COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 16.05 1997 
COM(97) 218 final 
97/0137 (CNS) 
97/0138 (CNS) 
MEMORANDUM FROM THE COMMISSION 
Application of the competition rules to air transport 
Proposal for a 
COUNCIL REGULATION (EC) 
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 
Proposal for a 
COUNCIL REGULATION CEO 
on the application of Article 85(3) of the Treaty to certain categories of agreements 
and concerted practices in the sector of air transport between the Community 
and third countries 
(presented by the Commission) 

MEMORANDUM FROM THE COMMISSION 
Application of the competition rules to air transport 
A. AMENDMENT OF COUNCIL REGULATION (EEC) No 3975/87 LAYING 
DOWN THE PROCEDURE FOR THE APPLICATION OF THE 
COMPETITION RULES 
Background 
1. In 1981 the Commission made a proposal to the Council for a Regulation laying 
down the procedure for the application of the competition rules to air transport, 
and included within the scope of the Regulation international air transport with 
third countries1. In the course of the discussion of the Commission's proposal in 
the Council it became clear that, in order to reach agreement on the proposal, its 
scope would have to be restricted to international air transport within the 
Community, a change which was made at the time of Memorandum No 22 and was 
incorporated in Article 1(2) of Regulation (EEC) No 3975/873. 
2. The Commission's powers to enforce the competition rules in the air transport 
sector by means of fact-finding, taking decisions, imposing penalties and granting 
individual exemptions were initially limited by Regulation (EEC) No 3975/87 to 
international transport between Member States. The Commission's powers did not 
extend either to domestic transport or to transport between a Member State and a 
third country. 
3. In its judgment of 11 April 1989 in the Ahmed Saeed case4 the Court of Justice 
confirmed its judgment in Nouvelles Frontières5 as regards the application of 
Article 85 of the Treaty and ruled that Article 86 of the Treaty is directly 
applicable by national courts, even in the absence of an implementing regulation 
under Article 87 of the Treaty or of action by a Member State cartel authority or 
by the Commission (under Article 88 or Article 89 of the Treaty respectively). The 
Court's judgment means that, where a dominant airline succeeds, other than by 
normal competitive means, in eliminating all price competition, even on a domestic 
or on a Community third country route, this behayiour is to be deemed 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, such discussions or 
agreements are prohibited by Article 85 and hence are automatically void where 
either the authorities in the Member State in which the head office of one of the 
airlines concerned is situated or the Commission, acting under Articles 88 and 89 
respectively, find that they are incompatible with Article 85. The Court also ruled 
that a Member State is in breach of its Treaty obligations if it approves fares which 
1 OJ No C 291, 12.11.198) 
2 
3 COM(84) 72 final or 15 March 1984. 
OJNoL374, 31.12.1987, p. 1. 
4 Case 66/86 11989] ECR 803. 
5 Joined Cases 209-213/84 11986] ECR 1425. 
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). 
4. Since, in respect of both domestic and EC third country air transport, the 
Commission had at that time no power to grant exemptions under Article 85(3) or 
to use normal procedures to rule on abuses of dominant positions under 
Article 86, there was and still is a climate of serious uncertainty in which air 
carriers cannot 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 damages. Moreover, 
prior to the third package of measures liberalizing air transport, which introduced 
via Regulation (EEC) No 2409/926 the freedom in principle to set fares and rates, 
Member States faced comparable uncertainties when approving the fares filed by 
carriers on such routes. In order to establish a framework of certainty, the 
Commission asked the Council to give it the necessary powers to clarify how 
Articles 85 and 86 apply to domestic and extra-Community air transport. 
5. The Commission accordingly proposed again in 19897 that the Council adopt 
regulations extending the scope of its powers to enforce the competition rules so 
as to include domestic and EC third country air transport. 
Air transport within a Member State 
6. The Council having committed itself, within the framework of the third package of 
air transport liberalization measures, to lay down rules on cabotage, it was 
necessary to adopt at the same time measures enabling the Commission to apply 
the competition rules to transport within a Member State. 
7. This induced the Commission to withdraw its 1989 proposal8 in so far as it 
concerned domestic transport and to present, on 25 July 1991, a new proposal for 
a Regulation9 whereby Regulation (EEC) No 3975/87 would also apply 
henceforth to transport entirely within a Member State. The latter proposal was 
adopted by the Council on 23 July 1992 as Regulation (EEC) No 2410/9210. 
