Lufthansa – ITA Agreement: European Commission Gives Approval

The European Commission approved the acquisition of Italian airline ITA Airways by Germany’s Lufthansa, a few months later. The company is currently owned by the Italian state, which controls it through the Ministry of Economy and Finance (MEF). In this first phase, Lufthansa will pay 325 million euros for a 41% stake, but by 2033 a full sale will be achieved at a cost of 829 million.

The operation is approved, according to the EU Commission, “subject to full compliance with the corrective measures proposed by Lufthansa and MEF.” For months, European institutions have been conducting an in-depth investigation into the deal. “Lufthansa and ITA,” the Commission said in a statement, “operate an extensive network of routes from their hubs in Austria, Belgium, Germany, Switzerland, and Italy. Their activities are largely complementary, as they operate from different hubs in Central Europe and Italy, respectively. Lufthansa has joint ventures with United Airlines and Air Canada for transatlantic routes and with All Nippon Airways (ANA) for routes to Japan. Although ITA is performing well today, without this transaction, its long-term viability as an independent carrier would remain very uncertain.”

On the other hand, however, there was a risk that antitrust rules would be violated, reducing competition in the European airline market. For this reason, Lufthansa and MEF have committed to sell some assets on public routes to competing companies, in particular on the Rome – Milan route and on routes between some central European and Italian airports other than Rome and Milan. Similar commitments have been made on intercontinental routes. Slots will also be sold at Milan’s Linate Airport, the closest to the city and crucial for business transportation to major European cities.

“At a time when consumers are facing ever-higher airfares, it is essential to maintain competition in the sector,” commented Margrethe Vestager, head of European competition policy. “For this reason, we evaluated the acquisition very carefully. We needed to avoid passengers ending up paying more or getting less and lower quality air transportation on some routes to and from Italy. The package of measures proposed by Lufthansa and MEF for this cross-border agreement fully addresses our competition concerns.”