EUROPEAN COMMISSION
DAILY NEWS
Brussels, 03 July 2024
Commission clears proposed acquisition of stake in ITA Airways by Lufthansa, subject to conditions
The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of joint control of ITA Airways (‘ITA') by Deutsche Lufthansa AG (‘Lufthansa') and the Italian Ministry of Economy and Finance (‘MEF'). The approval is conditional upon full compliance with the remedies offered by Lufthansa and the MEF.
Today's decision follows an in-depth investigation of the proposed transaction, including the sending of a Statement of Objections. Lufthansa and ITA operate an extensive network of routes from their respective hubs in Austria, Belgium, Germany, Switzerland and Italy. Their operations are to a significant extent 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 as well as with All Nippon Airways for routes to Japan. Whilst ITA is performing well today, ITA's long-term sustainability as a stand-alone carrier would have remained highly uncertain absent the transaction.
The Commission's investigation
During its in-depth investigation, the Commission gathered extensive information and feedback from market participants and other stakeholders, including from rival airlines, airports, business customers, consumer and passenger associations, as well as from individual consumers who reached out to the Commission.
Following its market investigation, the Commission had concerns that the transaction, as initially notified, would have:
Reduced competition on a certain number of short-haul routes connecting Italy with countries in Central Europe through non-stop and one-stop flights. On such routes: (i) Lufthansa and ITA compete head-to-head or would have likely competed head-to-head soon; and (ii) competition is limited and comes primarily from low-cost carriers, such as Ryanair, who in many cases operate from more remote airports.
Reduced competition on a limited number of long-haul routes between Italy and the US and Canada. Given that Lufthansa and its joint venture partners United Airlines and Air Canada coordinate on price, capacity, and scheduling, and share revenues, the Commission treats the activities of ITA, Lufthansa and its joint venture partners as those of a single entity when assessing this transaction. ITA and Lufthansa's joint venture partners compete head-to-head with non-stop flights on these routes and competition from other airlines is limited.
Created or strengthened ITA's dominant position at the Milan-Linate airport, which could have made it harder for rivals to provide passenger air transport services from and to Milan-Linate.
The proposed remedies
To address the Commission's competition concerns, Lufthansa and the MEF submitted a remedy package consisting of:
Commitments for short-haul routes: Lufthansa and the MEF will make available to one or two rival airlines the necessary assets to enable them to start non-stop flights between Rome or Milan and certain airports in Central Europe. Remedy takers would need to operate on those routes for a certain minimum period. Lufthansa and the MEF will also ensure that one of those rival airlines will have access to ITA's domestic network to offer indirect connections between certain airports in Central Europe and certain Italian cities other than Rome and Milan.
Commitments for long-haul routes: The merged company will enter into agreements with rivals to improve their competitiveness on the long-haul routes of concern, for instance through interlining agreements or slot swaps. This will lead to increased frequencies of non-stop flights and/or improved connections for one-stop flights on each of the routes. In its assessment, the Commission took into account the fact that the MEF will retain a controlling stake in ITA after the transaction and will continue to have incentives to have ITA compete against Lufthansa's joint venture partners in North America, at least until ITA is integrated into the joint venture.
Commitments for Milan Linate airport: Lufthansa and MEF will transfer take-off and landing slots at Linate airport to the remedy takers for the short-haul routes. The number of slots to be divested exceeds what is necessary to operate the short-haul routes as well as the number of slots that the transaction would have added to ITA's portfolio. This will allow the remedy taker to establish a sustainable base at Linate airport and to potentially offer its own one-stop connections between Italy and Central Europe.
Pursuant to the commitments, Lufthansa and the MEF can only implement the transaction following the Commission's approval of suitable remedy takers for each of the short-haul, long-haul and Milan Linate commitments. The Commission will assess the suitability of remedy takers in the context of a separate buyer approval procedure.
These commitments fully address the competition concerns identified by the Commission.
