The European Commission has opened an in-depth investigation to assess, under the EU Merger Regulation, the proposed acquisition of sole control of Air Europa Holding, S.L. (‘Air Europa') by International Consolidated Airlines Group, S.A. (‘IAG'). The Commission has preliminary concerns that the transaction may reduce competition in the market for passenger air transport services on several domestic, short-haul and long-haul routes in and out of Spain.

IAG and Air Europa operate an extensive network of domestic routes in Spain, short-haul routes within the European Economic Area (‘EEA') as well as long-haul routes, in particular to and from Latin America.

The Commission's preliminary concerns

The preliminary investigation indicates that the transaction may reduce competition in the market for passenger air transport services on several domestic, short-haul and long-haul routes. IAG and Air Europa are strong and close competitors in the provision of passenger air transport services on certain routes within, to and from Spain.

In particular, the Commission found that the transaction may reduce competition on:

  • Spanish domestic routes, notably on routes where high speed trains do not provide an alternative, and on routes between peninsular Spain and the Balearic and Canary Islands.
  • Short-haul routes between Madrid and some of the main EEA cities as well as on routes connecting Madrid and Israel, Morocco, the UK and Switzerland, on which both parties offer a direct connection.
  • Long-haul routes between Madrid and North and South America, on which both parties offer a direct connection and face competition from only few other competitors with a non-stop connection.

During its in-depth investigation the Commission will also assess:

  • If the parties' strong slot portfolio, in particular at Madrid-Barajas airport, could make it harder for other carriers to provide airline services.
  • The likely effects of the transaction on indirect connections, in particular on long-haul routes to South America, where either one or both of the parties have a convenient one-stop connection and where non-stop connections are limited.
  • The likely effects of the transaction on routes on which other airlines rely on access to the parties' domestic and short-haul network for their own operations, which could affect their services to international destinations also served by IAG.

The transaction was notified to the Commission on 11 December 2023. The Commission now has 90 working days, until 7 June 2024, to take a decision. The opening of an in-depth investigation does not prejudge the outcome of the investigation.

Companies and products

IAG, headquartered in Spain, is a multinational airline holding company listed on the London Stock Exchange, with secondary listings on Spanish Stock Exchanges. It controls the Spanish carrier Iberia Líneas Aéreas de España, S.A. Operadora and the Spanish low-cost carrier Vueling Airlines, S.A., as well as the UK carrier British Airways Plc, the Irish carrier Aer Lingus Limited, and the Barcelona-based long-haul airline FLYLEVEL UK Limited. IAG is the parent company of IAG Cargo Limited. British Airways and Iberia are members of the oneworld alliance.

Air Europa, headquartered in Spain, and its wholly owned subsidiaries constitute the airline division of Globalia. Globalia is a Spanish tourism group headquartered in Llucmajor, Spain. Air Europa is a member of the SkyTeam alliance.

Merger control and procedure

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).

In addition to this proposed transaction, there are currently 4 on-going Phase II merger investigations: (i) the proposed creation of a joint venture between Orange and MasMovil; (ii) the proposed acquisition of Asiana by Korean Air; (iii) the proposed acquisition of iRobot by Amazon; and (iv) the proposed acquisition of ITA Airways by Lufthansa.

More information will be available on the Commission's competition website, in the Commission's public case register under the case number M.11109.

Quote(s)

IAG and Air Europa are leading airlines in Spain and key providers of connectivity within the country and between Spain, the rest of Europe and Latin America. With our in-depth investigation, we want to make sure that the transaction does not negatively affect the prices or the quality of passenger air transport services in and out of Spain.

Margrethe Vestager, Executive Vice-President in charge of competition policy

Management + GovernmentEurope