Air transport on Community third country routes 
8. The Council has, however, yet to act on the Commission's proposals concerning 
air transport on Community third country routes. 
9. As regards air transport on such routes, the Commission considers that a number 
of new factors have arisen since its 1989 proposals were last examined by the 
Council. In its view, these new factors make it more necessary than ever to 
endow the Commission as of now with the same powers of action vis-à-vis 
transport on such routes as those which are currently conferred on it by 
6 OJ No L 240, 24.8.1992, p. 15. 
7 COM(89) 417 final of 8 September 1989. 
8 OJ No C 248, 29.9.1989, p. 9. 
9 OJNoC225, 30.8.1991, p. 9. 
10 OJ No L 240, 24.8.1992, p. 18. 
Regulation (EEC) No 3975/87 with a view to ensuring compliance with the 
competition rules in the case of air transport between Community airports. 
10. Apart from the reasons which gave rise to a lack of legal certainty back in 1989 
and which still apply today (see points 3 and 4 above), these new factors are 
as follows 
10.1 Liberalization of the internal market 
The regulatory context has changed substantially since the introduction of the 
third package of air transport liberalization measures with effect from 
1 January 1993, with the resulting greater liberalization of the internal aviation 
market, which is to be rounded off by the unrestricted introduction of cabotage 
scheduled for April 1997. 
As one by one the existing regulatory restrictions on the commercial conduct of air 
carriers are removed, competition issues become increasingly pressing. When an 
airline operates in a more competitive environment, experience gained by the 
Commission in other sectors shows the need for more extensive and more effective 
means of coping with this new liberalized regulatory context so as to ensure fair 
competition between operators and to safeguard the interests of consumers. 
It is clear that for some major, mainly non-Community, air carriers, or for certain 
alliances, flights in the Community market are in some cases no more than an 
initial stage in, or a prolongation of, a flight bound for a third country. In such a 
case, intra-Community flights may be organized using the practice of code sharing 
with a partner and are viewed as only one stage in the journey. 
Equipping the Commission with such means of action is essential if the beneficial 
effects of the liberalization process that is under way are not to be partially offset 
by restrictive or abusive conduct on the part of European or non-European 
commercial operators. It would also make it possible to protect more effectively 
and more rapidly, for example by granting interim measures, small and 
medium-sized airlines, which are more often than not Community in origin and 
which might be harmed by such conduct. 
10.2 Weakness of the external aspect 
The liberalization of the Community aviation market, an objective decided on and 
gradually implemented by the Council through the adoption of the three 
liberalization packages, remains fragile, however, inasmuch as the market is still 
incomplete externally. It remains subject to bilateral agreements between 
Community Member States and third countries. These agreements do not normally 
include any mechanism providing for a system of effective application of the 
Community competition rules, whereas some third countries apply their antitrust 
law to routes between themselves and the Community. The existence of these 
agreements is partly responsible for the lack of competitive pressure on the 
Community market, as referred to in the Commission report of 22 October 1996 
on the impact of the third package of air transport liberalization measures11. 
It was to safeguard the internal aviation market and to be able to control the 
impact bilateral agreements might have on the Community market that the 
Commission proposed negotiations with the third countries concerned. This factor 
was instrumental in inducing the Council to issue a brief to conduct Community 
negotiations, first in March 1995 with Switzerland and in June 1996 with the 
United States, and secondly with the associated countries of central Europe, in the 
course of which competition issues were also raised. 
What is more, the Council has already agreed in the past to confer on the 
Commission the power to apply the competition rules on certain Community third 
country routes. The Agreement concluded in 1992 and amended in 199312 
between the Community on the one hand and Norway and Sweden on the other 
included a section on competition. The Agreement establishing the 
European Economic Area, which entered into force on 1 January 1994, replaced 
the above Agreement and likewise includes such a section. 
10.3 Need to create a more structured legal framework in order to make good the 
deficiencies of the present system 
The recent rapid development of a new generation of alliances between air carriers 
covering EC third country (in particular EC-USA) routes having a major impact 
on competition13, notably within the Community market, induced the Commission 
in July 1996 to initiate the procedure provided for in Article 89 of the Treaty in 
respect of some of them with a view to carrying out a thorough examination both 
of their compatibility and of the compatibility of certain restrictive practices which 
they entail with the Community competition rules. 
