Lufthansa makes concessions to EU competition authorities in Air Berlin acquisition

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Lufthansa has made far-reaching concessions to European Union (EU) competition authority in order to receive approval for its recent acquisition of Air Berlin, German media reports.

Lufthansa was already Germany’s largest civilian carrier prior to purchasing the insolvent rival Air Berlin and is widely expected to further tighten its grip on the German aviation market.

According to the reports, the Dax-listed firm has now offered to forfeit substantial starting and landing rights held by Air Berlin and its subsidiaries LG Walter and Niki at large airports including Berlin, Duesseldorf and Palma de Mallorca to prevent the emergence of monopolistic structures.

The Commission’s powerful competition authority must grant approval for any corporate merger in the EU where combined annual revenue exceeds 5 billion euros (5.9 billion U.S. dollars). Following its successful bid for Air Berlin, Lufthansa had until midnight on Friday to address any of the Commission’s concerns surrounding excessive market share in writing.

In particular, EU competition authority has voiced unease over Lufthansa’s acquisition of Air Berlin’s profitable Austrian subsidiary Niki. After receiving Lufthansa’s proposal, the Commission has until December 21 to either approve the merger or launch a detailed investigation.

The airlines Condor and IAG (British Airways, Iberia, Vueling) have only recently reiterated their interest in taking over Niki after failing with their bids in the German government’s public tender for Air Berlin.

Lufthansa is currently maintaining the operation of Niki and LG Walter with large credit facilities until a final anti-trust verdict is reached, but has warned that these transfers would be halted immediately if approval for the acquisition was not granted.

The two Air Berlin subsidiaries would then most likely have to be shut down should no other investor agree to their purchase, risking the repayment of an outstanding emergency loan of 150 million euros by the German government.

The European Commission confirmed the receipt of corresponding proposals but was unwilling to provide any detailed information about their content. Lufthansa also declined to comment on the matter.(1 euro = 1.19 U.S. dollars) Enditem

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