EU Set for Deep Dive into Lufthansa’s Proposed ITA Airways Investment Amid Competition Concerns

The European Commission is poised to launch a comprehensive investigation into Lufthansa’s bid to acquire a minority stake in ITA Airways, as reported by sources to Reuters and Corriere della Sera. The inquiry stems from concerns that the concessions offered by Lufthansa may be insufficient to address competition issues related to the EUR325 million (USD354 million) investment for a 41% share in ITA Airways.

Lufthansa submitted its proposal to the Commission on January 8, outlining remedies to mitigate potential competition concerns. This includes overlapping routes between Lufthansa Group and ITA Airways, particularly from Milan Linate to Düsseldorf, Frankfurt International, and Stuttgart Manfred Rommel, as well as from Rome Fiumicino to Frankfurt, Munich, and Zurich. Dominance in other routes, such as Milan-Brussels National, Rome-Brussels, and Milan-Hamburg Helmut Schmidt, is also under scrutiny, along with the impact on transatlantic flights.

Sources indicate that Lufthansa proposed giving up some slots at Linate and reducing frequencies on some European routes. However, the airline is reportedly unwilling to make concessions on its profitable intercontinental network, which is closely coordinated with Star Alliance and joint venture partners.

The European Commission typically solicits feedback from competitors and customers to assess if proposed remedies address their concerns. However, this standard procedure has not been followed in this case, even though the preliminary review deadline is set for January 29. This deviation suggests that an in-depth probe, extending an additional 90 working days, is likely.

While the European Commission has not publicly commented on the proposed concessions, an Italian government source has indicated that a full-scale EU inquiry is expected. Lufthansa, in response to inquiries, stated that it would not comment on media speculation but confirmed ongoing close and constructive contact with all parties involved.

This impending investigation underscores the complexities of airline mergers and acquisitions in the context of maintaining competitive balance in the aviation industry. It also highlights the European Commission’s role in scrutinizing such deals to ensure fair competition and consumer choice in the sector.