HiH* 
Safe' COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(91) 272 final 
Brussels, 7 August 1991 
Proposal for a 
COUNCIL REGULATION (EEC) 
amending Regulation (EEC) No 3975/87 laying down the 
procedure for the application of the rules on 
competition to undertakings in the 
air transport sector, 
and 
Proposal for a 
COUNCIL REGULATION (EEC) 
amending Regulation (EEC) No 3976/87 on the application 
of Article 85(3) of the Treaty to certain categories of 
agreements and concerted practices in the 
air transport sector 
wm 
(presented by the Commission) 
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A. AMENDMENT TO REGULATION (EEC) No 3975/87 ON PROCEDURE FOR THE 
APPLICATION OF COMPETITION RULES 
1. The Commission's powers to enforce the competition rules in the air 
transport sector by means of fact-finding, imposing orders and 
sanctions and granting individual exemptions is limited, by Council 
Regulation (EEC) No 3975/87<1>, to international transport between 
Member States. The Commission's powers do not extend to either 
domestic transport nor to transport between a Member State and a 
third country. 
2. In its Judgment of 11 April 1989 in the "Ahmed Saeed" case (1) the 
Court of Justice confirmed its Judgment in the "Nouvelles 
Frontières case"(2) as regards the application of Article 85 of 
the Treaty and ruled that Article 86 is directly applicable by 
national courts, even in the absence of an implementing regulation 
under Article 87 or of action by a Member State cartel authority or 
by the Commission (under Article 88 or Article 89 respectively). 
The Court's judgment means that where a dominant airline succeeds, 
other than by normal competitive means, in eliminating competition, 
even on a domestic or on a Community-third country route, this 
behaviour is an abuse contrary to Article 86. Since there is no 
block exemption for airlines to discuss, let alone agree, fares on 
Community-third country routes, the elimination of price 
competition resulting from such discussions or agreements is liable 
to be an abuse of the dominant or joint dominant position which in 
many instances exists on such routes. The Court also ruled that a 
Member State is in breach of its Treaty obligations if it approves 
fares which infringe Article 85 or Article 86. Such would be the 
case for instance where a uniform agreed price structure has 
resulted from consultations which have not been exempted pursuant 
to Article 85(3). 
(1) OJ No L 374, 31.12.1987. 
(2) Judgment of 11 April 1989 in Case 66/86, [1989] ECR 
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3. Since, in respect of both domestic and of EC-third country air 
transport, the Commission has no power to grant exemptions under 
Article 85(3) nor to use normal procedures to rule on abuses of 
dominant position under Article 86, there is now a serious 
uncertainty in which air carriers can not know what practices and 
arrangements they may legitimately engage in on such routes. If, 
even inadvertently, they act unlawfully, they run the risk of 
actions in national courts leading to the payment of compensation. 
Moreover, Member States face comparable uncertainties when 
approving the fares filed by carriers on such routes. In order to 
establish a framework of certainty, the Council should now give the 
Commission the necessary powers to clarify how Articles 85 and 86 
apply to domestic and to extra-Community air transport. 
4. The Commission accordingly proposed(3) that the Council adopt 
regulations extending the scope of its powers to enforce the 
competition rules in respect of domestic and third-country air 
transport. The Council has however not yet acted on that proposal. 
5. Since the Council has committed itself, in the framework of the 
third package of air transport liberalisation measures, to lay down 
rules on cabotage it will be necessary to adopt at the same time 
measures enabling the Commission to enforce the competition rules 
to transport within a Member State. 
6. Therefore the Commission now withdraws its earlier proposal insofar 
as it applied to domestic transport, and makes a new proposal 
(Annex I) consisting in a regulation to delete the limitation to 
international transport within the Community, so that domestic 
transport entirely within a single Member State is also covered by 
Regulation (EEC) No 3975/87. (Annex I). 
(3) C0M(417) final, 8.9.1989. 
