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'
Date: 1998-01-28
Institutions: European Economic and Social Committee
Subjects: air transport, application of EU law, competition law, liberalisation of the market, transport company

30.3.98

EN

Official Journal of the European Communities

C 95/59

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’ (1)

(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

Council Regulation (EEC) No 3975/87 (2), as
1.1.
amended by Council Regulations (EEC) Nos 2410/92 (3)
and 1284/91 (4), 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 Com-
mission 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 (5),
it should be noted that the
regulation confers upon the Commission the power to
adopt a certain number of block exemptions for a

(1) OJ C 165, 31.5.1997, p. 13-14.
(2) OJ L 374, 31.12.1987, p. 1.
(3) OJ L 240, 24.8.1992, p. 18.
(4) OJ L 122, 17.5.1991, p. 2.
(5) OJ L 374, 31.12.1987, p. 9.

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,
that
Article 85(1) does not apply to certain categories of
agreements between undertakings, decisions by associ-
ations of undertakings and concerted practices on
international air routes between the Community and
one or more third countries.

regulation,

declare

by

The Commission would, in particular, be able
1.2.3.
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 consist-
ency of these rules with the Code of Conduct adopted
by the Council.

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Official Journal of the European Communities

30.3.98

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 guaran-
tee 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 effec-
tive 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 regu-
lation 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 compe-
tition authorities of certain Member States in their
appraisal of alliances between airlines.

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

In line with its earlier opinions (1), the Committee
2.7.
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 cur-
rently drawing up an opinion on sectors and activities
excluded from the working time directive (2), 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.

The Committee reiterates its various proposals
2.8.
on making provision for consultation on socio-economic
repercussions, so that the social implications of commer-
cial 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;
adopted Regulation (EEC)
No 3975/87 at the same time as the first package of

the Council

For this reason, the Commission should be
2.5.
provided with the means necessary to fulfil its task of

(1) OJ C 77, 21.3.1983, p. 20; OJ C 303, 25.11.1985, p. 31; OJ

C 169, 6.7.1992, p. 15.

(2) SOC/348.

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Official Journal of the European Communities

C 95/61

measures liberalizing Community airspace was im-
plemented; 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 liberal-
ization in this sector to be accompanied by arrangements
for the application of competition rules.

The Committee therefore favours extending the
2.11.
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 correspond-
ingly authorizing the Commission to grant block exemp-
tions for these links, as part of a coherent European
Union external policy in this field.

2.11.1.
Consequently, in the context of future devel-
opments, 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. Negotiat-

ing 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, indepen-
dent, 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,
the Commission’s
extending
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 compe-
tition with third countries with liberalization agree-
ments.

Brussels, 28 January 1998.

The President

of the Economic and Social Committee

Tom JENKINS