Lufthansa has submitted a revised package of proposed commitments to the Commission in connection with the planned acquisition of Austrian Airlines. This follows the Commission’s earlier statement that the commitments originally offered were insufficient to overcome competition concerns on a number of routes out of Vienna that could lead to a lack of choice and increased fares for passengers.
Competition Commissioner Neelie Kroes is reported to have instructed her services to draft a conditional clearance decision for the planned merger between Lufthansa and Australian Airlines.
Besides the merger clearance aspects, there are elements of state aid control to be looked at, as the merger goes together with a public takeover offer. This offer is subject to approval by the Commission of €500 million in restructuring aid to be granted to Austrian Airlines by the Austrian government. Nevertheless, there are clear signals that a positive decision is also forthcoming in the financial aid proceedings.
Lufthansa had originally set a deadline of 31 July for the completion of the merger, failing which it threatened to pull out of the deal, but has now asked the Austrian competition authorities for an extension of time up to 31 August in order to complete the transaction.
The Commission’s initial investigation found that the proposed merger transaction would lead to competition concerns with respect to, among others, the routes from Vienna to Frankfurt, Munich, Stuttgart, Cologne, Zurich, Geneva and Brussels. Some third parties remain dissatisfied with Lufthansa's suggestions for remedying these concerns, the opponents of the deal stressing the existence of the aforementioned regional dominance, which would be further enhanced with the takeover of Austrian Airlines. Lufthansa argues that the merger with Austrian airlines will have positive effects on consumer welfare, revenues, costs, employment levels, and existing needs to restructure.