EU : formal proceedings against Star and oneworld members

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Antitrust: European Commission opens formal proceedings against certain members of Star and oneworld airline alliances

The European Commission has decided to open two formal antitrust proceedings in relation to cooperation between certain airlines on transatlantic routes. The first investigation concerns both existing and planned cooperation between four current or prospective members of the Star Alliance – Air Canada, Continental, Lufthansa and United. The second investigation relates to proposed cooperation between three members of the oneworld alliance – American Airlines, British Airways and Iberia. The Commission will assess the compatibility of each of these airlines’ cooperation with European rules on restrictive business practices (Article 81 of the EC Treaty and Article 53 of the EEA Agreement).

The Commission has opened two separate investigations. They respectively relate to two sets of agreements between Air Canada, Continental, Lufthansa and United, on the one hand, and between American Airlines, British Airways and Iberia, on the other hand. The agreements provide for the coordination of the airlines' commercial, marketing and operational activities on transatlantic routes (principally routes between the EU and North America). The level of cooperation in question appears far more extensive than the general cooperation between these airlines and other airlines which are part of the Star and oneworld alliances. In particular, the parties to each agreement intend to jointly manage schedules, capacity, pricing and revenue management on transatlantic routes, as well as share revenues and sell tickets on these routes without preference between these carriers. The scope of the Star Alliance investigation covers both the existing transatlantic cooperation between Lufthansa and United and between Lufthansa and Air Canada as well as the proposed four-party agreement between them and Continental.

The Commission is assessing whether these joint activities may lead to restrictions of competition on certain transatlantic routes. In its analysis, the Commission will take into consideration any demonstrated consumer benefits which may arise from the parties’ cooperation.

The opening of proceedings does not imply that the Commission has conclusive proof of an infringement but merely signifies that the Commission will deal with the cases as a matter of priority.

As in any other competition case, the companies will be able to rely on their rights of defence in accordance with the applicable rules.

There is no strict deadline for the Commission to complete inquiries into potentially anticompetitive conduct. Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate with the Commission and the exercise of the rights of defence.

What is the legal base for the decision?

The legal base of this procedural step is Article 11(6) of Council Regulation No 1/2003 and Article 2(1) of Commission Regulation No 773/2004.

Article 11(6) of Regulation No 1/2003 provides that the initiation of proceedings relieves the competition authorities of the Member States of their authority to apply Articles 81 and 82 of the Treaty to the practices under investigation by the Commission. Moreover, Article 16(1) of the same Regulation provides that national courts must avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings that it has initiated.

Article 2 of Regulation No 773/2004 provides that the Commission can initiate proceedings with a view to adopting at a later stage a decision on substance according to Articles 7-10 of Regulation No 1/2003 at any point in time, but at the latest when issuing a statement of objections or a preliminary assessment notice in a settlement procedure. In the two present cases, the Commission has chosen to open proceedings before such further steps.

Source: EC press releases
EU-Memo 09/168 (20/04/2009)
http://europa.eu/rapid/pressReleasesAct ... EMO/09/168