Lufthansa has proposed competition conditions for its entry into the Italian state airline ITA Airways in order to get the green light from the EU Commission.

The EU authority has received a proposal for conditions which it is now examining, the EU Commission explained in Brussels on Tuesday. The deadline for an initial decision will therefore be extended from January 15 to January 29. In order to ensure competition in air traffic, Lufthansa has offered to waive traffic rights for half a dozen routes between Milan-Linate airport and Lufthansa hubs, two people familiar with the matter told the Reuters news agency.

In June, Lufthansa reached an agreement with the Italian Ministry of Economy and Finance to purchase an initial 41 percent stake in ITA for 325 million euros. This was followed by months of discussions with the EU competition authority, which has to approve the deal. The authority ensures that the merger does not restrict competition too much to the detriment of consumers and other companies. According to insiders, the two airlines have a dominant market position on the routes between Milan and the Lufthansa hubs in Frankfurt, Munich, Zurich and Vienna.

It remains to be seen whether the concessions will be sufficient for approval by the EU Commission. Italy's Minister of Economy, Giancarlo Giorgetti, stated a few weeks ago that he expected the merger plan to be examined in depth for several months. The Commission has 90 working days to do this. According to insiders, the EU Commission is closely examining the consequences for the market, particularly in the Lufthansa case. This is because in previous takeovers of the German industry leader, such as Austrian Airlines (AUA), the conditions were too weak to prevent monopoly positions on some routes. In order to clear the AUA takeover, Lufthansa had to ensure the use of the traffic rights transferred by presenting another airline as a buyer. The EU competition watchdog could demand the same this time.

(Report by Foo Yun Chee, Ilona Wissenbach. Edited by Olaf Brenner. If you have any queries, please contact the editorial team at frankfurt.newsroom@thomsonreuters.com)