Monopoly concerns over Air Berlin sale to Lufthansa

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The potential sale of Germany’s second largest carrier Air Berlin to domestic rival Lufthansa has sparked further criticism over antitrust issues .

“Air Berlin and Lufthansa are direct competitors on many flying routes,” Achim Wambach, chief of the German monopoly commission, warned in the newspaper Rheinische Post. The independent commission is an advisor to the German government on antitrust issues.

“In order to receive regulatory approval for a merger, Lufthansa would have to expect strict conditions and requirements.” Wambach cautioned against reports that the sale was a done deal.

He demanded that Lufthansa renounce a large share of the starting and landing rights held by Air Berlin. The insolvent firm’s flying rights at Berlin and Duesseldorf international airports in particular are considered to be highly-prized assets by aviation experts.

Wambach’s concerns were underlined by the well-known German competition expert Professor Justus Haucap. “I would prefer a Ryanair acquisition (of Air Berlin) to a Lufthansa acquisition,” Haucap told Rheinische Post.

Dublin-based budget airline Ryanair has publicly decried what it views as an “obvious conspiracy between the German government, Lufthansa and Air Berlin.”

The German government had awarded an emergency loan facility of 150 million euros (176 million U.S. dollars) in response to Air Berlin’s insolvency to enable the continued operation of flights until November. Ryanair sees a high-level plot to ensure the sale of Air Berlin’s business to Lufthansa at favorable conditions and “under the exclusion of major competitors.”

“This artificial insolvency has clearly been constructed to enable Lufthansa to acquire Air Berlin without its debt and this contradicts competition rules in Germany and the EU,” Ryanair wrote on its website. Several German media have quoted an unnamed insider saying that the objective of Air Berlin’s insolvency had been to “keep Ryanair out.”

The German government has rejected claims that antitrust regulations were breached as “far-fetched” and expressed confidence that both the loan facility and any final deal would be approved by European Union competition authorities.

Alexander Dobrindt, German minister for transport, wants to use Air Berlin’s insolvency as an opportunity to strengthen the country’s aviation industry.

“We need strong German airports and aviation companies. Now we should grasp the chance to use the 140 planes, the capacities and employees of Air Berlin strategically to improve the position of the German aviation industry on international markets,”Dobrindt told German newspaper Bild last Thursday.

The German Federal Cartel Office (Bundeskartellamt) announced to intensively scrutinize Lufthansa’s plans.”It is clear that we will have to look at this very closely as a competition authority.” Andreas Mundt, President of the Federal Cartel Office said to Sueddeutsche Zeitung, a German newspaper published in Munich.

Mundt noted however so far there was no official notification of an acquisition. According to Air Berlin’s Chief Executive Officer Thomas Winkelmann, the firm is currently negotiating with two other firms alongside Lufthansa for a partial sale of its business.

Winckelmann refused to state any names but voiced optimism that the majority of Air Berlin’s 8,000 jobs would be saved. The brand Air Berlin is unlikely to endure in Winckelmann’s opinion however.

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