On 21 December 2017 the European Commission conditionally approved the proposed acquisition by Lufthansa of certain assets of Air Berlin, through the entity Luftfahrtgesellschaft Walter GmbH (‘LGW’).

Lufthansa originally notified the Commission of its proposed acquisition on 31 October 2017, after entering into a sale and purchase agreement with Air Berlin to acquire:

• air carrier NIKI with its aircraft, crew and slots;

• air carrier LGW, which (prior to Air Berlin‘s insolvency proceedings) was primarily providing feeder traffic for Air Berlin‘s short- and long-haul operations at Berlin and Düsseldorf airports; and

• a collection of additional Air Berlin aircraft, crew and slots at several EU airports. These assets were transferred to LGW.

The Commission assessment was particularly focused on whether the slot portfolio to be acquired by Lufthansa at different airports would allow it to prevent competitors from entering or expanding their presence in the markets for passenger air travel to and from these airports, resulting in higher barriers to entry for airlines and eventually higher fares or less choice for passengers.  The Commission’s investigation found that the increase in Lufthansa‘s slot portfolio at Düsseldorf airport, through the acquisition of LGW, was likely to adversely affect passengers in terms of fares and/or choice of services. The Commission therefore concluded that the acquisition of LGW by Lufthansa would raise competition concerns at Düsseldorf airport.

To address these competition concerns Lufthansa offered a set of commitments, that after a market consultation were improved and submitted again. More precisely, according to the commitments Lufthansa will reduce its acquisition of slots at Düsseldorf airport by limiting the transfer of slots for the summer season to the number of slots used by two aircraft, so that Lufthansa‘s slot holding at Düsseldorf airport would only increase by 1%. 50% of slots at Düsseldorf airport will be held by Lufthansa‘s competitors.

Thanks to the adoption of these final commitments, and provided their full implementation, the Commission has approved Lufthansa acquisition of Air Berlin/LGW.

During the course of the Commission’s merger review process Lufthansa decided to drop its acquisition of NIKI Luftfahrt GmbH (NIKI) as initially proposed given the competition concerns originating from the merger of the two carriers.

Davide Scavuzzo