The European Commission has opened an in-depth investigation into the proposed acquisition of Air Europa (UX, Palma de Mallorca) by the IAG International Airlines Group via its Iberia (IB, Madrid Barajas) subsidiary, under the concern that the transaction may reduce competition in the Spanish market.

Announced on January 24, 2024, the European Commission’s preliminary investigation indicates that IAG’s acquisition of Air Europa may reduce competition on several domestic, short-haul, and long-haul routes in and out of Spain.

IAG is a multinational airline holding company that owns Iberia, Vueling Airlines, and LEVEL in Spain, as well as British Airways and Aer Lingus in the UK and Ireland.

It presented to the European Commission a second formal proposal to acquire Air Europa in December 2023, after the first one was derailed by the bloc’s antitrust authorities, claiming it would create an excessive market concentration. In this second proposal, IAG offered remedies that would guarantee “strong competition on all routes," and includes acquiring 80% of Air Europa, currently owned by parent Globalia, for EUR400 million euros (USD435 million).

On January 24, Margrethe Vestager, Executive Vice-President in charge of competition policy, said in a statement, “IAG and Air Europa are leading airlines in Spain [...]. With our in-depth investigation, we want to make sure that the transaction does not negatively affect the prices or the quality of passenger air transport services in and out of Spain.”

In particular, the Commission believes this transaction could reduce competition in certain Spanish domestic routes, for example, flights between peninsular Spain and the Balearic and Canary Islands, where there is no high-speed train alternative, but also short-haul routes to EEA cities, and countries such as Israel, Morocco, the UK, and Switzerland. Finally, it also sees an impact on long-haul routes between Madrid and the Americas, where Iberia and Air Europa have an extensive route map and face competition from only a few other competitors.

Additionally, the Commission will look into a possible slot impact at Madrid Barajas, the effects on indirect connectivity, particularly on long-haul routes to South America, and the effect the transaction will have on third-party carriers that rely on access to IAG’s and Air Europa’s domestic and short-haul network.

The Commission has until June 7, 2024 to decide on this proposed acquisition. ch-aviation reached Iberia and Air Europa for comment; they weren’t immediately available.