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
Date: 1990-06-11
Institutions: European Commission
Subjects: air transport, competition, competition law

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

C0MC90) 167 final 

Brussels, 11  June 1990 

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 

(presented  by the  Commission) 

- 2 -

EXPLANATORY  MEMORAMMfl* 

To the draft regulation providing for temporary relief  against 

anticompetitive practices in the air transport sector. 

The  Commission's  current  proposals  on  further  liberalisation  of  air 

transport 

("i ) 

include rules designed to permit air  carriers to  develop 

and  implement their own commercial policies.  While this process on the 

whole will contribute to a more dynamic  industry  in the interest of  the 

air  transport  user,  there  may  be  cases  in which  air carrier:; use the 

opportunity  created  by  the  relaxation  of  controls  to  adopt  strategies 

designed  to  eliminate  competitors  by  other  means  than  eon-petition on 

the merits. 

During  discussions  within  the  Council  it  became  clear  that  such 

anticompetitive practices are of serious concern to the industry  and to 

Member  States. 

As  a result  the  Council  called  on  the  Commission  to 

strengthen  its proposals  by defining  rules to prevent anti-rompitî+-iv^ 

".'ehaviour and abusive practices 

(2) 

The Commission at present has considerable fact-finding and enforcement 

powers  in the air transport sector 

,  but its present procedures may 

not always be sufficient  to  enable  it to act with the necessary  speed 

against practices which threaten to eliminate a competitor.  Experience 

!)..-• COM  <!.'.?) J73 finol of 0 September 1987. 

'Conclusions of the Transport Council of  A and 5 December 1999,  Council 

Working Document AER/89/29. 

35Council Regulation 3975/87, OJ N° L 374 of 31 December 1987. 

- .3 -

-f  the  air  transport  sector  shows,  however.  that  in the  absence  of 

s e d i t i o us 

action  such 

anticompetitive  practices  may  ,MI;,(, 

irreversible  'amage to the competitive structure of the  industry. 

*'.. Consequently  it  is  proposed  to  provide  for  some  acceleration  of 

procedures  enabling  the  Commission  to  give  temporary  relief  against 

anticompetitive practices in the air transport sector.  The provisions 

-re  similar  to  the  rules  laid  down  in the  Court's  judgement  in Case 

792/79, Camera Care 1980 ECR  119. 

!i. The  anticompetitive  practices  concerned  are  actions by  one  or  several 

air  carriers  which  have  the  object  or  effect  of  threatening  the 

viability  of  an air  service or  of threatening  the existence  of an  air 

carrier. 

The  following  actions  could  be  considered  as  examples  of 

anticompetitive practices : 

• providing  :-o much  capacity  or  such high  frequencies  on  a  route  fhat 

"tli*3i- fiii-i up-!, find  U  difficult  to  make  sales  of  servi ••«» . ••!• the 

route; 

- charging  fares  appreciably  below  the  air  carrier's  own  fully 

allocated  relevant costs; 

- granting  benefits  to  travel  agents  which  make  it  difficult  for 

competing air carriers to make sales, e.g. override commissions; 

granting benefits  to air  transport users which  artificially  maintain 

their loyalty to a specific airline,  e.g. frequent flier programmes. 

Whether  such  actions  are  judged  to  be  anticompetitive  in  a  particular 

case would depend on the particular circumstances of that case. 

Because  of  the  severe  time  constraints  the  draft  regulation  modifies 

i-eguiation 3970/07 to enable the Commission to take  interim measures to 

prevent or terminate anticompetitive practices more rapidly by omitting 

consultation of the Advisory Committee.  However,  the Commission will 

endeavour  to  maintain  a close  and  constant  liaison  with  the  competent 

j'j'horities jf the Member States concerned.  In any event, "he Advisory 

'ornmitte* will be consulted before a decision is renewed,  and l^forc* c 

'  :nal  decision  is taken. 

• , t . ; i p. 

[!"<•••.•••.! n ' f. 

w i il  n ot  b«- 

f-^l:<-*T'i 

wit||.,nt 

fir'-.t  •.•!..•!.!  m--. 

' : «• 

• d^rt,:,!•;ii^'• concerned  to  comment  in writing.  and  will  !••• 'inni-'- ':•-

-'na length 01 time appropriate to the case (at most 6 months. 

- 5 -

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 

THE COUNCIL OF THE EUROPEAN  COHMUNITIES, 

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 Parliament (2), 

Having  regard  to the opinion of  the Economic  and Social  Committee (3), 

Whereas  Council Regulation 

(4) 

provides for further  liberalisation of air transport within the  Community; 

Whereas,  while the  relaxation of controls will enable carriers to compete 

on their merits  and  thus  contribute  to  a  more  dynamic  industry  in  the 

interest of the air transport user,  the Commission  should be able to take 

prompt  action  in  cases  where  air  carriers  engage  in practices  which  are 

contrary  to  the competition  rules and  which may  threaten  the  viability of 

services  operated  by  a  competitor  or  even  the  existence  of  a competitor, 

and thus cause  irreversible damage to the competitive structure; 

Whereas  it is appropriate to provide  for a specific procedure according  to 
which  the  Commission  may  apply  the  competition  rules  expeditiously  in 
cases  where  there  is  an  urgent  need  to  prevent  or  act  against  such 
anticompetitive practices; 

Whereas  this  procedure  should  provide the undertakings  concerned with the 
opportunity  to  comment  in  writing  on  the  matters  to  which  objection  is 
taken; 

Whereas it is therefore necessary  to amend Council Regulation  (EEC) 
No' 3975/87 (5); 

HAS ADOPTED THIS  REGULATION: 

(1) 
(2) 
(3) 
(4) 
C5> O J H ol  3 ?V 31.12.1987, p. 1 

-  6 -

ARTICLE 1 

Regulation  (EEC) No 3975/87 is hereby amended as follows : 

1) The following  Article 4a  is inserted : 

"ARTICLE 4a 

Temporary  relief against  anticompetitive  practices 

1. Without prejudice to Article 4(1),  where the Commission  has reasons 

to believe  that  certain  practices  are  contrary  to  Articles 85 or  86 

of  the  Treaty and have the object or effect of threatening  the 

viability of an air service or of threatening  the existence of an 

air carrier, it may by decision take interim measures to ensure that 

these practices are not  implemented or cease to be  implemented  and 

to give such  instructions as are necessary  to prevent  the occurrence 

of these practices until a decision under Article 4(1) is taken. 

2. A decision  taken pursuant  to paragraph  1  shall  apply  for  a period 

not exceeding  six months.  Article 8(3) to  (6) shall not apply. 

The  Commission  may  renew  the  initial  decision,  with  or  without 

modification. 

In such  case. Article 8(3) to  (6) shall apply." 

2) 

The following  is added to Article  13(1): 

"(e) to comply with any measure  imposed by decision under Article 4 a." 

3) 

In Article 16(1) "4a," is inserted after  "4,". 

7 -

ARTICLE 2 

This  Regulation  shall  enter  into  force  on  the  day  following 

that of its publication  in the Official Journal of the European Communities, 

Tli i r;  Regulation  ".hall  be  binding  in  ils  ont i rot y  and  dir.M.ily 

applicable  in all Member States. 

Done at Brussels, 

For the Council 

ISSN 0254-1475 

COM(90) 167 final 

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