At the same time as the Commission was initiating the Article 89 procedure, 
two Member States considered it necessary also to initiate a procedure under 
Article 88 of the Treaty in order to rule on the admissibility of two of these 
alliances under the same competition rules. 
A dual examination of one and the same agreement by two authorities, that of a 
Member State under Article 88 of the Treaty, and the European Commission 
under Article 89, is not only costly for the airlines party to the agreement in terms 
of both money and time, but is also a source of great legal insecurity for 
those airlines. 
11 COM(96) 514 final of 22 October 1996. 
12 Council Decision of 22 June 1992 concerning the conclusion of an Agreement between the 
European Economic Community, the Kingdom of Norway and the Kingdom of Sweden on civil 
aviation, OJ No L 200, 18.7.1992, and Council Decision of 22 July 1993 amending that Agreement, 
OJNoL212, 23.8.1993, p. 17. 
13 Such alliances are liable, at least where they involve major operators in a strong market position, to 
make it difficult for operators who are not able to face up to such a dominant position to gain access 
to the market. 
5 
The extension of the scope of Regulation (EEC) No 3975/87 to include 
international air links with third countries would therefore afford airlines the clear 
benefit of a single set of controls as to the legality of their agreement under the 
' Community competition rules according to a much less ponderous and more direct 
procedure than that of Article 89 of the Treaty, without their being any risk of 
conflicting decisions. 
Cooperation agreements between European and US airlines are closely scrutinized 
by the US authorities, who apply their antitrust law to routes between the US and 
the Community, imposing where appropriate conditions on European airlines, 
whereas the Commission has as yet no power to impose any conditions on 
US airlines on the strength of Article 85(3) of the Treaty with a view, if necessary, 
to exempting such agreements. 
At the level of the continent of Europe, the same phenomenon of alliances is likely 
to arise as on EC/US routes. There has also been a sharp increase in the number 
of flights between Member States and other third countries such as Switzerland, 
for example. Any cooperation agreements between air carriers concerning routes 
between Switzerland and the Community or some of its Member States are for the 
time being14 not amenable to Commission control under Regulation (EEC) 
No 3975/87. The Commission can examine them only under Article 89 of the 
Treaty. On 27 November 1996 it decided to initiate a procedure under the latter 
provision in respect of a cooperation agreement concerning such routes with a 
view to examining its compatibility with the competition rules. 
The expected changes in the conditions under which air transport operates in 
eastern Europe following the political and economic transformation that is taking 
place there will probably lead to the conclusion of numerous cooperation 
agreements with European airlines which are liable to have an impact in 
the Community. 
11. The Commission accordingly proposes once more that the Council adopt 
two Regulations which would enable the Commission to apply the Community 
competition rules to air transport on Community third country routes. It presents 
to that end two new proposals which, as is explained in point 21 of this 
memorandum, replace those which it presented in 1989. 
12. The first Regulation would modify Regulation (EEC) No 3975/87 in two ways: 
(i) Deletion of Article 1(2), which limits the scope to air transport between 
Community airports. 
It should be noted that Community competition law would apply only if 
there is an effect on trade between Member States. Such an effect would 
have to be determined on a case-by-case basis. 
14 The present proposals are without prejudice to the agreement on transport, including air transport, 
envisaged between the Community and Switzerland. 
6 
(ii) Addition of an Article providing for consultations and, where necessary, 
negotiations under Council directives in the event of a conflict between 
Community competition law and the laws, regulations or administrative 
provisions of third countries15 or the provisions of air service agreements 
between Member States and third countries. 
B AUTHORIZATION OF THE COMMISSION WITH RESPECT TO THE 
POWER TO GRANT CERTAIN BLOCK EXEMPTIONS 
13. In the context of the various sets of measures liberalizing the internal aviation 
market and the concomitant application of the competition rules applicable to 
airlines, the Council conferred at the same time on the Commission the power to 
adopt block exemption regulations so as to enable air carriers to adapt gradually to 
a more competitive environment. 
14. The Commission's general experience with these block exemptions is that they 
satisfy a genuine need for legal certainty on the part of air carriers and other 
market operators, while providing an incentive to abandon previous, more 
restrictive agreements. Such a need also exists in the case of air transport on 
Community third country routes. 
