1.   INTRODUCTION

1.

On 30 November 2023, the Commission received a notification of a proposed concentration by which Deutsche Lufthansa AG (‘Lufthansa’) and the Ministry of Economy and Finance of Italy (‘MEF’) will acquire joint control (2) within the meaning of Article 3(1)(b) and 3(4) of the Merger Regulation (3) over Italia Trasporto Aereo S.p.A. (‘ITA’) (together with Lufthansa and MEF, the ‘Parties’) by way of a purchase of shares (the ‘Proposed Transaction’).

2.

Lufthansa and ITA are active in the supply of scheduled passenger air transport services and scheduled cargo air transport services.

3.

Lufthansa is the holding company of the Lufthansa Group, headquartered in Cologne, Germany, and operates hubs in Frankfurt, Munich, Brussels, Zurich and Vienna.

4.

ITA is an Italian airline company, created by the Italian State on 9 October 2020, which is active worldwide and operates hubs in Rome-Fiumicino and Milan-Linate airports. ITA is wholly owned by the MEF.

2.   PROCEDURE

2.1.   Pre-notification phase and request for derogation

5.

Between March and November 2023, the Commission and the Parties held pre- notification discussions.

6.

On 22 June 2023, Lufthansa and ITA requested the Commission to allow certain steps toward the integration of Lufthansa and ITA prior to clearance, in derogation from the suspension obligation pursuant to Article 7(1) of the Merger Regulation.

7.

On 7 August 2023, the Commission adopted a Statement of Objections on that derogation request, in which it preliminarily considered that Lufthansa and ITA’s envisaged measures (i) would have amounted to an important step towards the integration of Lufthansa’s and ITA’s activities, thereby falling under the suspension obligation of Article 7(1) of the Merger Regulation, and (ii) did not meet the conditions set out in Article 7(3) of the Merger Regulation.

8.

On 21 August 2023, Lufthansa and ITA withdrew their request for derogation.

2.2.   Phase I remedy proposal and Article 6(1)(c) decision

9.

On 8 January 2024, the Parties proposed commitments under Article 6(2) of the Merger Regulation. These commitments were not market tested as the Commission considered that they did not address all areas of preliminary competition concerns that had been identified by the Commission.

10.

On 23 January 2024, the Commission adopted a decision to initiate proceedings pursuant to Article 6(1)(c) of the Merger Regulation (the ‘Article 6(1)(c) decision’), as the Commission’s first phase investigation raised serious doubts as to the compatibility of the Proposed Transaction with the internal market and the commitments proposed by the Parties on 8 January 2024 were not sufficient to address the Commission’s preliminary competition concerns.

11.

On 5 February 2024, the Parties submitted written comments to the Article 6(1)(c) Decision.

2.3.   Statement of objections

12.

On 25 March 2024, the Commission adopted a statement of objections (the ‘SO’), which was formally notified to the Parties on 26 March 2024. The SO concluded, on a preliminary basis, that the Proposed Transaction would have significantly impeded effective competition in a substantial part of the internal market.

2.4.   Reply to the SO and oral hearing

13.

On 11 April 2024, the Parties submitted their reply to the SO, in accordance with the deadline set by DG Competition. The Parties requested to develop their arguments at an oral hearing.

14.

The oral hearing took place on 19 April 2024.

2.5.   Extension of the time limit

15.

On 26 April 2024, the Commission decided to extend the procedure by a total of 5 working days in accordance with Article 10(3) second subparagraph, third sentence of the Merger Regulation, with the agreement of the Parties. Accordingly, the legal deadline for a Commission decision was extended until 13 June 2024.

2.6.   Letters of facts

16.

On 29 April 2024, the Commission sent a first letter of facts to inform the Parties about additional factual elements that were not included in the SO, and that supported preliminary conclusions reached by the Commission in the SO (the ‘First Letter of Facts’). On 5 May 2024, the Commission issued a second letter of facts with the same purpose (the ‘Second Letter of Facts’).

17.

The Parties responded to the letters of facts, in accordance with the deadlines indicated by DG Competition, on 6 May 2024 and 14 May 2024, respectively.

2.7.   Access to the file

18.

The Parties were first given access to the file, in connection with the issue of the SO, on 26 March 2024. Subsequent access to the file was provided to the Parties on 26 April, 7 May, 24 May, 20 June and 28 June 2024.

19.

In relation to certain confidential documents relied upon by the Commission in the SO, as well as in the First and Second Letter of Facts, the Parties were provided access in a data room. The data room was opened initially on 26 and 27 March 2024, and re-opened on 9, 17, 18 April 2024 and 2 May 2024.

20.

I have not received any complaints or requests concerning access to the file.

2.8.   Offers of commitments

21.

On 11 April 2024, the Parties submitted commitments in the Phase II investigation, with a view to render the concentration compatible with the internal market pursuant to Article 8(2) of the Merger Regulation (‘Initial Commitments’). The Commission decided not to market test the Initial Commitments, as it considered that they did not address all of the competition concerns raised by the Proposed Transaction and were unlikely to address the competition concerns they were meant to address.

22.

On 6 May 2024, the Parties submitted a second set of commitments (the ‘Second Commitments’), aimed at addressing the preliminary competition concerns arising from the Proposed Transaction. In line with Article 10(3) first subparagraph, second sentence of the Merger Regulation, the deadline for the Commission to take a decision in this case was extended by 15 working days, until 4 July 2024.

23.

On 13 May 2024, the Commission launched a market test in connection with the Second Commitments. The Commission informed the Parties about the results of the market test at a state-of-play meeting held on 23 May 2024.

24.

On 18 June 2024, the Parties submitted a final version of their commitments (the ‘Final Commitments’).

2.9.   Interested third persons

25.

Throughout the proceedings, I admitted 14 entities (undertakings, associations of undertakings, as well as consumer organisations and representatives of employees) as interested third persons, pursuant to Article 5 of Decision 2011/695/EU.

26.

Following the issue of the SO, DG Competition informed all interested third persons about the nature and subject matter of the procedure, in accordance with Article 16(1) of the Merger Implementing Regulation, (4) by providing them with a non- confidential version of the SO on the condition of signing a confidentiality declaration.

27.

Following their request, eight of these interested third persons were admitted to attend the oral hearing. I refused the participation of one, principally due to the lateness of its application.

3.   CONCLUSION

28.

The draft decision declares the Proposed Transaction compatible with the internal market and the EEA Agreement, subject to compliance with the Final Commitments.

29.

Pursuant to Article 16(1) of Decision 2011/695, the Draft Final Report shall consider whether the draft decision deals only with objections in respect of which the Parties have been afforded the opportunity of making known their views. Upon review of the draft decision, I conclude that it does so.

30.

Overall, I consider that the effective exercise of the Parties’ procedural rights has been respected.

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(1)  Pursuant to Articles 16 and 17 of Decision 2011/695/EU of the President of the European Commission of 13 October 2011 on the function and terms of reference of the hearing officer in certain competition proceedings (OJ L 275, 20.10.2011, p. 29) (‘Decision 2011/695/EU’).

(2)  Draft decision, recital 1 and Section 2.3.

(3)  Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ L 24, 29.1.2004, p. 1) (the ‘Merger Regulation’).

(4)  Commission Implementing Regulation (EU) 2023/914 of 20 April 2023 implementing Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings and repealing Commission Regulation (EC) No 802/2004 (OJ L 119, 5.5.2023, p. 22) (the ‘Merger Implementing Regulation’).