European Commission blocks proposed merger between Greek airlines

The European Commission rejected a proposed merger between two Greek Airlines arguing the merger would create a quasi-monopoly. Greek air carriers Aegean Airlines SA and Olympic Air had proposed a tie-up that would have seen them merger their operations.

However, the EU blocked the merger, saying it would have created a quasi-monopoly in parts of the country's air-transport market.
In a statement, the Commission's said its investigation showed no realistic prospects that a new airline of a sufficient size would enter the routes and restrain the merged entity's pricing. The European Commission has antitrust powers within the European Union.

The two Greek firms offered to give up takeoff and landing slots at Greek airports, but these airports aren't as congested as other European airports that were considered in previous mergers or alliances, it added.

As part of its ruling, the commission asked other competing airlines what conditions would attract them to the Greek market and they too were against the idea. At a press conference, Joaquin Almunia, EU Competition Commissioner said establishing a foothold in Athens was almost impossible because of entry barriers that are too high, such as airport taxes.

The commission has blocked only two mergers in the last six and a half years: Ryanair Holdings PLC's bid for Ireland's Aer Lingus Group PLC, and a tie-up in the Portuguese electricity market. It is generally regarded by Brussels lawyers as reluctant to stop deals without very significant reasons.

Commenting on the EU’s decision, Theodore Vassilakis, chairman of Aegean Airlines regretted that a significant opportunity for a consolidated representation in the European aviation market had been lost. However, he reiterated that the Airline would adjust and continue.

Aegean and Olympic had decided on the tie-up in February last year, after the EU commission approved in 2008 a plan to restructure Olympic, Greece's deficit-ridden national carrier, as part of a long-awaited plan to slim down and privatize the airline. Aegean Airlines is publicly-traded, while Olympic Air is part of a group owned by Greece's Marfin Investment Group SA.

Aegean Airlines S.A. is the largest Greek airline by total number of passengers carried. It operates scheduled and charter services from Athens and Thessaloniki to other major Greek destinations as well as to a number of European destinations. Its main base is Athens International Airport. It has its head office in Kifisia, Athens Prefecture.

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