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B. AMENDMENT TO REGULATION (EEC) No 3976/87 ON GROUP EXEMPTIONS 
7. The Commission's powers to adopt group exemptions is limited, by 
Council Regulation (EEC) No 3976/87<4>, to International transport 
between Member States. For similar reasons to those set forth 
above, these powers should now be extended to domestic transport 
entirely within a Member State. 
8. As part of the second package of liberalisation measures in the air 
transport sector the Council extended the validity of Regulation 
(EEC) No 3976/87 empowering the Commission to adopt for a limited 
period a number of group exemptions to the competition rules so 
that air carriers could adapt progressively to a more competitive 
envIronment. 
The Commission on that basis adopted three Régulâtions(5): 
- Regulation (EEC) No 82/91 of 26 July 1988 concerning ground 
hand Iing services; 
- Regulation (EEC) No 83/91 relating to computer reservation 
systems for air transport services; and 
- Regulation (EEC) No 84/91 concerning Joint planning and 
coordination of capacity, consultations on tariffs on scheduled 
air services and slot allocation at airports. 
9. The Commission's general experience with these group exemptions is 
that they satisfy a genuine need for legal certainty among air 
carriers and other market operators, while providing an incentive 
to abandon previous more restrictive agreements. 
10. In view of the further liberalisation now proposed, the Commission 
is of the opinion that the same objectives can be pursued after 
31 December 1992. This would imply that, subject to the 
circumstances as they appear at the time, in particular the terms 
(4) OJ No L 374, 31.12.1987. 
(5) OJ No L 10, 15.1.1991. 
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of the third package adopted by the Council, the group exemptions 
will be substantially renewed subject to some tightening of 
conditions (as set out below) which is made desirable by progress 
attained in creating a more competitive environment. The 
possibilities for cooperation to be left to airlines will depend on 
the extent to which the new regulatory framework creates room for 
increased competition. 
11. The Commission intends to make the following changes to the 
existing regulations : 
- replacement of the exemption for capacity discussions by an 
exemption for binding schedule coordination (the exemption for 
non-binding schedule consultations will be maintained); 
- (if appropriate) alignment of the exemption for slot allocation 
discussions on the results of discussions by the Council on 
common rules for slot allocation (subject to the need to ensure 
compatibility of the outcome of the discussions with Article 
85(3) of the EEC Treaty). 
The exemptions for computer reservation systems- and ground 
handling agreements can be renewed without significant changes, 
except for changes necessary to take account of alterations in the 
arrangements of the computer reservation systems. The exemption 
for tariff consultations, including the obligations to interline, 
will be renewed with some minor changes which will not affect the 
substance of air carriers' obligations but will clarify the 
conditions in practice. 
The Commission considers it useful to have power to adopt a group 
exemption in favour of Joint operations on new routes with 
relatively few passengers for limited periods, in line with the 
practice which was developed in individual cases during the past 
few years. 
5* - 6 -
12. In order to secure adoption of the new group exemptions by the time 
the present exemptions expire, on 31 December 1992, the extension 
of Regulation (EEC) No 3976/87 in order to enable the Commission to 
adopt these new group exemptions, should be in place by 30 June 
1992. 
The Commission will then follow the normal procedure provided by 
Regulation (EEC) No 3976/87, i.e. it will invite comments by third 
parties and consult the Advisory Committee on Restrictive Practices 
and Dominant Positions in Air Transport. 
13. The Commission accordingly proposes that the Council adopt a 
regulation modifying Regulation (EEC) No 3976/87 in the following 
ways (Annex II): 
(I) the Regulation would also apply to domestic transport 
i£ entirely within a single Member State; 
È* (il) the Regulation is given an indefinite validity; 
(ill) the possibility of an exemption for joint operations between 
airlines will be provided for; 
(iv) the conditions contained in Article 2(2) of the Regulations 
|j., are deleted, as is appropriate in a regulation of indefinite 
£ . duration; and 
%' (v) a standard clause (new Article 3) is included on the duration 
t and review of the Commission's implementing regulations. 
