Aegean Airlines Faces EU Probe of Olympic Air Bid
Stock Chart for Aegean Airlines SA (AEGN)
Aegean Airlines SA (AEGN) faces an in- depth probe into its renewed bid to buy Olympic Air and form Greece’s biggest carrier, two years after the EU blocked a previous attempt over antitrust concerns.
The transaction may lead to price increases and poorer service on several domestic Greek routes out of Athens, where the merged entity would have “a monopoly or an otherwise strong market position,” the European Commission said in an e-mailed statement today. It set a new deadline of Sept. 3 to rule on the deal.
Aegean, based in Athens, said in October it would pay 72 million euros ($93.7 million) for Olympic Air to help the two unprofitable airlines benefit from cost savings and an extended network. The Brussels-based commission in 2011 blocked an attempted merger of the two carriers over concerns they would form a quasi-monopoly with likely increases in passenger fares in Greece.
“We have the duty to ensure that Greek passengers and people visiting Greece can travel at competitive air fares, even more so during challenging economic times,” Joaquin Almunia, the EU’s antitrust commissioner, said in an e-mailed statement.
The commission said its latest investigation also showed that Cyprus Airways (CAIR) “may not continue to act as a viable competitive force on the Greek domestic market in the future.”
“We are confident that we will convince the EC that the benefits to the consumers and the economy from the acquisition are very important,” Roula Saloutsi, a spokeswoman for Aegean, said in an e-mail.
Aegean in March proposed concessions to the EU to allay any concerns and win approval for its renewed bid.
“We will keep discussing for appropriate remedies,” Saloutsi said. The two airlines “together are a mere 28 percent of the total Greek aviation market and they need the synergies and the size to be viable and develop within such a crisis,” she said.
The EU earlier this year blocked Ryanair Holdings Plc (RYA)’s bid for Irish rival Aer Lingus Group Plc (AERL), more than five years after a previous takeover was also banned on concerns it would end competition on some routes.
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