Lufthansa stumbled on another road block on its road to acquire a substantial stake in Italian airline ITA from the Italian government, as the European Union antitrust object the operation over competition concerns.
Reuters reported people close to the issue saying that the remedies offered by the German airline are not enough to obtain EU clearance. The antitrust is going to make a decision on July 4 and Lufthansa has until May 19 to present possible remedies.
The EU’s concerns are that the deal will reduce short-haul and long-haul competition in Italy, with less routes connecting the country. Also, regulators believe that the deal will only reinforce ITA’s market share in Milan Linate airport.
Lufthansa told the antitrust that it plans on keeping some competing short-haul routes from ITA, plus it will accept interlining agreements with other airlines to allow passengers to fly using different airlines. In addition, the German company will leave ITA to operate independently for two years and will not seek to integrate it into its joint venture with US’ United Airlines and Air Canada. As for Linate, it offered 40 slots to low-cost airlines easyJet and Volotea.
According to Reuters, the EU is worried on short-haul routes in Germany, Belgium, Switzerland and Austria. Currently the EU is asking feedback from rivals, consumers and travel organisations on the deal. At the moment the Italian government is not considering other options than to sell a 41% stake of ITA to Lufthansa.