£-. 
i. *•' 
I\ C. CHANGES TO EARLIER PROPOSAL TO ENFORCE THE COMPETITION RULES IN 
K RESPECT OF DOMESTIC AND THIRD-COUNTRY TRANSPORT 
14. In view of the inclusion of domestic air transport in the proposals 
for a third air transport package, the Commission now limits its 
earlier proposal to enforce the competition rules in respect of 
domestic and third-country transport, to transport to third 
countries . 
As a result, Annex II of the earlier proposal (C0M(89) 417 final, 
OJ No C 248 of 29 September 1989, p. 9) is withdrawn. 
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ANNEX I 
Proposal for a 
COUNCIL REGULATION (EECÏ 
amending Regulation (EEC) No 3975/87 
laying down the procedure for the application of the rules 
on competition to undertakings in the air transport sector 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic 
Community, and in particular, Article 87 thereof, 
Having regard to the proposal from the Commission^) 
Having regard to the opinion of the European Pari lament<2>, 
Having regard to the opinion of the Economic and Social Committee*3^ 
Whereas Regulation (EEC) No 3975/87<4) formed part of a package of 
interrelated measures adopted by the Council as a first step towards 
completing the internal market in transport; whereas its scope was 
accordingly limited to international air transport between Community 
airports; 
Whereas, therefore, the Commission has no means at present of 
investigating directly cases of suspected infringement of Article 85 
and 86 of the Treaty in respect of air transport within a Member State 
and lacks such powers to take decisions or impose penalties as are 
necessary for it to authorise agreements under Article 85(3) and to 
(1) OJ No C 
(2) OJ No C 
(3) OJ No C 
(4) OJ No L 374, 31.12.1987, p.1. 
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bring to an end infringements established by it in relation to 
transport within a Member State; 
Whereas air transport entirely within a Member State now also is 
subject to Community liberalisation measures; whereas it is therefore 
desirable that rules should be laid down under which the Commission, 
acting in close and constant liaison with the competent authorities of 
the Member States, may take the requisite measures for the application 
of Articles 85 and 86 of the Treaty to this area of air transport, in 
situations where trade between Member States may be affected; 
Whereas there is a need to produce a secure and clear legal framework 
for domestic air transport within a Member State, while ensuring a 
coherent application of the competition rules; whereas therefore the 
scope of Regulation (EEC) No 3975/87 should be extended to this area of 
air transport, 
HAS ADOPTED THIS REGULATION : 
r Article 1 
L-, 
I The word "international" is hereby deleted in Article 1(2) of 
r _ 
*-f-. Regulation (EEC) No 3975/87. 
Article 2 
This Regulation shall enter into force on the day following that of its 
publication in the Official Journal of the European Commun!tes. 
This Regulation shall be binding in its entirety and directly 
applicable in all Member States. 
Done at Brussels, For the Council 
The President 
ANNEX II 
Proposal for a 
CWNCIU RE6UIATIQN (EEC) 
amending Regulation (EEC) No 3976/87 
on the application of Article 85(3) of the Treaty to certain 
categories of agreements and concerted practices 
in the air transport sector 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic 
Community, and in particular Article 87 thereof, 
Having regard to the proposal from the Commission*1), 
Having regard to the opinion of the European PaN lament*2), , 
Hav ing regard to the opinion of the Economic and Socla I ComrnltteeC3^, 
Whereas in accordance with Council Regulation (EEC) No 3975/87*4), as 
amended by Regulation (EEC) No (5), the Commission has power 
to implement the competition rules in respect of air transport within a 
Member State; whereas it is therefore desirable to provide for the 
possibility of adopting block exemptions applicable to that area of 
transport; 
(1) OJ No C 
(2) OJ No C 
(3) OJ No C 
(4) OJ No L 374, 31.12.1987, p. 1 
(5) OJ No 
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Whereas Council Regulation (EEC) No 3976/87(6), as amended by 
Regulation (EEC) No 2344/90(7), empowers the Commission to declare by 
way of Regulation that the provisions of Article 85(1) do not apply to 
certain categories of agreements between undertakings, decisions by 
associations of undertakings and concerted practices; 
Whereas the power to adopt these block exemptions has been granted for 
a limited period, expiring on 31 December 1992, during which air 
carriers can adapt to the more competitive environment introduced by 
changes in the regulatory systems applicable to intra-Community 
international air transport; 
Whereas a continuation of block exemptions after that date is justified 
by the further measures to liberalize the air transport sector adopted 
by the Community; whereas the scope of these block exemptions and the 
conditions attached to them should be defined by the Commission, in 
close liaison with the Member States, taking into account changes to 
the competitive environment achieved since the entry into force of 
Regulation (EEC) No 3976/87, 
HAS ADOPTED THIS REGULATION : 
Article 1 
Regulation (EEC) No 3976/87 is hereby amended as follows: 
