The European Commission conditionally clears the Alitalia/Etihad concentration

The European Commission gave the go ahead to the proposed acquisition of Alitalia by Etihad by accepting a slot remedy package offered by the parties (Case M.7333). The Commission examined the competition impact of the concentration with the O & D pair methodology. It found that the only route on which the activities overlapped to the effect to raise competition problem was the Rome-Belgrade route. Indeed on this link only by Alitalia and Air Serbia, which is jointly controlled by Etihad and the Government of Serbia, operated direct flights. Thus, following the implementation of the merger, Etihad would have a monopoly on this route, and the Commission feared that such monopoly might conduce to higher fares and lower quality. It is not clear, however, whether the Commission's competition concerns are only based on the situation of monopoly (market dominance merger) and/or on the fact that airport of Rome Fiumicino is a congested airport, where there are no available slots for new entrants planning to enter the Rome-Belgrade route and compete with the parties (slot dominance merger).
That said, the Commission accepted a slot remedy, whereby the parties committed to release two daily slots pairs at the airports of Rome Fiumicino and Belgrade to new entrants. More precisely, the remedy offered by the parties fall under the so-called slot remedy packages of new generation. Indeed, apart from the slot divestiture, the parties also offered a number of ancillary behavioral remedies, the purpose of which is to give new entrants an incentive to use the divested slots to enter the market in spite of the strong market position enjoyed by the merged entity. In particular, the accompanying behavioural remedies include the possibility for a new entrant to acquire grandfathering rights after a fixed period of time, to enter a special prorate agreement, a fare combinability agreement and also an interline agreement. Finally, the merging parties offered the new entrants access to their frequent flyer programme of the merging carriers.


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