Court OKs Air Berlin takeover deals by Lufthansa, easyJet

(CN) — The takeover of bankrupt Air Berlin four years ago by German airline Lufthansa and British low-cost carrier easyJet did not give them unfair market dominance, the European Union's second-highest court found on Wednesday.

The European General Court's decision is a loss for Poland's national carrier LOT. The Polish airline challenged the takeover deals, arguing they broke the EU's rules governing fair competition. The ruling was not immediately available in English.

The European Commission, the EU's executive body, approved the mergers in December 2017, prompting several airlines to complain Lufthansa was being allowed to become too big as it bought up many of Air Berlin's assets, including airplanes and airport slots.

Air Berlin was Germany's second-largest carrier but it was struggling with debts and losses, failing to make a profit in a market being transformed by low-cost airlines and the entry of non-European competitors.

Its collapse was assured after Etihad, the United Arab Emirates' flag airline and Air Berlin's largest shareholder, ceased providing the German airline with loans. It filed for bankruptcy in August 2017 and ceased operations in October, causing waves across Europe's aviation market.

The European Commission then quickly gave the green light to Lufthansa and easyJet to buy many of Air Berlin's assets and hire thousands of its employees.

In May 2018, LOT sued the commission in the General Court, arguing that it had not properly assessed how the deals would affect the aviation market and competitors.

On Wednesday, the court dismissed LOT's case and said the commission had correctly assessed that it was unclear if Lufthansa and easyJet would gain unfair market advantages by buying Air Berlin's assets.

The court noted that EU competition rules give the commission a “margin of discretion” in assessing complex economic deals such as those involving the takeover of Air Berlin and its subsidiaries, Niki and LGW airlines.

Also, the court said the deals did not give Lufthansa and easyJet an inappropriately large number of airport slots and noted “the low rate of congestion” at the airports where they gained slots. The companies purchased slots at Dusseldorf, Zurich, Hamburg, Munich, Stuttgart and BerlinTegel airports. The commission made Lufthansa give up a lot of Air Berlin's slots at Dusseldorf as part of the takeover.

LOT said it was reviewing the ruling. The company did not say whether it will appeal to the EU's highest court, the European Court of Justice.

Air Berlin began operations in 1978 as an American-owned luxury carrier taking sun-seekers in West Berlin to holiday destinations in Europe. After the collapse of the Berlin Wall, the company was taken over by German owners and expanded into a major carrier.

Courthouse News reporter Cain Burdeau is based in the European Union.

Follow @cainburdeau

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