Monday

13th Jul 2020

Vestager hits back at Lufthansa bailout criticism

  • Commissioner Margarethe Vestager said she is not putting 'extra hurdles' to Lufthansa's state aid (Photo: Kevin Hackert)

EU Commission vice-president Margrethe Vestager on Friday (29 May) hit back by at criticism she is being too tough on the bailout package for Germany's air carrier Lufthansa.

Lufthansa and the German government this week agreed a more than €9bn rescue package, making the German government take a 20 percent stake in the airline, which now requires a green light from commission competition regulators.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • Vestager: 'There is a high risk that if you hold market power, that you are a big, impressive company, and you get a lot of aid, that competition will be disturbed, this is why we ask for a remedy' (Photo: European Parliament)

Vestager said the commission is not "creating extra hurdles" - arguing that companies getting large capital injections from the state have to offset their competitive advantage.

"We are making sure that when any company with market power with a recapitalisation bigger than €250m, that disturbance of competition is being remedied. Because the economy will pick up again, and there will competitors to any company with market power and state recapitalisation, who will compete against this company," Vestager explained to reporters in Brussels.

"It is to be able to balance the situation and make sure that the single market is still working," she said.

"There is a high risk that if you hold market power, that you are a big, impressive company, and you get a lot of aid, that competition will be disturbed, this is why we ask for a remedy," Vestager said.

Lufthansa, meanwhile, has criticised EU regulators for asking the airline to give up some slots at its hubs in Frankfurt and Munich, where it commands a two-thirds market share.

Commission regulators are under pressure to scrutinise huge subsidies governments are now handing out to to help in the coronavirus crisis. Trillions of euros in state aid have already been approved, overall.

German MEP Daniel Caspary, who heads the parliamentary delegation of Germany's ruling Christian Democrats, criticised Vestager for what he sees as the weakening of large European companies.

"It is pathetic that Ms Vestager regularly decides to weaken European companies such as Lufthansa, Alstom, Bombardier in the global market," he tweeted.

The commission last year decided to ban the merger of Germany's Siemens and France's Alstom to create a European railway company, citing concern over rising prices and costs for taxpayers.

Both the French and German governments supported the deal, and some argued that Vestager's interpretation of competition rules hamper European companies' global role.

"Moreover, Vestager has has not been able to tackle the excessive market power of companies like Amazon, Google, Facebook and others on European and international markets. By that, she is harming the #EU's global competitiveness," Caspary argued.

"Commissioner Vestager should immediately approve the Lufthansa rescue package without further requirements," he added.

Low-cost carrier Ryanair, which also received help from the UK government, has challenged the Lufthansa bailout, arguing it would distort competition.

"How can airlines like Ryanair, EasyJet and Laudamotion be expected to compete with Lufthansa in the short-haul market to and from Germany, now that it has €9bn worth of German government subsidies to allow it to engage in below-cost selling or buy up even more competition for the next number of years," Ryanair CEO Michael O'Leary said earlier this week in a statement.

Coronavirus

EU Commission clash with countries over travel refund

Twelve EU countries have asked the commission to temporarily suspend rules that require travel operators to provide cash refunds for cancelled trips. The commission argues consumers have to be protected - and that vouchers should be made more attractive.

Coronavirus

Vestager pushes tracing apps as key for summer holidays

The commissioner for the digital portfolio, Margrethe Vestager, warned that "without the technology, it will be very difficult to open [society] to the degree that we all want" - since new outbreaks might surge back until there is a vaccine.

Michel lays out compromise budget plan for summit

Ahead of expected tense discussions next weekend among EU leaders, European Council president Charles Michel tries to find common ground: the recovery package's size, and grants, would stay - but controls would be tougher.

EU forecasts deeper recession, amid recovery funds row

The economies of France, Italy and Spain will contract more then 10-percent this year, according to the latest forecast by the EU executive, as it urges member state governments to strike a deal on the budget and recovery package.

EU plans tougher checks on foreign takeovers

The EU and its member countries are worried that foreign powers, such as China and its state-owned companies will take advantage of the economic downturn and buy up European firms

News in Brief

  1. Croatia opens for US tourists, defying EU ban
  2. Poll: only 61% of Germans would get Covid-19 vaccine
  3. UK to spend €788m on new UK-EU border control system
  4. Berlin wants first use of EU cyber sanctions on Russia
  5. Erdogan warns neighbours over hydrocarbon reserves
  6. Bulgaria: political crisis amid anti-corruption protests
  7. Pope and Turkish-German leader join Hagia Sophia protest
  8. France and UK create joint migrant intelligence unit

EU forecasts deeper recession, amid recovery funds row

The economies of France, Italy and Spain will contract more then 10-percent this year, according to the latest forecast by the EU executive, as it urges member state governments to strike a deal on the budget and recovery package.

Stakeholders' Highlights

  1. UNESDANext generation Europe should be green and circular
  2. Nordic Council of MinistersNEW REPORT: Eight in ten people are concerned about climate change
  3. UNESDAHow reducing sugar and calories in soft drinks makes the healthier choice the easy choice
  4. Nordic Council of MinistersGreen energy to power Nordic start after Covid-19
  5. European Sustainable Energy WeekThis year’s EU Sustainable Energy Week (EUSEW) will be held digitally!
  6. Nordic Council of MinistersNordic states are fighting to protect gender equality during corona crisis

Latest News

  1. Poland's EU-battles to continue as Duda wins tight vote
  2. EU 'in-person' summit plus key data privacy ruling This WEEK
  3. Let's have positive discrimination for EU stagiaires
  4. We need to do more for our small and medium-sized enterprises
  5. Romania's virus surge prompts queues and new worries
  6. Michel lays out compromise budget plan for summit
  7. Border pre-screening centres part of new EU migration pact
  8. EU 'failed to protect bees and pollinators', report finds

Join EUobserver

Support quality EU news

Join us