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From Antitrust Law Daily, May 13, 2015

Challenge to Lufthansa’s acquisition of Austrian Airlines rejected by European Union General Court

By Greg Hammond, J.D.

The General Court of the European Union refused to nullify the European Commission’s approval of Deutsche Lufthansa AG’s acquisition of Austrian Airlines AG. Austrian low-cost airline Niki Luftfahrt GmbH challenged the decision, but could not cast doubt on the EC’s authorization to approve the transaction (Niki Luftfahrt GmbH v. European Commission, Case Nos. T-511/09 and T-162/10).

Austria decided to privatize Austrian Airlines in 2008 by selling its majority shareholding of 41.56 percent. Lufthansa’s bid proposed: (1) a purchase price of €366,268.75; (2) a debtor warrant that was capable of giving rise to an additional payment of up to €162 million in the event Austrian Airline’s financial condition improved; and (3) a subsidy of €500 million paid by the Austrian State through a securitization structure to be used to increase Austrian Airlines’ capital.

The EC, in two decisions, approved Lufthansa’s proposed acquisition of Austrian Airlines, subject to certain conditions. Specifically, both Lufthansa and Austrian Airlines were required to respect their commitments, the approval was subject to full implementation of the restructuring plan, and the restructuring aid that was included in the negative purchase price was to be paid by Lufthansa.

Niki challenged the EC’s approval decisions, seeking annulment before the General Court. The court dismissed Niki’s actions, however, finding that the airline: (1) unsuccessfully refuted the EC’s finding that the compatibility of Lufthansa’s acquisition of Austrian Airlines with EU competition law gave rise to serious doubts concerning certain routes; (2) failed to demonstrate that the commitments proposed by the merging parties were insufficient to dispel those doubts; and (3) failed to show that the EC erred in finding that the state aid granted to Austrian Airlines was compatible with EU law on State aid.

Companies: Austrian Airlines AG; Deutsche Lufthansa AG; Niki Luftfahrt GmbH

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