The European Commission approved the acquisition of 41% of the controlling stake in ITA Airways by Lufthansa after a lengthy antitrust assessment.
The decision paves the way for the German group to close the acquisition of the stake for a value of 325 million euros, agreed with the Italian Ministry of Finance.
Lufthansa may, if it wishes, expand its stake in ITA to full shares in the future.
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As compensation for the agreement, the German airline and the Italian government agreed to give up routes and slots at the country’s main airports such as Milan Linate and Rome.
The low cost Volotea and easyJet are expected to take on some short-haul routes to Central Europe.
The European Commission also expects ITA Airways to continue to provide competition on long-haul routes to North America, where Lufthansa maintains joint ventures.
The agreement, however, can only be implemented when ITA actually gives up the routes and slots included in the proposal approved by the European Union.
“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,” said Margrethe Vestager, Executive Vice-President in charge of competition policy from European Comission.
Less competition in Europe
The acquisition of part of ITA Airways, which emerged after the bankruptcy of Alitalia, should further concentrate air travel in Europe.
Currently there are three large groups dominating most of the market, IAG, which brings together British Airways, Iberia, Aer Lingus and others, Air France-KLM, which also includes Transavia, and the Lufthansa Group, which has among its subsidiaries the Austrian Airlines and Swiss.
IAG is also in the process of taking over Spain’s Air Europa while the Portuguese government is expected to launch a privatization tender for TAP Air Portugal soon.