Therefore, the Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments. Under supervision of the Commission, an independent trustee will monitor their implementation.
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. 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 with All Nippon Airways for routes between the EEA and Japan.
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.
Merger control rules and procedure
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the EU 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 this proposed transaction, there is currently one ongoing Phase II merger investigation: the proposed acquisition of Air Europa by IAG.
For More Information
More information will be available on the Commission's competition website, in the public case register under the case number M.11071.
Quote(s)
At a time when consumers are facing increasingly higher prices for air travel, it is very important to preserve competition in the sector. This is why we have assessed very carefully whether the acquisition of a controlling stake in the new Italian flag carrier ITA by Europe’s largest network carrier Lufthansa would raise competition concerns. We needed to prevent that passengers end up paying more or end up with fewer and lower quality air transport services on certain routes in and out of Italy. The package of remedies proposed by Lufthansa and the MEF on this cross-border deal fully addresses our competition concerns by ensuring that a sufficient level of competitive pressure remains on all relevant routes.
Margrethe Vestager, Executive Vice-President in charge of competition policy
Commission endorses Greece's request for a targeted revision of its recovery plan
Yesterday, the Commission endorsed Greece´s request for a targeted revision of its recovery and resilience plan, which Greece had submitted to the Commission on 5 June 2024. The proposed amendments are technical in nature and follow the comprehensive revision of the Greek plan, which was adopted by the Council on 8 December 2023.
The Greek recovery and resilience plan consists of €35.95 billion, i.e., €17.7 billion in loans and €18.2 billion in grants. The plan includes 381 milestones and targets and covers 75 reforms and 103 investments.
You can find more information on Greece's Recovery and Resilience plan on this page, which features an interactive map of projects financed by the RRF, as well as on the Recovery and Resilience Scoreboard. More information on the process of payment requests under the RRF can be found in this Q&A.
(For more information: Veerle Nuyts – Tel.: +32 229 96302; Quentin Cortès – Tel.: +32 460 76 10 03)
European Commission announces additional €1.2 billion investment package for infrastructure and support to entrepreneurship in the Western Balkans
The European Commission announced the sixth investment package under the EU's Economic and Investment Plan for the Western Balkans that is expected to mobilise €1.2 billion in investments. This package will support eight new flagship investments in water supply and sanitation, wastewater treatment and rail transport, as well as innovation and green transformation in small and medium enterprises. The investments will be rolled out in close cooperation with the Western Balkan partners and international financial institutions.
President of the European Commission, Ursula von der Leyen, said: “Our €30 billion Investment Plan for the Western Balkans is delivering, with this new €1.2 billion package. It strengthens regional connections with quality infrastructure and brings us closer together, which is our ultimate goal. Our Western Balkan partners are building their European future. These investments, along with necessary reforms and access to our Single Market, will prepare our partners' economies to join our Union.”
The €1.2 billion in investment package includes €300 million in EU grants from the Instrument for Pre-accession Assistance (IPA III), additional bilateral contributions from EU Member States and Norway, loans from international financing institutions and contributions from the economies of the Western Balkans. The package was endorsed by the Operational Board of the Western Balkans Investment Framework (WBIF) during the 1-2 July meeting. The new flagship investments fall under three priorities of the Economic and Investment Plan:
Environment and climate: Reconstruction and rehabilitation of water supply and sanitation infrastructure in Montenegro and Bosnia and Herzegovina.
Sustainable transport: advancing on Corridor X rail infrastructure, with the high-speed Belgrade – Velika Plana connection enabling a faster flow of passengers and freight in the region.
Support to the business sector: launch of a new facility for innovation and green transformation of enterprises in the region.
Background
As part of the Global Gateway, the EU's Economic and Investment Plan for the Western Balkans (2021-27) aims to spur long-term recovery, accelerate a green and digital transition, and foster regional cooperation and convergence with the EU. Adopted by the European Commission in October 2020, the Plan mobilises up to €30 billion in investments, including €9 billion in EU grants through IPA III, over the seven-year period. Of this amount, €5 billion has been committed through the WBIF.
