Vice President of the European Commission Introductory remarks at the press conference

Joaquín Almunia

Vice President of the European Commission responsible for Competition Policy

Introductory remarks at the press conference on the Aegean Airlines/ Olympic decision

Press conference

Brussels, 26 January 2011

Good morning,

Today, the European Commission has prohibited the proposed merger between Aegean Airlines and Olympic Air, the two largest airlines in Greece.

We took this decision to protect consumers. We are convinced that if we had allowed the merger, consumers would have been harmed as a result.

Prohibition decisions are never easy to take. This is only the third such decision in over six years and the first I take as Commissioner for Competition. The last prohibition also involved two airlines based at the same airport, in the Ryanair/Aer Lingus case of 2007. Our decision was upheld by the General Court last July.

In today's case too, we had no choice but to prohibit.

The airline resulting from the merger would have had a quasi-monopoly of the Greek air transport market. This would have led to higher fares for air passengers in Greece, both Greek and European, and possibly a service of lower quality.

Currently, Aegean and Olympic compete head-to-head on key routes. The proposed merger would have eliminated effective competition on nine crucial routes, such as between Athens and Thessaloniki, Herakleion or Rhodes. As a consequence, over four million passengers who travel on these routes each year would have been directly affected, out of a total of six million who fly to and from Athens.

Our analysis has shown that after the merger, no new player would be able to enter the Greek market and challenge the combined force of these two companies.

We spared no effort to encourage the companies to find adequate remedies to the legitimate competition problems. We granted them an extension of the deadline.

But despite all our efforts, no solution was found.

The remedies offered by the parties - mainly the release of slots in Athens and other airports - could not ensure that customers would not be harmed as a result of this merger.

Unlike in previous airline cases, the problem here was not the availability of slots. There are enough slots available at Athens airport and most other Greek airports. The problem here was that even with slots available, there was no company who would credibly enter the market.

What does this decision say about the future?

Our merger control policy does not change. Prohibition decisions will remain rare since in most cases we are able to accept the solutions proposed by the parties.

Let me remind you that - since 1989 - we have looked into more than 4500 merger cases and took only 20 prohibition decisions.

Our control on mergers does not - and will not - prevent the emergence of strong companies with a global reach.

But we have a duty to prohibit mergers that would significantly reduce competition and make consumers worse off. In the last six years, the Commission has only blocked three such mergers. All three were mergers of close competitors on their domestic, national, markets.

We will continue to allow mergers and other forms of co-operation that bring advantages to airlines and the economy - but not at the expense of consumers.

Today maybe more than ever, Greece needs a competitive and thriving airline sector to boost its trade and tourism and leave the economic crisis behind. We cannot afford that companies place the burden of the crisis onto consumers, charging them higher prices and reducing choice.

I have no doubt that consumers will welcome today's decision