The Bundeskartellamt prohibits Lufthansa for the time being from terminating long-standing cooperation agreements (Special Prorate Agreements, SPAs) with Condor.

Andreas Mundt, President of the Bundeskartellamt: “On this basis Condor passengers from all over Europe can continue to use through tickets for feeder flights operated by Lufthansa and its airlines for Condor long-haul flights. Following an intervention by the Bundeskartellamt, Lufthansa had temporarily suspended its original termination of this business relationship several times for limited periods, most recently until 31 October 2022. We have reached the conclusion that Condor is entitled under competition law to be given access to the feeder flights operated by Lufthansa also after this point in time.”

The Bundeskartellamt also removed several other impediments to competition included in the existing agreements between the airlines as the entitlement to access feeder flights would otherwise have been partly ineffective.

Even after the companies’ recent submissions there is no doubt that Lufthansa is the only airline that can offer a comprehensive network of feeder flights from Europe to the major German hubs Frankfurt, Munich and Düsseldorf. According to the investigations this position cannot be challenged: On the one hand, Lufthansa is the only airline at these airports which offers a network of feeder flights to European destinations, including domestic flight connections in particular. No other airline has a similarly dense feeder flight network. On the other hand, it will not be possible for Condor in the foreseeable future to offer its long-haul passengers a similarly seamless journey by using train or bus services to reach an airport. Even if operating a feeder flight network of its own were economically viable for a comparably small airline, it is currently not foreseeable that such a network could be set up in view of the fact that most of the airport slots at the German hubs have been allocated to Lufthansa.

Due to its dominant position in offering feeder flights Lufthansa is subject to abuse control under competition law and thus has to fulfil special obligations towards other market participants. Also in view of the fact that Lufthansa is increasingly positioning itself in direct competition with Condor in the sector of long-haul tourist flights, especially with Eurowings Discover, the airlines are of different opinions whether to continue the agreements. The number of long-haul routes on which both airlines offer flights, especially in the winter season, has more than doubled between 2019 and 2022, and Lufthansa does not want to promote competition from other airlines by giving them access to its feeder flight network. However, as an airline with strong resources, Lufthansa has many options for effectively competing with Condor in terms of the services offered, and it actually makes use of these options.

The Bundeskartellamt’s assessment is that a sufficient level of competition on the merits and price competition is only possible on the already strongly concentrated indirect long-haul routes if Condor can access the upstream services of Lufthansa, the dominant company on the feeder flight market, against payment based on SPAs. Otherwise, in contrast to its competitors, Condor would not be able to offer seamless long-haul connections from the departure airport to the destination with through-checked baggage and full travel protection in the case of delays or flight cancellations.

If Condor lost customers who wish to use a feeder flight, this would have severe economic consequences both for the company and for competition. The Bundeskartellamt’s investigations have shown that depending on the season, up to 30 per cent of all long-haul passengers use a feeder flight. As a consequence, Lufthansa as a current or potential competitor could have considerable competitive advantages and in some cases even gain a dominant position on almost 80 transfer connections to tourist destinations. Travellers and tour operators would have less choice.

A mere continuation of the agreements that have been used so far is not sufficient to effectively ensure Condor’s entitlement to access feeder flights. For this reason the authority’s decisions will provide Condor with access to more booking classes than before. Moreover, Condor will be able to book seats whenever feeder flights still have considerable free capacities. Under competition law Lufthansa is also not allowed to restrict Condor’s booking and price control by setting rules on booking classes that Condor can offer its long-haul passengers.

Andreas Mundt: “Lufthansa’s new focus on the long-haul tourist flight business will not be affected by the decision. Lufthansa is still free to optimise booking and price control for its own passengers in its own way. However, this may not impede the technical implementation of the entitlement to access.”

The validity of the decision is not limited, but the decision may be subject to revocation. If the market and competition conditions change, the Bundeskartellamt can examine upon request whether, for example, alternative options would then be available to Condor other than Lufthansa’s feeder flight network. It is to be assumed that both companies will continuously examine whether there is scope for such alternatives.

Background:

Lufthansa and its affiliate carriers Austrian Airlines and Swiss Airlines had terminated the SPA effective 1 June 2021. The SPA with Lufthansa’s subsidiary Brussels Airlines was to expire on 28 February 2021. Condor filed a complaint against this termination with the Bundeskartellamt on 6 January 2021. On 21 January 2021, the Bundeskartellamt initiated an abuse proceeding against Lufthansa to examine a possible infringement of Section 19 GWB, Article 102 TFEU and the suspicion of prohibited conduct pursuant to Section 20(1) GWB in conjunction with Section 19(1) and (2) no. 1 GWB. The Bundeskartellamt also initiated a proceeding to impose interim measures pursuant to Section 32a(1) GWB as at the time the abuse proceeding was initiated Lufthansa had in some cases refused to accept Condor’s feeder flight bookings or at least announced its refusal. Already in this provisional proceeding the Bundeskartellamt reached the preliminary conclusion that the termination of the SPAs by the Lufthansa group constitutes an exclusionary abuse pursuant to Sections 19 and 20 GWB and Article 102 TFEU. This proceeding was continued in the principal proceeding following the temporary agreement between Lufthansa and Condor. The preliminary conclusions reached in the summary proceeding have been confirmed by further investigations conducted in the principal proceeding.

The Bundeskartellamt’s decision is not yet final. Lufthansa has one month to appeal the decision to the Düsseldorf Higher Regional Court