European Commission - Press release

Commission sends Statement of Objections over proposed acquisition of a

stake in ITA Airways by Lufthansa
Brussels, 25 March 2024
The European Commission has informed Deutsche Lufthansa AG (‘Lufthansa') and the Italian
Ministry of Economy and Finance (‘MEF') of its preliminary view that their proposed acquisition of
joint control of ITA Airways (‘ITA') may restrict competition on certain routes in the market for
passenger air transport services in and out of Italy. The Commission is concerned that customers
may face increased prices or decreased quality of services after the transaction.
Lufthansa and ITA operate an extensive network of routes from their respective hubs in Austria,
Belgium, Germany, Switzerland and Italy. Lufthansa has joint ventures with United Airlines and Air
Canada for transatlantic routes as well as with All Nippon Airways for routes to Japan. The joint
venture partners coordinate on price, capacity, scheduling, and share revenues.
The Statement of Objections
On 23 January 2024 the Commission opened an in-depth investigation to assess if Lufthansa's
acquisition of a stake in ITA may restrict competition in the provision of passenger air transport
services in and out of Italy.
The Commission has conducted a wide-ranging investigation to understand the potential impact of
the deal. This investigation has included, among others, analysing internal documents and detailed
information provided by the parties and gathering information and views from competing airlines,
airports, slot coordinators and customers.
The Commission has also considered proactive submissions from individual consumers, consumer
representative organisations, airports, rival airlines and trade unions expressing their views in
support of or against the transaction.
As a result of this in-depth investigation, the Commission is concerned that the transaction may:
Reduce competition on a certain number of short-haul routes connecting Italy with
countries in Central Europe. On such routes, Lufthansa and ITA compete or will compete
head-to-head mainly with direct, but also with indirect flights. Competition in such routes
appears limited and comes primarily from low-cost carriers, such as Ryanair, who in many
cases operate from more remote airports.
Reduce competition on a certain number of long-haul routes between Italy and the US,
Canada and Japan. On such routes, ITA on the one hand and Lufthansa and its joint venture
partners on the other hand compete head-to-head with direct or indirect flights. Competition
from other airlines appears insufficient on those routes. In its assessment, the Commission
treats the activities of ITA, Lufthansa and its joint venture partners as those of a single entity
after the merger.
Create or strengthen ITA's dominant position at the Milan-Linate airport, which could
make it harder for rivals to provide passenger air transport services from and to Milan-Linate.
Every year, millions of passengers travel on those routes for a total annual spending of over €3
billion. The Commission's objective is to ensure that the transaction would not lead to adverse
effects for customers – consumers and businesses alike – in terms of increased prices or decreased
quality of services. ITA has had a successful start to its operations. The Commission is concerned
that, absent suitable remedies, the removal of ITA as an independent airline may have negative
effects on competition in these already concentrated markets. 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.
A Statement of Objections is a formal step in an investigation, where the Commission informs the
companies concerned in writing of the objections raised against them. The sending of a Statement of
Objections does not prejudge the outcome of the investigation. Lufthansa and MEF now have the
opportunity to reply to the Commission's Statement of Objections, to consult the Commission's case
file and to request an oral hearing.
Lufthansa and MEF also have the possibility to put forward remedies to address the preliminary
competition concerns identified by the Commission. They can decide to submit remedies at any time
of the proceedings until the remedy deadline, which currently falls on 26 April 2024.
Companies and products
ITA, headquartered in Italy, is a full-service carrier with domestic and international operations in
passenger and cargo air transport. ITA operates a hub-and-spoke network with its principal hubs in
Rome and Milan. ITA was created by the Italian State in October 2020 and it had a successful year
2023. ITA is a member of the SkyTeam alliance.
Lufthansa, headquartered in Germany, is a global full-service carrier with domestic and international
operations in passenger and cargo air transport. Lufthansa also operates a hub-and-spoke network
with its principal hubs in Frankfurt, Munich, Zurich, Vienna and Brussels. Its subsidiaries include
Austrian Airlines, Brussels Airlines, Eurowings, Swiss International Airlines and Air Dolomiti.
Lufthansa is a member of the Star Alliance, of a transatlantic joint venture with United Airlines and
Air Canada and of a joint venture for traffic between Europe and Japan with All Nippon Airways.
MEF carries out the tasks and responsibilities of the Italian government in the fields of economic
policy, financial policy, budgeting, and tax policies. MEF holds shareholdings in public and strategic
companies in Italy, among others in the transport sector, and it is currently the sole shareholder in
ITA. The companies in which MEF has shareholdings are active worldwide.
Background
The transaction was notified to the Commission on 30 November 2023. On 8 January 2024,
Lufthansa submitted commitments to address some of the Commission's preliminary concerns.
However, these commitments were insufficient, in terms of both scope and effectiveness, to clearly
dismiss the Commission's preliminary concerns. The Commission therefore did not test them with
market participants.
The Commission opened an in-depth investigation on 23 January 2024 and has until 6 June 2024 to
take a final decision.
The Commission has the duty to assess mergers and acquisitions involving companies with a
turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent
concentrations that would significantly impede effective competition in the European Economic Area
or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a
routine review. From the moment a transaction is notified, the Commission generally has 25 working
days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
In addition to the current transaction, there is currently one ongoing Phase II merger investigation,
namely the proposed acquisition of Air Europa by IAG.
More information will be available on the Commission's competition website, in the
Commission's public case register under the case number M.11071.
IP/24/1430

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