LONDON (Reuters) - Britain's competition watchdog will investigate a partnership between British Airways and other airlines on transatlantic routes ahead of the 2020 expiry of a previous deal, the regulator said on Thursday.
British Airways, American Airlines
The Competition and Markets Authority (CMA), however, said it would open an investigation of the agreement, adding that the case is at an early stage and no assumption should be made that partnership infringes competition law.
Shares in IAG
The CMA said it had decided to study the partnership because commitments made by the airlines on six routes after a previous European Union competition investigation is due to expire in 2020.
By that time, the UK will no longer be part of the EU, potentially removing the oversight of the European Commission, prompting the CMA to launch its investigation because five of the six routes involve London.
The CMA said the new investigation would apply both and EU law.
Royal Bank of Canada (RBC) analysts said the planned investigation could affect BA parent firm IAG because it could encourage IAG to take "a more muted response to lifting fares" on Atlantic routes that are key to the company's profits.
It could also deter IAG from any potential takeover of low-cost rival Norwegian
"The CMA review also potentially constrains and complicates scope for a 'rescue' takeover of Norwegian by IAG - maybe opening the field for Lufthansa
IAG Group said in a statement that it would respond to the review.
Compared to the market in 2010, the BA alliance now has a stronger rival after Britain's Virgin Atlantic [VA.UL] and U.S. carrier Delta
(Reporting by Sarah Young; Editing by David Goodman)