The European Commission wants to further investigate the operation Ita Airways-Lufthansa and it takes more time, until 6nd June, to give the green light to the German giant's entry into the Italian carrier. In a note, Brussels therefore communicates the transition to the so-called “phase two” , who requests further details, as he believes that “the operation could reduce competition" on “different routes a short and long range”, reads the press release.
“By opening the in-depth investigation, we want to further evaluate the transaction and ensure that the acquisition of Ita does not reduce competition in traffic short and long range and that it will not lead to higher prices, less capacity or lower quality for passenger air transport services in and out of Italy", is the comment of Margrethe Vestager, executive vice president responsible for competition policy.
The commitments offered by Lufthansa were deemed insufficient
The Commission now has 90 working days to make a final decision. The German carrier should acquire 40% of the Italian one with the prospect of increasing its participation and immediately assuming operational control. The two companies hoped to close the game sooner.
The first phase of the investigation was started on November 30th, after the notification of the operation by the Treasury and the German carrier. But the commitments offered by Lufthansa on January 8 to address the EU's preliminary concerns deemed insufficient, both in terms of scope and effectiveness.
On some routes, explains Brussels, the two companies "compete head-to-head with non-stop connections with only limited competition mainly only from low-cost carriers, such as Ryanair, which in many cases operate from more remote airports". Brussels will 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”.
EU concerns about the offer on intercontinental flights
Regarding long-haul routes between Italy and North America, the Commission will “further evaluate whether the activities of ITA, Lufthansa and its joint venture partners United Airlines and Air Canada should be treated as those of a single entities after the merger”. The operation “could reduce competition on some routes a long range between Italy and the United States, Canada, Japan and India, due to strong competition between Ita, Lufthansa or the German carrier's joint venture partners with United Airlines and Air Canada — through non-stop connections or convenient one-stop and convenient airport locations —, and due to potentially limited competition from other airlines with attractive connections.”
The reactions: The Treasury and Lufthansa move forward
“Il government continues with determination on the path undertaken, hoping that the commission decides perhaps before 6 June in order to support the development and growth of Ita Airways also in view of the summer season", explains the Treasury in a note. “The group will continue to work closely and constructively with the Commission in this process for a rapid conclusion of the examination and for the subsequent realization of the investment,” replies a spokesperson for Lufthansa. And again: “The company continues to firmly believe that the procedure will be authorized following further investigations. Ita will become a complementary and important part of the Lufthansa Group's multi-hub system, which currently consists of four network airlines. The investment in ITA will have an overall positive effect on competition in Italy and Europe."