The problem is that this action could cause customers to pay more and receive a lower standard of service. Before approving the merger of the two companies, the opposition services of the European Commission have identified the concerns and unresolved problems. By June 6 is expected to make the final decision.
Italia Trasporto Aereo S. p. A., dba ITA Airways, is Italy’s emblem provider. It was established in 2020 as the illustrious leader to Alitalia and is owned by the Italian government through the Ministry of Economy and Finance. The airport flies to over 70 scheduled home, German, and international locations
Three possible areas of concern have been identified by the European Commission.
The alliance may lessen opposition on particular short-haul routes connecting Italy and Central European nations, lessen competition on certain long-haul routes connecting Italy and the United States, Canada, and Japan, and strengthen ITA’s standing at Milan-Linate Airport.
ITA – Lufthansa Operation at Risk of Loss
Until the European Commission approves, Lufthansa’s expenditure of 325 million Euros in acquiring a 41 % interest in ITA remains on keep, as do the business synergies between ITA and Lufthansa’s system.
By April 26, 2024, Lufthansa and the Roman Ministry of Economy may offer “remedies” for the opposition problems raised by the ITA-Luhansa integration, as stated in the declaration of complaints.
European Economy Minister Giancarlo Giorgetti criticized the EU Commission on Saturday, March 23 for allegedly obstructing the Lufthansa-ITA deal, saying:” In response to the pending report from Brussels,…
We have been having a ten-month fight with Europe, which prevents us from developing a German champion capable of battling global giants.
In a sharp answer, Margrethe Vestager, Vice President of the European Commission, stated:
Emerging vs. Contest
You will find that many big businesses have been created through merger if you examine the history of consolidation approvals during my ten years at the German Commission. This occurs because it is frequently possible to endorse a merger while maintaining competition.
The German Commission’s report emphasizes that Lufthansa and ITA operate extensive network of roads from their respective centres in Austria, Belgium, Germany, Switzerland, and Italy.
For intercontinental roads, Lufthansa collaborates with United Airlines and Air Canada, and it collaborates with All Nippon Airways.
Joint venture companions coordinate sales, power, planning, and profit sharing.
ITA was control competitors
On January 23, Brussels conducted an in-depth research to see if Lufthansa’s purchase of a stake in ITA might stifle competition in customer air transportation companies to and from Italy.
Following the investigation, the Commission is concerned that the procedure may lead to a decrease in competitors on some short-haul roads connecting Italy to Central European nations.
Lufthansa and ITA engage head- to- head on like routes, principally with direct and indirect flights.
Low-cost companies may be the major competitors on some of these roads, with low-cost companies being the major competitors on some of them. There may also be less competition on long-haul roads between Italy and the United States, Canada, and Japan.
The contract may decrease competition on certain long- haul routes between Italy and the United States, Canada, and Japan, where ITA and Lufthansa, along with their shared venture partners, compete directly or indirectly.
After the merger, the Commission considers the activities of ITA, Lufthansa, and their joint venture partners as those of a single entity.
ITA’s Dominant Milan Hub
This could increase or strengthen ITA’s position as the main airport in Milan-Linate, making it more difficult for rivals to offer passenger air transportation services there.
According to Brussels, millions of passengers travel on these routes each year, and the annual cost is more than 3 billion euros.
The Commission aims to make sure that the operation “does not have negative effects on customers – consumers – and businesses – in terms of price increases or service quality reductions.”
The Commission “freaks that eliminating ITA as an independent airline could negatively affect competition in these already concentrated markets.”
Routes that raise potential concerns only account for a small portion of the total short- and long-haul routes and passengers that both parties and their joint venture partners provide, and potential concerns are unaffected by the vast majority of routings that ITA runs.
Lufthansa is confident that the project will ultimately be approved.
@media ( max- width: 1200px ) {SOURCE: EU puts the ITA’s merger with Lufthansa on hold BY: eTurboNews | eTN
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