EU antitrust regulators warned on Monday that Lufthansa’s (LHAG.DE) open-tab offer for a minority interest in Italian rival ITA Airways might hurt competition and result in higher pricing, increasing pressure on the German airline to provide tougher remedies.
The agreement, according to the European Commission, jeopardizes competition on both long- and short-haul routes connecting Italy with the United States, Canada, and Japan, as well as between Italy and nations in Central Europe. Additionally, it would solidify ITA’s hegemonic status at Milan’s principal airport.
In a statement of complaints to Lufthansa, the European Commission expressed its worries, confirming a Reuters report from earlier this month. It is now possible for Lufthansa and the Italian government to propose alternative solutions.
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The agreement, in which Spanish airline Air Europa is being pursued by IAG, the owner of British Airways, highlights the trend of airline sector consolidation.
As part of a capital expansion, Lufthansa intends to pay 325 million euros ($351.46 million) for a 41% share in the state-owned Italian rival.
Reporting from Inti Landauro and Foo Yun Chee
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