Wednesday July 1, 08:21 PM
EU probes Lufthansa takeover of Austrian Airlines
BRUSSELS (AFP) - The European Commission on Wednesday put off a ruling on Lufthansa (Xetra: 823212 - news) 's takeover of Austrian Airlines (Vienna: 675054.VI - news) and opened an in-depth probe that could jeopardise the deal, which was opposed by rival airlines.
Competition Commissioner Neelie Kroes announced the decision in a statement, saying there were fears that the takeover deal would lead to an increase in prices for passengers and possibly reduce operations on some routes.
"It is essential that airline consolidation does not deprive consumers of a choice of airlines, competitive prices and other benefits of liberalisation of air transport in the EU," Kroes was quoted as saying.
Lufthansa said it found the announcement "surprising" but was "confident" that it would eventually get approval from EU competition authorities.
"Due to the fact that since many years a joint venture exists between Lufthansa and Austrian Airlines the opening of the in-depth investigation... is surprising for Lufthansa," the airline said in a statement.
A source close to the matter, speaking on condition of anonymity, told AFP earlier: "Lufthansa's offer for Austrian Airlines expires July 31 and if the conditions are not met then they will drop the offer."
Lufthansa signed a deal last year to acquire a 41.6-percent stake in AUA from the Austrian state holding company OeIAG for the symbolic sum of one euro cent per share or just over 366,000 euros (518,000 dollars) in all.
One of the conditions for the deal was an agreement that the Austrian state would absorb 500 million euros -- or just over a third -- of AUA's debts.
But those terms have enraged rival airlines, such as Franco-Dutch carrier Air France (Paris: FR0000031122 - news) -KLM, which had also sought to buy AUA, as well as other airlines such as British Airways (LSE: BAY.L - news) and low-cost carrier Ryanair (Dublin: RY4.IR - news) .
Brussels also has to approve the 500 million euros in Austrian state aid.
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