One day after IAG confirmed that it will not proceed with the purchase of Air Europa, the European Commission, through the Vice-President in charge of Competition, Margrethe Vestager, explained the grounds for the body’s position.
In the statement, the official indicated that since IAG and Air Europa are leading airlines in Spain that dominate connectivity between that country and the Americas, the «in-depth analysis indicated that the merger would have negatively affected competition on a large number of domestic, short-haul, and long-haul routes within, to, and from Spain, on which both airlines compete closely.»
«We were concerned that the transaction could have had adverse effects for passengers, both business customers and consumers, in terms of increased prices or decreased quality of services. IAG offered remedies, but taking into account the results of the market test, the remedies submitted did not fully address our competition concerns,» continued Vestager.
«This is the second time that the Commission has been asked to assess the acquisition of Air Europa by IAG under EU merger control rules, after the first attempt failed in 2021 due to the Commission’s competition concerns. Air Europa is in a stronger position today than it was in 2021, so the challenge of identifying adequate remedies was even greater than in 2021,» she concluded.
In the report announced on April 26, the European Commission had specified that the acquisition of Air Europa would reduce competition on several Spanish domestic routes, especially where high-speed trains are not an alternative and between peninsular Spain and the Balearic and Canary Islands, where IAG and Air Europa compete directly.
A similar situation would occur with European or Middle Eastern routes, where competition is limited or comes from low-cost airlines operating from more remote airports. In the case of transatlantic flights, the European Commission had mentioned that competition would be reduced on several routes, while on others there would be no direct competition or it would be limited due to the high market shares held by IAG and Air Europa.
