Lufthansa, ITA Airways deal may lead to higher prices: EU watchdog | World News – sqnews.org

Lufthansa (Photo: Unsplash)

Lufthansa’s bid for a minority stake in Italian rival ITA Airways could harm competition and lead to higher prices, EU antitrust regulators said on Monday, ramping up pressure on the German carrier to come up with stronger remedies.

“A risk of a competition issue is of course that prices go up and services go down,” EU Commissioner Margrethe Vestager told reporters. “That is what we mean when we say risk to competition: that users will have to pay,” she added.

The European Commission said the deal threatened competition on short-haul routes between Italy and Central European countries, as well as on long-haul routes between Italy and the United States, Canada and Japan. It would also strengthens ITA’s dominant position at Milan’s main airport.

“The removal of ITA as an independent airline may have negative effects on competition in these already concentrated markets,” the Commission said in a statement.

“The routes giving rise to potential concerns represent a small share of total short- and long-haul routes and passengers served by both parties and their joint venture partners, and the potential concerns do not affect the vast majority of routes that ITA operates,” it added.

The statement confirmed a Reuters story earlier this month.

Lufthansa and the Italian government can now put forward new remedies by April 26.

Lufthansa wants to buy a 41% stake in state-owned ITA for 325 million euros ($351 million) as part of a capital increase.

The deal highlights the airline industry’s attempts to consolidate, with British Airways-owner IAG seeking to buy out Spain’s Air Europa.

The German group said it would present remedies to the Commission “in a timely manner”, adding that – in the company’s view – the deal would strengthen competition in Europe and in Italy.

“We remain confident that ITA will become part of the Lufthansa group family this year,” it said in a statement.

Lufthansa’s remedies to address EU concerns could be similar to those in a Korean airline deal approved by the Commission which included ceding slots, traffic rights and planes to a rival, a person with direct knowledge of the deal has previously told Reuters.

Regulators also want to ensure that the rival acquiring such assets would start using them almost immediately before allowing airlines to close deals.

First Published: Mar 25 2024 | 5:50 PM IST

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