Opinion of the Economic and Social Committee on:

- the '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`, and - the 'Proposal for a Council Regulation (EC) 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` () (98/C 95/15)

On 6 June 1997 the Council decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the above-mentioned proposals.

The Section for Transport and Communications, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 19 January 1998. The rapporteur was Mr Decaillon.

At its 351st plenary session held on 28 and 29 January 1998 (meeting of 28 January), the Economic and Social Committee adopted the following opinion by 79 votes to two.

1. The Commission proposal

1.1. Council Regulation (EEC) No 3975/87 (), as amended by Council Regulations (EEC) Nos 2410/92 () and 1284/91 (), restricts the scope of the Commission's remit to ensure compliance with the rules of competition to air transport within the Community.

1.1.1. In EU-third country air transport the Commission has no power to grant exemptions under Article 85(3). Neither can it use normal procedures to rule on abuses of dominant position under Article 86: it relies on Article 89 to introduce such procedures indirectly, thereby generating a legal uncertainty which is damaging to air carriers.

1.1.2. For this reason the Commission is submitting a new draft regulation to delete the provisions limiting the scope of Regulation (EEC) No 3975/87 to intra-Community air transport, so that EU-third country routes would also be covered by the regulation.

1.2. With respect to the amendment of Regulation (EEC) No 3976/87 (), it should be noted that the regulation confers upon the Commission the power to adopt a certain number of block exemptions for a limited period, so as to enable air carriers to adapt gradually to a more competitive environment.

1.2.1. Experience shows that block exemptions satisfy a genuine need for legal certainty on the part of air carriers and other market operators.

1.2.2. The Commission consequently proposes that the Council adopt a regulation so that, 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) does 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.

1.2.3. The Commission would, in particular, be able to 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.

2. General comments

2.1. Air transport is currently undergoing extensive deregulation across the world: it is therefore important to establish common competition rules to be applied by both the European Union and third countries to the links between the two sides. Trends in international air transport are leading airlines to forge alliances and agreements which have important repercussions for competition. Where such alliances and agreements are between Community and third country carriers, a climate of consistency would seem necessary to guarantee a sufficient level of legal certainty throughout the EU.

2.2. The Committee notes the Commission proposals designed to extend the scope of Regulation (EEC) No 3975/87, and enabling the Commission to take exemption measures under Article 85(3) for air transport. Nevertheless, it wonders why the Commission did not specify in its explanatory memorandum (point 17) that the new list of block exemptions was longer than the earlier list included in Council Regulation (EEC) No 3976/87 as amended by Council Regulation (EEC) No 2411/92.

2.3. This extension of the existing list to cover the new fields of revenue sharing and coordination of capacity should bring about effective and uniform checks on the rules of competition which do not yet exist for routes between the European Union and third countries.

2.4. Community law does not currently allow effective and uniform checks on the rules of competition governing air transport links between Member States and third countries.

2.4.1. In practice, in the absence of a Council regulation under Article 87, the rules of competition apply under Treaty Articles 88 and 89, which can produce clashes of jurisdiction between the Commission and Member State authorities, in turn giving rise to serious legal uncertainty among European air carriers.

2.4.2. This is illustrated in particular by the recent disagreements between the Commission and the competition authorities of certain Member States in their appraisal of alliances between airlines.

2.5. For this reason, the Commission should be provided with the means necessary to fulfil its task of supervising the rules of competition in the same way as it does in other sectors. The capacity to carry out effective and uniform European-level checks on infringements of competition is most important as it is only at this level that any influence can be brought to bear in the context of expanding world trade.

2.6. It is therefore essential that the European competition authority is able to make its voice heard on an equal footing with, for example, its American counterpart (as recently illustrated by the Boeing-McDonnell Douglas merger). The same powers should therefore be feasible in the field of air transport.

2.7. In line with its earlier opinions (), the Committee repeats its call for the application of the rules of competition to be accompanied by social demands. There is still no European social policy for airline and airport employees. An assessment of employment trends is becoming necessary. The Committee, which is currently drawing up an opinion on sectors and activities excluded from the working time directive (), emphasizes the need to look, at the same time, into concomitant questions such as restricting flying time and taking account of safety and quality criteria in air transport, with particular reference to applying minimum training and qualification standards.

2.8. The Committee reiterates its various proposals on making provision for consultation on socio-economic repercussions, so that the social implications of commercial agreements are taken into account.

2.9. In order to encourage development in the regions and remote islands, and although reference is made to this in the Amsterdam Treaty, the Committee would welcome the Commission building upon the concept of public interest service in the air transport sector, in accordance with the third package rules, if appropriate under the new Article 7d of the Amsterdam Treaty and its interaction with the existing regulations.

2.9.1. Historically, however, the liberalization of Community airspace has always been accompanied by an extension of the Commission's powers concerning application of the rules of competition in the European Union; the Council adopted Regulation (EEC) No 3975/87 at the same time as the first package of measures liberalizing Community airspace was implemented; the extension of liberalization to domestic flights through the third package in 1992 was backed by Regulation (EEC) No 2410/92.

2.10. It would, in principle, be desirable for liberalization in this sector to be accompanied by arrangements for the application of competition rules.

2.11. The Committee therefore favours extending the scope of Directive 3975/87 to all links with third countries as proposed and accompanying this extension of the remit to apply competition rules by correspondingly authorizing the Commission to grant block exemptions for these links, as part of a coherent European Union external policy in this field.

2.11.1. Consequently, in the context of future developments, the Commission could receive from the Council a mandate to negotiate on these same links with third countries, in accordance with terms duly defined on the basis of consultations between the Commission, the Member States and the air transport industry. Negotiating briefs of this kind could be granted in several stages, to provide for transitional periods. This approach would offer the best guarantee of uniform terms of competition for the various carriers operating between the EU and third countries.

2.11.2. In the same way that the current uncertainty surrounding the application of the rules of competition to air transport agreements between the EU and third countries may jeopardize the introduction of consistent and uniform rules within the European Union, independent, bilateral Member State negotiations with third countries may, where they result in open sky agreements, generate discrepancies in the conditions under which different European carriers operate.

2.11.3. Moreover, extending the Commission's powers in applying the rules governing competition between the European Union and third countries would strengthen its negotiating position vis-à-vis such countries on behalf of the Member States, and would facilitate tying in harmonization of the rules on competition with third countries with liberalization agreements.

Brussels, 28 January 1998.

The President of the Economic and Social Committee

Tom JENKINS

() OJ C 165, 31.5.1997, p. 13-14.

() OJ L 374, 31.12.1987, p. 1.

() OJ L 240, 24.8.1992, p. 18.

() OJ L 122, 17.5.1991, p. 2.

() OJ L 374, 31.12.1987, p. 9.

() OJ C 77, 21.3.1983, p. 20; OJ C 303, 25.11.1985, p. 31; OJ C 169, 6.7.1992, p. 15.

() SOC/348.