15. On this basis, were Regulation (EEC) No 3975/87 also to cover air transport 
between the Community and third countries, the Commission considers that it 
should also have the power to grant block exemptions for such links as it may in 
the case of air transport between Community airports pursuant to 
Council Regulation (EEC) No 3976/87, as amended by Regulation (EEC) 
No 2411/9216. 
16. The second Regulation that is proposed to the Council would accordingly 
empower the Commission to grant block exemptions to airline agreements, 
decisions and concerted practices in respect of international air transport between 
the Community and third countries and concerned with joint planning, the 
coordination of capacity and schedules, revenue sharing, the holding of 
consultations on tariffs for passengers with their accompanying baggage in so far 
as they are essential to interlining, the joint operation of a service on a new or less 
busy route, and slot allocation at airports. 
17. This second Regulation is broadly similar to Regulation (EEC) No 3976/87, as 
amended by Regulation (EEC) No 2411/92. However, the list of agreements in 
respect of which the Commission seeks authorization to grant block exemptions 
differs in that, to take account of the situation on certain Community third country 
routes, it includes the sharing of revenue and the coordination of capacity. The 
Regulation also contains an additional provision (Article 7(4)) designed to deal 
with the special situation where breaches of conditions or obligations, or effects 
incompatible with Article 85(3), are due to the laws, regulations or administrative 
provisions of third countries or the provisions of air service agreements between 
15 There is a provision of this type in Council Regulation (EEC) No 4056/86, which lays down detailed 
rales for the application of Articles 85 and 86 to maritime transport, namely Article 9 on conflicts of 
international law. 
16 OJ No L 374, 31.12.1987, p. 9, and OJ No L 240, 24.8.1992, p. 19. 
7 
Member States and third countries. In the case of extra-Community routes, the 
Community is bound to take account of such conflicts of rules and of the need to 
pay due regard to Community law when dealing with them. 
18. The Commission recognizes that restrictions of competition on routes between the 
Community and third countries are likely in certain cases to have direct distortive 
effects within the Community in the same way as restrictions on routes within 
the Community. 
19. It therefore intends to adopt, on the basis of powers to be granted to it by the 
proposed Council Regulation, an implementing regulation granting a block 
exemption subject to compliance with certain conditions and obligations while 
taking account of the situation obtaining as regards the block exemptions currently 
applicable in the sector of air transport between Community airports. Such a block 
exemption would in principle take account of the existing general regulatory 
framework applicable to links with third countries. The said exemption should be 
granted for a limited period and be periodically reviewed as to its scope in view of 
the foreseeable development of a more competitive environment. 
20. It goes without saying that airlines would still be free to conclude other forms of 
cooperation agreement and to notify them to the Commission with a view to 
obtaining the benefit of an individual exemption. 
C WITHDRAWAL OF THE PREVIOUS 1989 PROPOSALS AIMED AT 
APPLYING THE COMPETITION RULES AND AT ENABLING THE 
COMMISSION TO ADOPT BLOCK EXEMPTIONS FOR AIR TRANSPORT 
OPERATIONS BETWEEN THE COMMUNITY AND THIRD COUNTRIES 
21. The two proposals for Regulations presented by the Commission with this 
memorandum fall within a field covered by the European Economic Area and are 
accordingly of relevance to it. They replace those submitted in 1989, as set out in 
document COM(89) 417 final (in Annexes I and III) and presented to the Council 
on 8 September of that year. 
22. The two Commission proposals dating from 198917 are accordingly withdrawn. 
17 OJ No C 248, 29.9.1989. pp. 7 and 10 respectively. 
8 
Proposal for a 
COUNCIL REGULATION (EC) 97/0137 (CNS) 
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 UNION, 
Having regard to the Treaty establishing the European Community, and in particular 
Article 87 thereof, 
Having regard to the proposal from the Commission18, 
Having regard to the opinion of the European Parliament19, 
Having regard to the opinion of the Economic and Social Committee20, 
Whereas Regulation (EEC) No 3975/8721, as last amended by Regulation (EEC) 
No 2410/9222, 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 initially to international air transport between Community airports; 
whereas, following the Council's decision to regulate cabotage as part of the 
third package of air transport liberalization measures and to make air transport operations 
taking place entirely within a Member State also subject to Community liberalization 
measures, measures had to be adopted to enable the Commission to apply the competition 
rules to air transport within a Member State; whereas to that end the Council amended the 
scope of Regulation (EEC) No 3975/87 by Regulation (EEC) No'2410/92 by including in 
it air transport entirely within a Member State; 
Whereas, therefore, the Commission has no means at present of investigating directly 
cases of suspected infringement of Articles 85 and 86 of the Treaty in respect of air 
transport between a Community airport and an airport in a third country and lacks such 
powers to take decisions or impose penalties as are necessary for it to bring to an end 
infringements established by it; 
Whereas practices which affect competition in the area of air transport between the 
Community and third countries may affect trade between Member States; 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; 
