Mergers in the passenger air transport services. A new Commission’s investigation

On 29 June 2021, the Commission opened an in-depth investigation to assess under the EU Merger Regulation whether the proposed acquisition of Air Europa by IAG, two of the main providers of scheduled passenger air transport services in Spain, may reduce competition on domestic and international routes to and from the latter.

The transaction was notified on 25 May 2020, at a point in time where the recovery of the aviation sector from the consequences of the coronavirus outbreak was still uncertain. Therefore, despite not being able to determine whether in the long-run Air Europa and IAG would continue to compete on each and every route, according to the Commission the companies remain the closest actual or potential competitors on almost 70 origin and destination (O&D) city pairs within and to/from Spain.

More particularly, the Commission is concerned that the proposed transaction could significantly reduce competition not only on the above-mentioned O&D city-pairs, but also on routes on which other airlines rely on Air Europa’s domestic and short-haul network for their own operations at the Madrid airport and a number of other European ones. Without Air Europa‘s feeder traffic, indeed, some airlines may decide to terminate their services to several international destinations also served by IAG, thereby reducing choices for travellers and removing a significant competition constraint on the routes where the merged entity would hold high market shares.

The Commission has now 90 working days, until 5 November 2021, to take a decision. Despite entering into Memoranda of Understanding (MoU) with two Spanish airlines as potential remedy takers, however, IAG and Air Europa decided not to submit commitments.

Marco Stillo