The parties informally submitted to the European Commission measures that satisfactorily respond to the competition concerns expressed regarding the transaction that will gradually place ITA under the control of Lufthansa, which is the subject of an in-depth investigation by the Competition Directorate. Firstly, notable progress was made on solutions for short-haul flights, for which an agreement in principle already existed, which was improved by Lufthansa, in particular at Milan Linate. For each route identified as problematic at Milan city airport (not Malpensa) and Rome Fiumicino, a new entrant is expected, which will guarantee the same route, with the same frequency as Ita has today. For example, for Linate-Brussels, a route on which the Lufthansa-Ita combination runs the risk of becoming a monopolist, the new operator will have to guarantee the same number of weekly flights, for a minimum of three years, for each route. Furthermore, and this only applies to Linate, where Lufthansa is particularly strong with around 7% of slots, and where Ita dominates, around 50%, the solution is for the new operator to have a number of slots that will be around the 10-11%, so almost double what Lufthansa has today.
These slots can be used for both problematic and other routes, to ensure that the new entrant has a lasting and solid presence with a base. The new entrant does not have to be just one, but there can also be more than one. It could be Easyjet and Volotea, but we will have to see. Before the completion of the Ita-Lufthansa operation, the presence of the new entrant, or new entrants, must be guaranteed.
On the long haul, towards North America, there are few routes that are problematic for competition: Lufthansa proposed that the ITA routes be managed by a third party operator, a solution that the Commission did not consider sound and therefore unacceptable. Now Lufthansa offers a solution similar to short-haul transport: either there is a new operator that guarantees the same presence, with the same frequency, for at least three years; or, if there is no new entrant that guarantees the direct flight, alternatively two new entrants must arrive, guaranteeing a flight with a stopover, but not lasting more than three hours than the direct flight. It is a remedy that especially protects groups that fly in Economy, as those who fly in Business rarely have budgetary problems. These solutions appear, in the Commission’s opinion, to strike a good balance between the need to protect the market and consumers and allowing Ita to join a larger group such as Lufthansa. The package therefore responds to the concerns expressed by the Commission at the time. For now, these are solutions presented informally, which until now were not enough. But now they are: in the afternoon, the Commission informed the parties that it is addressing competition concerns. Formal appeals must now be presented by the parties. At that time, in the next few hours or tomorrow, the EU executive will officially confirm that it has received the revised solutions, but will not explicitly say whether they are good or not. The formal decision, at this point almost certainly positive barring any surprises, will therefore be taken, as expected, by the 4th of July, but it is unlikely that it will arrive much before the deadline, given that the document must be prepared and there are technical times inescapable.
Source: IL Tempo
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