So far, the EU has approved programmes set to mobilise up to €17.5 billion in investments under the Economic and Investment Plan, including €5.4 billion in EU grants.
The WBIF is a joint financial platform launched 15 years ago, bringing together the European Commission, financial organisations, EU Member States and Norway, to enhance cooperation in public and private sector investments. It supports the region's socio-economic development and contributes to the European integration of the Western Balkans. Alongside being the main financial vehicle for implementing the EU's Economic and Investment Plan, the WBIF will also play an important role in the implementation of the new €6 billion Reform and Growth Facility for the Western Balkans, which has the double objective to boost socio-economic convergence with the EU and accelerate the accession process. The WBIF will channel €3 billion of grants and loans under the Facility to support priority investments in transport, energy, digital and human capital areas.
Factsheet: Summary of approved projects
Factsheet: EIP
WBIF brochure
Our €30 billion Investment Plan for the Western Balkans is delivering, with this new €1.2 billion package. It strengthens regional connections with quality infrastructure and brings us closer together, which is our ultimate goal. Our Western Balkan partners are building their European future. These investments, along with necessary reforms and access to our Single Market, will prepare our partners’ economies to join our Union.
Ursula von der Leyen, President of the European Commission
The EU’s Economic and Investment Plan for the Western Balkans is being rolled out swiftly, with the shared ambition to bring the region closer to the EU, as the new investment package adopted today demonstrates. The Western Balkans Investment Framework has made a real difference over the last 15 years, including helping the region connecting their road, rail, energy and digital infrastructures, weather the energy crisis and the COVID-19 pandemic. We look forward to continue working with the WBIF as we aim to accelerate the socio-economic convergence of the region with the EU as part of the new €6 billion Reform and Growth Facility and make a difference on the ground for the benefit of the citizens and businesses alike.
Olivér Várhelyi, Commissioner for Neighbourhood and Enlargement
Canada joins the Horizon Europe program
Today at 5:00 p.m. CEST, Iliana Ivanova, Commissioner for Innovation, Research, Culture, Education and Youth, and Francois-Philippe Champagne, Canadian Minister of Innovation, Science and industry, will sign the agreement that gives Canadian researchers and organizations the opportunity to participate in the EU's research and innovation program, Horizon Europe, on an equal footing with their EU counterparts.
Commission President Ursula von der Leyen and Canadian Prime Minister Justin Trudeau announced the conclusion of negotiations for Canada's association with Pillar II of Horizon Europe at the EU-Canada Summit on November 24, 2023 .
Canada will join Pillar II of Horizon Europe, which funds collaborative research projects in a wide range of areas. Canadian entities will now be able to join and lead research consortia with some of the world's best research organizations to tackle global challenges together. They will have the opportunity to be funded directly by the program, while Canada will contribute to its budget.
(For more information: Thomas Regnier — Tel.: + 32 2 299 10 99; Roberta Verbanac — Tel.: + 32 2 298 24 98)
CALENDAR
Wednesday 3 July 2024
College Meeting
Mr Margaritis Schinas in Cascais, Portugal: participates in the EPP Group study days.
The European Commission is committed to personal data protection. Any personal data is processed in line with Regulation (EC) 2018/1725. All personal information processed by the Directorate-General for Communication / European Commission Representations is treated accordingly. If you do not work for a media organisation, you are welcome to contact the EU through Europe Direct in writing or by calling 00 800 6 7 8 9 10 11.
Athanasios ATHANASIOU
Press Officer / Political Reporter
European Commission
Representation in Cyprus
EU House, 30 Vyronos Avenue, 1096 Nicosia
Tel: +357 22 81 75 76 Mob: +357 99 363753
Twitter: @aathans