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EU blocks Greek airline merger over monopoly fears

BRUSSELS, Jan 26, 2011 – Europe\’s competition watchdog used a rare veto Wednesday to block a merger between Greece\’s biggest carriers, Olympic Air and Aegean Airlines, saying it would create a quasi-monopoly.

The tie-up would have led to a near total domination by the new airline between Athens and Greece\’s second biggest city, Thessaloniki, and between the capital and eight island airports, the commission said.

"This would have led to higher fares for four out of six million Greek and European consumers travelling on routes to and from Athens each year," the European Commission said.

Europe\’s competition watchdog seldom uses its veto on mergers: the last time it blocked one was in 2007, when it barred Irish low-cost airline Ryanair from taking over national competitor Aer Lingus.

Olympic Air and Aegean Airlines announced in February 2010 plans to merge into a single listed company that would take the name Olympic Air and become a "national champion" in the airline business.

The Commission said in a statement that together the two carriers control more than 90 percent of the Greek domestic air transport market.

Its investigation into the planned merger "showed no realistic prospects that a new airline of a sufficient size would enter the routes and restrain the merged entity\’s pricing," it added.

It also said that the companies had offered to cede take-off and landing slots at Greek airports.

"But Greek airports do not suffer from the congestion observed at other European airports in previous mergers or alliances," it remarked.

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European competition commissioner Joaquin Almunia decided in July to launch an in-depth investigation into the deal and in November expressed concerns, saying there were similarities with the failed Ryanair-Aer Lingus merger.

The commission has only blocked 20 mergers since 1990 out of thousands of deals it has reviewed.

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