Overview of EU Competition Scrutiny on Iberia and Air Europa
The European Commission has been weighing the Iberia–Air Europa merger for nearly five years, a deal initially announced in 2019. The regulator argues that the proposed consolidation would create one of Europe’s largest aviation hubs, but authorities under Margrethe Vestager, the competition commissioner, remain concerned that the road map Iberia presented to rivals does not guarantee adequate consumer protection. The remedies on the table are meant to ensure that competition persists on key routes and that prices and service levels stay fair for travelers across Europe.
The clock is ticking toward the theoretical deadline for a decision. Iberia has revisited its position from a July 18 submission to Brussels, proposing to divest as much as 52 percent of the routes Air Europa offered in 2023. A list of six potential competitors to absorb these connections was outlined so that the Commission’s competition office could select the best mix. The candidates include Avianca, Binter, Iberojet, Ryanair, Volotea, and World2Fly.
In addition, Iberia has already met several Brussels requirements. It has committed to preserving competition on problematic routes after the deal closes and to ensuring that the carriers taking over the concessions can grow into global competitors rather than limiting themselves to specific point‑to‑point routes. It should be noted that Brussels’ timetable for a decision can stretch if either party requests more time. Still, negotiations have progressed deeply, and the remedies proposed by IAG appear unlikely to change significantly, given their importance to the deal’s viability for the listed companies.
What is Brussels’ stance on the arrangement overall? The Commission argues that the union of Iberia and Air Europa would curb competition on national routes, particularly where no high‑speed rail alternative exists. Routes like Madrid–Bilbao or Madrid–Vigo, currently served only by Iberia and Air Europa, could see reduced competition if Air Europa integrates fully into Iberia, potentially leaving the market with limited rivals.
Other regulatory reviews under European scrutiny
Beyond Iberia and Air Europa, the European Commission’s oversight of concentration deals has grown sharper, touching other major corporate transactions. For instance, Ferrovial’s sale of a portion of its stake in Heathrow Airport has come under close watch. In November 2023, Ferrovial sold a 25 percent stake in FGP Topco, the parent company of Heathrow, for approximately 2.735 billion euros. The buyers include a French private equity fund and Saudi Arabia’s sovereign wealth fund, taking stakes of 15 percent and 10 percent, respectively. The Commission has signaled it will provide guidance on this process no later than August 21, underscoring a broader trend of heightened scrutiny on European assets with strategic importance.
Meanwhile, ACS, through Hochtief, reached an agreement with the German group Thomas-Krenn.AG to form a joint venture that would control half of Thomas-Krenn Project. This arrangement places veto rights on strategic decisions with both parent companies sharing control. Even though this is a smaller deal, it involves multiple entities, so regulators are likely to apply the European concentrations framework. A ruling was expected by August 29, with legal observers noting that the crowded involvement of several players makes it likely to trigger the merger control rules aimed at preventing market distortions.
Central to this landscape is the European Concentrations Regulation, designed to prevent post‑deal dominance that could distort competition in the single market. The regulation gives the Commission authority to approve, condition, or prohibit mergers and acquisitions that could threaten consumer welfare or fair competition. It uses global and European revenue thresholds to determine when a concentration must be evaluated, with penalties and remedies calibrated to deter monopolistic control. The financial thresholds for review can range from several billions of euros to much smaller figures, depending on the specifics of the deal and the sectors involved.
In recent years, particularly after the pandemic, two additional mechanisms have strengthened EU control over concentrations. The Foreign Direct Investments regime monitors investments from outside the EU, while the Foreign Subsidies Regulation oversees state subsidies that could tilt conditions in favor of a domestic activity. Legal experts note that authorities are adopting a more proactive posture, closely examining deals and ready to impose corrective measures when necessary to protect competition and consumer interests.
Differentiating IAG–Air Europa from Heathrow and ACS cases
The key difference between the Iberia–Air Europa deal and those involving Ferrovial or ACS lies in scale and complexity. When the Commission evaluates a concentration, it looks at both the breadth of the affected business and the market share created by the merger. For a large, intricate deal like Iberia–Air Europa, Phase 2 scrutiny is triggered, involving a deeper examination of market dynamics. By contrast, the Ferrovial and ACS cases tend to unfold in Phase 1, with lighter competition burdens, partly because their operational footprints are narrower or easier to assess under the existing rules. The Commission’s approach is further illustrated by comparisons to other deals, such as Orange and MásMóvil, which also navigated the staged review process before a final decision was reached.