The European Commission on Friday (30 June) said that it was opening an in-depth competition investigation into a planned merger between the Greek carriers Olympic Air and Aegean Airlines.

It said that the merger between Aegean, Greece’s largest airline, and Olympic, the country’s second-largest airline, “could raise significant competition concerns”.

The Commission has the power to ban the merger from taking place, should its investigation validate its concerns. The Commission’s concerns include that the merged company would have a very large market share, and possibly a monopoly, on many domestic routes in Greece. It would also have a large market share or a monopoly on a number of international routes.

The Commission also fears that the merged company could shut competition out of the market for ground-handling services in Greece and that rivals would be unable to compete with the merged airline for lucrative government contracts to run routes that would normally be uneconomical.

Joaquín Almunia, the European commissioner for competition, said: “The Commission must make sure that consumes and businesses will continue to have a competitive choice of airline services in Greece.” He said that this was particularly important given Greece’s “difficult economic circumstances”.  

Fact File

FORCED RESTRUCTURING

Olympic Air was created in October 2009 as part of a Greek government plan to restructure Olympic Airlines, its former national flag carrier. The restructuring was insisted on by the European Commission, which had previously forced Olympic Airlines to pay back aid it had illegally received from the Greek government.

The Greek government decided that, given Olympic Airlines persistent financial difficulties, it should be allowed to fail and be replaced by a privately owned airline, Olympic Air, which could buy up much of the old airline’s assets while not retaining its liabilities.