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IP/09/974

Brussels, 22 nd June 2009

Mergers: Commission clears proposed takeover of SN Brussels Airlines by Lufthansa, subject to conditions

The European Commission has approved under the EU Merger Regulation the proposed acquisition of SN Airholding (SNAH), the holding company of the Belgian commercial airline SN Brussels Airlines, by Deutsche Lufthansa AG of Germany. The decision is conditional upon the implementation of a set of remedies, offered by Lufthansa to alleviate the Commission's competition concerns. In January 2009, the Commission opened an in-depth inquiry to further investigate the potential impact of the proposed transaction on passenger transport on a number of routes between Belgium and Germany and Belgium and Switzerland (see IP/09/129 ). The in-depth investigation confirmed that the transaction, as originally notified, would have raised competition concerns on the routes Brussels-Frankfurt, Brussels-Munich, Brussels-Hamburg and Brussels-Zürich. To address these concerns, Lufthansa submitted a set of remedies, offering an efficient and timely slot allocation mechanism that would allow new entrants to operate flights on each of the four routes where the Commission had concerns. In the light of the commitments, the Commission concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Competition Commissioner Neelie Kroes said: “The comprehensive remedies package offered by Lufthansa will facilitate market entry on the affected routes and thereby create alternative choices for passengers. In the light of the current consolidation process in the European airline sector, the Commission takes great care to safeguard the interests of consumers in having a competitive choice of airline services in Europe. "

Lufthansa is a full-service air carrier with hubs at Frankfurt and Munich airports, and a base at Düsseldorf airport. Lufthansa also controls Swiss, based at Zurich airport, Air Dolomiti, Eurowings and low-cost carrier Germanwings. Lufthansa's proposal to acquire bmi was cleared by the Commission on 14 May 2009 (see IP/09/789 ).

SNAH is the holding company of Brussels Airlines, the Belgian commercial airline active in the transport of both passengers and cargo mainly in Europe and to some destinations in Africa.

On 26 January 2009, the Commission opened an in-depth inquiry (see IP/09/129 ) because of concerns related in particular to a number of routes between Belgium and Germany and Belgium and Switzerland.

The Commission's in-depth investigation showed that the merger, as initially notified, would have created a monopoly with respect to the routes from Brussels to Hamburg and Munich. The investigation also identified competition concerns on the routes Brussels-Frankfurt and Brussels-Zurich.

With a view to removing the Commission's concerns, Lufthansa made the commitment to offer slots that would allow new entrants to operate flights on each of the four routes where the Commission identified concerns. These proposed commitments provide for an efficient and timely slot allocation mechanism. Furthermore, any new entrant will obtain grandfathering rights over the relevant slots, once it has operated a route for a certain pre-determined period of time. Ancillary remedies, such as interlining, special prorate or code-share agreements and the participation in Frequent Flyer Programmes are also foreseen.

The Commission’s investigation showed that these commitments make the entry of new operators likely. The remedies not only target the problem of slot congestion, which is an important entry barrier on the problematic routes, but generally enhance the attractiveness for new entry on these routes.

More information on the case is available at:

http://ec.europa.eu/competition/mergers/cases/index/m106.html#m_5335


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