Brussels, 26/01/2011 (Agence Europe) - On Wednesday 26 January, the European Commission put a block on the proposed merger between Greek companies Aegean Airlines and Olympic Air, as it would have resulted in a quasi-monopoly on the Greek air transport market. This would have led to “higher prices and lower quality of service” for consumers. The Commission said the proposals put forward by the two companies to resolve this problem were inadequate.
Commission Vice-President Joaquín Almunia, who personally set out the case for journalists, said that the Commission had taken this “difficult” decision to “protect consumers”. It had no other choice but to prohibit the merger which would have resulted in a virtual monopoly (96% of the Greek air transport market) and removed competition on nine important routes, affecting 4 million of the 6 million passengers who use Athens airport annually.
The Commission's investigation found that, after the merger, “there is no prospect that any new player would enter the Greek market after the merger and challenge the new entity”, even despite all the efforts made since 24 June 2010, when the Commission was notified of the operation, to resolve the problem, including extending the deadline for the investigation. The companies offered to release slots at Athens and other Greek airports, but the commissioner said this was not a valid solution, given that, in this case, the problem was not the lack of available slots, but barriers to entry to the market, making it practically impossible for any new players (which also raised the issue of excessively high taxes at Athens Airport) to enter the market.
One option put by the Commission would have seen the two companies cede part of their air fleet or a brand name to a potential market entrant but this did not receive a positive response.
This is only the third refusal of a merger in six years, the previous one being on the proposed takeover of Aer Lingus by Ryanair in 2007, and the first refusal during Almunia's term of office as competition commissioner. (F.G./transl.rt)