January 25, 2011 8:27 pm

EU to veto Olympic tie-up with Aegean

European antitrust regulators are poised to block a proposed merger for the first time in almost four years.

The decision to give a red light to the planned tie-up between Olympic Airlines and fellow Greek carrier Aegean will be announced on Wednesday by Joaquín Almunia, the EU competition commissioner.

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Separately, Mr Almunia is expected to give a conditional go-ahead to another contentious takeover deal, the $7.7bn purchase of US security software company McAfee by Intel, after the world’s biggest chipmaker offered concessions.

The Greek airline merger will be the first takeover to face outright opposition from EU competition officials since Ryanair was told that it could not acquire rival Irish carrier Aer Lingus in mid-2007.

It has been rare for Brussels to block takeovers recently – although some transactions have been voluntarily withdrawn when faced by official scrutiny and many others have offered concessions in order to win approval.

Between 1994 and 2003, for example, the European Commission blocked 23 mergers out of the more than 2,000 deals notified. But between 2004 and 2010 only two deals were barred.

The Greek airline decision will come seven months after Athens-listed Aegean notified the Commission of its plans to acquire local rival Olympic Airlines. Olympic was, for many years, Greece’s state-owned carrier, but it was privatised and relaunched in 2009 after an earlier tussle with Brussels.

The merger deal was depicted in Athens as a response to the Greek financial crisis and the tough conditions in the airline sector. But Commission officials opened a probe into the proposed tie-up last July and said they were worried that the combined entity would have “very high, if not monopolistic, market shares on all domestic routes and on a number of international routes where both parties operate”. Efforts to resolve those worries through concessions by the carriers have not been successful.

By contrast, Intel – another company which has had past problems with competition officials in Brussels – is expected to have headed off a full probe into its proposed acquisition of McAfee by offering a set of remedies.

This transaction has already been cleared by US regulators. The concessions which the Commission will accept are thought to be designed to reduce Intel’s ability to disadvantage security software from other companies from running on computers that use Intel chips.

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