Commission blocks Greek airline merger

Almunia says Aegean-Olympic deal would have created “quasi-monopoly”.

The European Commission has prohibited a merger between Aegean Airlines and Olympic Air, saying that it would have virtually eliminated competition in the Greek flight market.

Joaquín Almunia, the European competition commissioner, said the mergers would have led to higher fares for four million European passengers who travel to and from Athens every year.

It is only the third time in six years that the European Commission has prohibited a merger.

Almunia said: “The merger between Aegean and Olympic would have led to a quasi-monopoly in Greece and thus to higher prices and lower quality of service for Greeks and tourists travelling between Athens and the islands.
“It is the duty of the Commission to prevent the creation of monopolies when applying the EU merger control powers conferred on it by the member states.

“My services and myself did our best to find a solution, but unfortunately the remedies offered by the companies would not have adequately protected the interests of the four million consumers that use the routes.”

The companies offered to cede take-off and landing slots at Greek airports, but because they are not congested, the Commission ruled that this would have little effect.

The two carriers control more than 90% of the Greek domestic air transport market and the Commission’s investigation showed no realistic prospects that a new airline of a sufficient size would enter the routes and keep costs down.

Theodore Vassilakis, the chairman of Aegean, said: “Throughout last year we presented to the European Commission the benefits of the merger for our companies, our passengers and our country’s economy.

“We also offered important commitments to safeguard consumers as well as measures to facilitate the entry of new competitors in the domestic market.

“Unfortunately, the Commission decided to prohibit the agreement. An important opportunity for a consolidated representation in the European aviation market has been lost.

“We will adjust and continue. Our track record shows that we can succeed through challenging times.”

The last merger to be prohibited by the European Commission was also between two airlines – Ryanair and Aer Lingus in 2007.

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