German cartel regulator, The Bundeskartellamt, has prohibited Lufthansa from terminating long-standing cooperation agreements (Special Prorate Agreements, SPAs) with Condor, “for the time being”.
Due to its dominant position in offering feeder flights, Lufthansa is subject to abuse control under German competition law and therefore is required to fulfil special obligations towards other market participants. The regulator noted 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 Bundeskartellamt stated that “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.
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.”
Mundt added: “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 says that it 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.
The Bundeskartellamt’s decision is not yet final. Lufthansa has one month to appeal the decision to the Düsseldorf Higher Regional Court.