European Commission puts Lufthansa’s proposed acquisition of ITA Airways under scrutiny

The European Commission has initiated a comprehensive investigation into the proposed acquisition of joint control of ITA Airways by Deutsche Lufthansa Group and the Italian Ministry of Economy and Finance. This scrutiny, conducted under the EU Merger Regulation, is prompted by initial concerns that the transaction might lead to reduced competition in the market for passenger air transport services, affecting both short-haul and long-haul routes in and out of Italy.

Lufthansa Group and ITA Airways are key players in the aviation industry, operating an extensive network of domestic, short-haul, and long-haul routes. Lufthansa’s collaboration with United Airlines and Air Canada further expands its influence, allowing coordination on pricing, capacity, and scheduling, with shared revenues on transatlantic routes.

The Commission’s preliminary investigation reveals potential competition issues on various fronts:

• Short-haul routes – the transaction may reduce competition on short-haul routes connecting Italy with Central Europe. The concern lies in the overlap of Lufthansa and ITA Airways services, creating potential monopolies on certain routes.
• Long-haul routes – the Commission is particularly focused on long-haul routes between Italy and North America, assessing whether the merged entity should be treated as a single entity. This scrutiny aims to maintain fair competition and avoid potential monopolistic practices
• Milan Linate airport dominance – the acquisition could strengthen ITA Airways’ dominant position at Milan-Linate airport, potentially limiting rivals’ ability to provide passenger air transport services in and out of this key location
• Impact on other airlines – the Commission will also assess the impact on routes where other airlines rely on access to ITA Airways’ network for their own operations. This could affect services to international destinations also served by Lufthansa.

Lufthansa submitted commitments on 8 January, 2024, in an attempt to address some of the Commission’s concerns. However, these commitments were deemed insufficient in scope and effectiveness. The Commission now has 90 working days, until 6 June, 2024, to make a decision. It is essential to note that the initiation of an in-depth investigation does not preclude a favorable outcome for the parties involved.