Commission clears proposed takeover of Austrian Airlines by Lufthansa, subject to conditions

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28-Aug-2009 The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of Austrian Airlines by Deutsche Lufthansa AG of Germany.

The decision is conditional upon the implementation of a set of remedies offered by Lufthansa to remove the Commission's competition concerns. The Commission's in-depth investigation, opened on 1 st July 2009, indicated that the transaction, as originally notified, would have led to competition concerns on a number of routes. The in-depth investigation enabled the Commission to reduce the number of routes where it was concerned that the transaction would result in consumers being faced with reduced choice and likely higher prices to the routes Vienna-Frankfurt, Vienna-Munich, Vienna-Stuttgart, Vienna-Cologne and Vienna-Brussels. Lufthansa submitted commitments which have removed these competition concerns on all these routes.

Competition Commissioner Neelie Kroes said: “ This case shows that consolidation in the airline sector is possible with proper remedies to safeguard consumers' interests ”.

Lufthansa is the largest German airline with hubs at Frankfurt and Munich airports. Lufthansa also controls Swiss, Air Dolomiti, Eurowings and Germanwings. Lufthansa recently acquired British Midland and SN Brussels Airlines. Austrian Airlines is Austria’s largest airline with its hub in Vienna. Its subsidiaries include Lauda Air and Tyrolean Airways. Both parties are members of the Star Alliance.

After the Commission had opened an in-depth inquiry on 1 July 2009, Lufthansa submitted a comprehensive set of remedies. This remedies package includes commitments to offer slots, according to an efficient and timely slot allocation mechanism. This will allow new entrants to operate flights or existing competitors to improve and expand their services on the routes where the Commission's investigation confirmed competition concerns, namely the routes from Vienna to Frankfurt, Munich, Stuttgart, Cologne and Brussels. New entrants will, under certain conditions, also obtain grandfathering rights over the relevant slots, once a route has been operated by them for a pre-determined period of time. The remedy package further foresees ancillary measures, in particular participation in Lufthansa's Frequent Flyer Programme.

The Commission’s investigation showed that these commitments address the problem of slot congestion as a main barrier to entry on the five routes with competition concerns and are likely to attract the entry of new operators or expansion of existing operators on these routes and thereby maintain effective competition to the benefit of passengers.