Brussels is investigating whether it is endangering competition

Brussels · WhyThe European Commission has opened a “comprehensive” investigation to assess whether the purchase announced by IAG (the Iberian trading company) of Air Europe threatens to “reduce” competition in the passenger air transport sector on various EU routes. Brussels highlighted in a statement issued on Wednesday that this could particularly affect the “extensive network of national routes in Spain” owned by the two airlines and short- and long-distance flights, “particularly those whose origin or destination point is in Latin America.” .

Specifically, the Community Executive is concerned about the “Spanish National Roads” that have no alternative to high-speed trains, and about flights to the Iberian Peninsula to the Balearic Islands and the Canary Islands. It is also believed that flight competition from Madrid to some major EU cities or to Israel, Morocco, the UK or Switzerland, where both airlines offer a direct route, may be affected. The same applies to flights from the Spanish capital to Latin America. “They face competition from only a few competitors with non-stop connectivity,” the European Commission says.

In this way, Brussels will investigate whether “the strong combination of time slots occupied by the two companies”, particularly at Madrid Airport, “could hinder the provision of the same air services by other companies”, as well as “the possible effects” of purchases on… Long-haul “one-stop indirect connections” in Latin America, which are also almost exclusively controlled by Air Europe and IAG.

We must remember that this is not IAG's first attempt. In 2021, the company already tried to acquire 80% of Air Europe for $400 million, but failed to get the green light from the European Commission. In fact, Brussels had already made it clear at the time that the concentration it would have required would have a negative impact on competition on routes with origin or destination in Spain and, therefore, it would not have accepted it.

Now, the second attempt will be evaluated by the European Commission within a maximum period of 90 working days (June 7). “We must ensure that the operation does not negatively affect prices or the quality of air transport services in Spain,” said the group's executive vice-president and head of competition, Margrethe Vestager.