1. The word "international" is deleted in Article 1. 
2. Article 2(2) is replaced by the following: 
"2. The Commission may, in particular, adopt such regulations in 
respect of agreements, decisions or concerted practices which 
have as their object any of the following: 
(6) OJ No L 374, 31.12.1987, p. 9. 
(7) OJ No L 217, 11.8.1990, p. 15. 
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- joint planning and coordination of airline schedules; 
- consultations on tariffs for the carriage of passengers 
and baggage and of freight on scheduled air services; 
- Joint operations on new scheduled air services; 
- slot allocation at airports and airport scheduling; 
- common purchase, development and operation of computer 
reservation systems relating to timetabling, reservations 
and ticketing by air transport undertakings; 
- technical and operational ground handling at airports, 
such as aircraft push back, refuelling, cleaning and 
security; 
- handling of passengers, mail, freight and baggage at 
airports; 
^, services for the provision of In-flight caterIngv" •*•••'-•• 
3. Article 3 is replaced by the following: 
"Article 3 
A regulation pursuant to Article 2 shall be made for a specified 
period. 
It may be repealed or amended where circumstance have changed with 
respect to any factor which was basic to its being made; in such 
case, a period shall be fixed for modification of the agreements 
and concerted practices to which the earlier Regulation applies." 
4. Article 8 Is deleted. 
- 12 -
Article 2 
This Regulation shall enter into force on 1 July 1992. 
This Regulation shall be binding in its entirety and directly 
applicable in all Member States. 
Done at Brussels, For the Counci 
The President 
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Fiche d'impact sur les PME et l'emploi 
1. OBLIGATIONS ADMINISTRATIVES DECOULANT DE L'APPLICATION DE LA 
LEGISLATION POUR LES ENTREPRISES 
Les compagnies aériennes devront suivre certaines procédures en vue de 
respecter les régies de concurrence. 
2. AVANTAGES POUR L'ENTREPRISE 
L'environnement plus concurrentiel devrait bénéficier tous les 
opérateurs économiques, y compris les PME. En outre les régies de 
concurrence protègent des petites compagnies aériennes contre des 
pratiques abusives éventuelles de la part de concurrents en position 
dominante. 
Les exemptions par catégorie envisagées par la proposition augmenteront 
la sécurité juridique des compagnies qui participent à des accords 
compatibles avec l'article 85 $ 3 du Traité CEE. 
3. INCONVENIENTS POUR L'ENTREPRISE (Coût supplémentaire) 
Non 
4. EFFETS SUR L'EMPLOI 
Non 
5. r *-T~lL EU CONCERTATION PREALABLE AVEC LES PARTENAIRES SOCIAUX ? 
Non 
•m Y A-T-IL UNE ALTERNATIVE *Wim XmfHMGHMm ï^ ^^^^^^^^^^^^^^^^^^ r * ^ 
Non 

ISSN 0254-1475 
COM(91) 272 final 
DOCUMENTS 
EN 08 07 
Catalogue number : CB-CO-91-369-EN-C 
ISBN 92-77-75280-7 
Office for Official Publications of the European Communities 
L-2985 Luxembourg