EU regulators block merger of Greece's two biggest airlines

 

EU REGULATORS have blocked the proposed merger of Greece’s Aegean Airlines and Olympic, the first veto in more than three years, saying a tie-up would have resulted in higher prices for consumers.

The last deal to be blocked also involved airlines, when the European Commission prevented Ryanair acquiring Aer Lingus in June 2007 because the deal would have meant less choice and higher prices.

Aegean and Olympic, which control more than 90 per cent of the Greek air market, had not offered sufficient remedies to ease competition concerns, the EU watchdog said.

“The merger between Aegean and Olympic would have led to a quasi-monopoly in Greece and thus to higher prices and lower quality of service for Greeks and tourists travelling between Athens and the islands,” EU competition commissioner Joaquín Almunia said.

Aviation and shipping services are crucial for Greeks and tourists because of the country’s more than 1,400 islands.

Tourism receipts, a key earner for recession-hit Greece, fell last year as anti-austerity protests discouraged visitors.

The airlines offered to cede take-off and landing slots in Greece, but the commission said this was not enough, as Greek airports do not suffer from the levels of congestion affecting others in Europe.

The carriers rejected suggestions they should give up part of their fleet or one of their two brand names to new entrants into the market, Mr Almunia said.

Aegean said the brand-name proposal was unacceptable.

“We did not accept conceding one of the two brands or part of the fleet as a remedy, this does not have a precedent in the history of airline mergers,” Aegean’s vice-chairman Eftyhios Vassilakis said.

“The brand names have a huge value, we built ours with hard work during the last 12 years and so did Olympic in the last 50 years.”

Olympic owner Marfin Investment Group criticised the commission’s decision.

“The commission’s decision will have negative consequences for consumers as well as our country’s economy while it will benefit foreign competitors,” Marfin chairman Andreas Vgenopoulos said in a statement. – (Reuters)