EU Commission Slows Down Lufthansa’s Acquisition of ITA

A principal agreement between the German company and the Italian Ministry of Economy was reached in May 2023

Following an investigation launched in January 2024, the EU Commission has expressed doubts about the acquisition of Italian national airline ITA by German giant Lufthansa.

Negotiations have been ongoing for months and are considered vital to the future of the company that replaced the old Alitalia. An agreement was reached between the Italian ministry and Lufthansa in May 2023, but closing the deal requires approval from the European Commission.

The Commission’s preliminary investigation revealed how the transaction could reduce competition in the market for air passenger transportation services on several short- and long-haul routes because Lufthansa and ITA compete strongly and closely with each other in providing air passenger transportation services on certain routes to and from Italy.

Now, with the document in hand, the European institution has formalized its preliminary conclusions on the acquisition project of Lufthansa and the Italian Ministry of Economy. There are fears of rising airfares for customers and a simultaneous decline in service quality. In particular, the operation could reduce competition not only on some short-haul routes between Italy and Central Europe, but also on routes linking Italy to the United States, Canada, and Japan, as well as strengthen ITA’s dominant position at Milan-Linata Airport, the closest airport with better connections to the Lombardy metropolitan area.

Brussels also clarifies that this communication does not prejudge the outcome of the negotiations, as both companies actually have the opportunity to propose solutions and remedies to avoid the concerns expressed by the appeal deadline, which is April 26, 2024.