airlines, especially low-cost carriers such as Ryanair. The Ita-Lufthansa union could also mean the union of market shares, reducing the participation of other operators too much and affecting final prices.

For long-haul routes, the assessment concerns inter-continental routes between Italy and North America. Here Vestager’s services must determine whether Ita and Lufthansa’s partners in the joint-venture with United Airlines and Air Canada should be treated as activities of a single entity.

There is also the risk of a monopoly at Milan’s Linate airport. Lufthansa’s acquisition of Ita “could give rise to ITA’s dominant position at the Lombard airport or strengthen it, making it more difficult for competitors to provide air passenger services to and from Milan Linate.

The knots to unravel are not a few. The Commission has 90 working days to decide whether to reject the proposed operation outright, endorse it and thus give the go-ahead, or allow it under certain conditions, such as slots surrender and takeoff and landing time slots. The deadline to clear doubts and reservations is June 6, European election day.