EU regulator's block on Lufthansa's deal with Italy's ITA continues

EU anti-trust regulators maintain their objections to Lufthansa's planned minority stake in the Italian airline ITA Airways, the European Commission said on Monday.

The top competition watchdog in the European Union reported concerns that customers could face higher prices and lower quality airline services in and out of Italy due to restricted competition.

The commission first blocked Lufthansa's move to take a minority stake in ITA in January over similar competition issues and opened an investigation into the matter.

Short-haul airline routes between Italy and central European countries were highlighted in the commission's report with Lufthansa and ITA competing on direct and indirect flights.

Limited competition from Ryanair was the alternative for the region, the commission said. Reduced competition on long-haul routes between Italy, Japan, Canada and the United States was also noted. ITA's dominant position at Milan airport would also be reinforced.

ITA was formed in 2020 after a restructuring of the failed Italian flag carrier Alitalia, which the government in Rome took over in March of the same year when various takeover bids failed.

After months of negotiations, Lufthansa agreed with the Italian state last May to take over a minority stake of 41%. In return, ITA is to receive €325 million ($352 million) in equity from Lufthansa.

Lufthansa already operates several hubs with the four airlines that currently comprise its network: Lufthansa, Austrian, Swiss and Brussels Airlines.

Lufthansa and the Italian state may now respond to the commission's report and have until April 26 to suggest solutions to competition issues. A final decision is to come in June.