Examinations undertaken so far show that Lufthansa's acquisition of shares in Eurowings would lead to a strengthening of its dominant position on the domestic flight market in Germany. The possible positive effects on competition in the European market for regional flights from Germany to neighbouring countries, especially to the hubs of Amsterdam and Paris, do not in any case outweigh the competitive disadvantages within Germany.

The Bundeskartellamt has therefore informed the companies of its intention to prohibit the merger project under the present circumstances. The President of the Bundeskartellamt, Dr Böge stated: "The market position of Lufthansa is so dominant, particularly on the domestic German flight market, that the merger would lead to a significant weakening of competition. The measures proposed by the company to improve competition would mainly affect travel between European destinations and would not be able to outweigh the strengthening of Lufthansa's dominant position within Germany."

The view of the Bundeskartellamt is based on the fact that currently 66 out of 86 routes on which Lufthansa offers domestic German flights are flown without competitors. The merger would remove from the market a further four competing domestic flights offered by Eurowings (Dortmund-Munich, Düsseldorf-Nuremberg, Munich-Paderborn and Nuremberg-Berlin). The only remaining significant competitor, Deutsche BA, would then be in competition with Lufthansa on only seven routes. In view of the considerable market entry thresholds for new competitors, the anticompetitive effect of the merger would be permanent and sustainable.

The new flight connections to Paris, Amsterdam and Milan planned by the company would not lead to any fundamental improvement of competition in the European regional flight market. There would also be a danger that there would be anticompetitive results. Eurowings is a significant partner of Air France and KLM as a feeder airline to the European hubs of Paris and Amsterdam. The tendency would be for the customer's alternatives to Frankfurt as a hub to worsen with the disappearance of Eurowings as an independent airline. That would particularly be the case for feeder flights from Düsseldorf to Amsterdam. The possibilities to offer alternative flight routes to the flight hub of Amsterdam, an airport of strategic importance to KLM, are limited due to the current slot bottlenecks.

Whether it will ultimately be possible to avoid prohibition of the merger will depend, according to Herr Böge, on whether the undertakings concerned propose measures to improve competition. They have the opportunity to submit a statement by 19 March 2001 before a final decision is taken.