18 OJNoC 
19 OJNoC 
20 OJNoC 
21 OJNoL 374, 31.12.1987, p. 1. 
22 OJ No L 240, 24.8.1992, p. 18. 
Whereas Regulation (EEC) No 3975/87 has established a clear and satisfactory legal 
framework for applying the competition rules to air transport between Community 
airports; whereas the scope of that Regulation should therefore be extended to include air 
transport between the Community and third countries; 
Whereas, in view of the characteristics of international air transport between the 
Community and third countries, account should be taken of the fact that the application to 
such transport of the provisions of Regulation (EEC) No 3975/87 may in some cases 
result in conflicts with the laws and rules of third countries or with the provisions of 
international agreements between Member States and third countries applicable to air 
services on the route or routes concerned; whereas it is necessary in such cases to take, 
paying due regard to Community law, appropriate action in accordance with Community 
interests and with Community obligations under international law, 
HAS ADOPTED THIS REGULATION: 
Article 1 
Regulation (EEC) No 3975/87 is hereby amended as follows. 
1. Paragraph 2 of Article 1 shall be deleted. 
2. The following new Article shall be inserted. 
"Article 18a 
Conflicts of rules 
Where the application of this Regulation in a particular case is liable to lead to a 
conflict with provisions laid down by law, regulation or administrative action of a 
third country or with the provisions of air service agreements between a 
Member State and a third country, the Commission shall, at the earliest 
opportunity, hold consultations with the competent authorities of the 
country concerned." 
Article 2 
This Regulation shall enter into force on the day following that of its publication in the 
Official Journal of the European C immunities. 
This Regulation shall be binding in its entirety and directly applicable in all 
Member States. 
Done at Brussels, For the Council 
The President 
10 
Proposal for a 
COUNCIL REGULATION (EC> 97/0138 (CNS) 
on the application of Article 85(3) of the Treaty to certain categories of agreements 
and concerted practices in the sector of air transport between the Community 
and third countries 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, and in particular 
Article 87 thereof, 
Having regard to the proposal from the Commission23, 
Having regard to the opinion of the European Parliament24, 
Having regard to the opinion of the Economic and Social Committee25, 
Whereas Council Regulation (EEC) No 3975/87,26 as last amended by Regulation (EC) 
No 27, lays down the procedure for the application of the rules on competition to 
undertakings in the air transport sector; 
Whereas international air transport between the Community and third countries is at 
present governed by a network of international and bilateral agreements between 
Member States and third countries; whereas many of these agreements encourage or allow 
air carriers to cooperate in matters of commercial importance; whereas in observing these 
agreements air carriers should not infringe the Treaty's competition rules, which apply 
fully to all air transport activities within the scope of Community law; whereas the 
application of the competition rules must nevertheless take account of the desirability of 
dealing with any conflicts of rules, paying due regard to Community law; whereas air 
carriers should be enabled to conduct their business within a framework affording a 
reasonable degree of legal certainty in relation to the competition rules; 
Whereas the Commission should therefore be enabled 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 it is desirable, in particular, that block exemptions be granted for certain 
categories of agreements, decisions and concerted practices; whereas the Commission, in 
close liaison with the Member States, should be able to define precisely the scope of these 
exemptions and the conditions attached to them; 
23 OJNoC 
24 OJNoC 
25 OJNoC 
26 OJNoL374, 31 12 1987, p. 1. 
27 See page . of this Official Journal. 
11 
Whereas there can be no exemption if the conditions set out in Article 85(3) are not 
satisfied; whereas the Commission should therefore have the power to take the 
appropriate measures where an agreement proves to have effects incompatible with 
Article 85(3); whereas it should consequently be able first to address recommendations to 
the parties and then to take decisions; 
Whereas this Regulation is without prejudice to the application of Articles 86 and 90 of 
the Treaty, 
HAS ADOPTED THIS REGULATION: 
Article 1 
This Regulation shall apply to international air transport between the Community and 
third countries. 
Article 2 
1. Without prejudice to the application of Regulation (EEC) No 3975/87 and in 
accordance with Article 85(3) of the Treaty, the Commission may, by Regulation, 
declare that Article 85(1) shall not apply to certain categories of agreements 
between undertakings, decisions by associations of undertakings and concerted 
practices on international air routes between the Community and one or more 
third countries. 
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: 
(a) joint planning of, and coordination of capacity and timetables on, a 
scheduled air service; 
(b) sharing of revenue from a scheduled air service; 
(c) holding of consultations on tariffs for the carriage of passengers with their 
accompanying baggage; 
(d) joint operation of a scheduled air service on a new or less busy route; 
(e) slot allocation at airports and airport scheduling; the Commission shall take 
care to ensure the consistency of these rules with the Code of Conduct 
adopted by the Council. 
3. Without prejudice to paragraph 2, such Commission Regulations shall define the 
categories of agreements, decisions or concerted practices to which they apply and 
shall specify in particular: 
(a) the restrictions or clauses which may, or may not, appear in the 
agreements, decisions and concerted practices; 
12 
(b) the clauses which must be contained in the agreements, decisions and 
concerted practices, or any other conditions which must be satisfied; 
(c) the routes to which they apply. 
Article 3 
A Regulation adopted pursuant to Article 2 shall apply for a specified period. 
It may be repealed or amended where circumstances have changed with respect to any 
factor which was fundamental to its adoption; in such a case, a period shall be fixed 
for modification of the agreements and concerted practices to which the earlier 
Regulation applies. 
Article 4 
Regulations adopted pursuant to Article 2 may include a provision that they apply with 
retroactive effect to agreements, decisions and concerted practices which were in 
existence on the date of the entry into force of such Regulations. 
Article 5 
Before adopting a Regulation, the Commission shall publish a draft thereof and invite all 
persons and organizations concerned to submit their comments within such reasonable 
time-limit, being not less than one month, as the Commission shall fix. 
Article 6 
The Commission shall consult the Advisory Committee on Agreements and Dominant 
Positions in Air Transport established by Article 8(3) of Regulation (EEC) No 3975/87 
before publishing any such draft Regulation and before adopting any such Regulation. 
Article 7 
1. Subject to paragraph 4, where the natural or legal persons concerned are in breach 
of a condition or obligation which attaches to an exemption granted by a 
Regulation adopted pursuant to Article 2, the Commission may, in order to put an 
end to such a breach. 
(a) address recommendations to the persons concerned, and 
(b) in the event of failure by such persons to observe those recommendations, 
and depending on the gravity of the breach concerned, adopt a decision 
that either prohibits them from carrying out, or requires them to perform, 
specific acts or, while withdrawing the benefit of the block exemption 
which they enjoyed, grants them an individual exemption in accordance 
with Article 4(3) of Regulation (EEC) No 3975/87 or withdraws the 
benefit of the block exemption which they enjoyed. 
2. Subject to paragraph 4, where the Commission, either on its own initiative or at 
the request of a Member State or of natural or legal persons claiming a legitimate 
interest, finds that in any particular case an agreement, decision or concerted 
practice to which a block exemption granted by a Regulation adopted pursuant to 
13 
Article 2(2) applies nevertheless has effects which are incompatible with 
Article 85(3) or are prohibited by Article 86, it may withdraw the benefit of the 
block exemption from those agreements, decisions or concerted practices and 
take, pursuant to Article 13 of Regulation (EEC) No 3975/87, all appropriate 
measures for the purpose of bringing these infringements to an end. 
3. Before taking a decision under paragraph 2, the Commission may address 
recommendations for termination of the infringement to the persons concerned. 
4. To the extent that the situation referred to in paragraph 1 or in paragraph 2 results 
from provisions laid down by law, regulation or administrative action of a 
third country or from the provisions of an air service agreement between a 
Member State and a third country, the Commission shall, before withdrawing 
the benefit of the block exemption, apply Article 18a of Regulation (EEC) 
No 3975/87. 
Article8 
This Regulation shall enter into force on the day following that of its publication in the 
Official Journal of the European Communities. 
This Regulation shall be binding in its entirety and directly applicable in all 
Member States. 
Done at Brussels, For the Council 
The President 
14 
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