1999/618/EC: Commission Decision of 20 July 1999 on a procedure relating to the application of Council Regulation (EEC) No 2299/89 (Electronic ticketing) (notified under document number C(1999) 2068) (Text with EEA relevance) (Only the German text is authentic)
Date: 1999-07-20
Institutions: European Commission
Subjects: Germany, code of conduct, complaint to the Commission, computer system, organisation of transport, reservation

L 244/56

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COMMISSION

COMMISSION DECISION

of 20 July 1999

on a procedure relating to the application of Council Regulation (EEC) No 2299/89

(Electronic ticketing)

(notified under document number C(1999) 2068)

(Only the German text is authentic)

(Text with EEA relevance)

(1999/618/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

on 20 January 1997 requesting it to submit its observa-
tions within one month. Lufthansa submitted its obser-
vations on 19 February 1997.

Having regard to Council Regulation (EEC) No 2299/89 of 24
July 1989 on the code of conduct for computerised reservation
systems (1), as last amended by Regulation (EC) No 323/
1999 (2), and in particular Article 16(2) thereof,

(2)

Having given the undertaking concerned the opportunity
to make known its views on the objections raised by the
Commission, pursuant to Article 19(1) of Regulation (EEC)
No 2299/89,

Whereas:

I. BACKGROUND, FACTS AND PROCEDURE

1. The complaint

(3)

(1)

In a letter of 9 January 1997, the system vendor SABRE
Travel Information Network (‘SABRE’) complained that
Deutsche Lufthansa AG (‘Lufthansa’) is infringing Regula-
tion (EEC) No 2299/89 (code of conduct) in that it offers
incentives to corporate clients using electronic tickets for
domestic travel on Lufthansa flights. This,
it alleged,
results in corporate clients only dealing with travel
agents using the computerised reservation system (CRS)
START Amadeus, of which Lufthansa is part owner,
since it is the only system that can issue electronic
tickets. A copy of the complaint was sent to Lufthansa

(1) OJ L 220, 29.7.1989, p. 1.
(2) OJ L 40, 13.2.1999, p. 1.

SABRE complained that Lufthansa had failed to provide
SABRE with the necessary information and technical
specifications to be able to issue electronic tickets for
Lufthansa which severely undermines SABRE's ability to
attract and retain subscriber accounts in Germany.
SABRE has developed its own electronic ticketing func-
tion that operates in accordance with industry standards
agreed by all airline members of IATA (International Air
Transport Association). SABRE considered that the effect
of the above actions by Lufthansa is to prevent effective
competition in the German CRS market.

the

incentives were

After a preliminary assessment of the complaint the
Commission issued a Statement of Objections against
Lufthansa dated 16 December 1997. Lufthansa replied
on 3 March 1998. Lufthansa's principal arguments were
intended to encourage
that
consumer and subscriber acceptance of the electronic
ticket rather than to prejudice competing CRSs and that
a new technological product requires a transition period
before it could be offered to all other CRSs. Further-
more, the airline made a distinction between a ticket and
an air transport product for the purposes of the code,
arguing that tickets did not come under the scope of
Article 8(1) which prohibits incentives. Lufthansa also
raised issues concerning its
rights of defence and
requested an oral hearing.

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L 244/57

(4)

(5)

(6)

(7)

(8)

By letter of 21 April 1999, SABRE informed the
Commission that the issues forming the basis of the
original complaint had been satisfactorily overcome by
way of a new commercial agreement with Lufthansa.

2. The parties

The CRS known as ‘SABRE’ is owned and operated by
Information Network of Dallas, Texas,
SABRE Travel
United States of America. SABRE Travel
Information
Network is itself 80 % owned by AMR Corporation
which is also owner of American Airlines. Its share of
the world CRS market is estimated to be 26,1 % (by
number of
the
travel agency locations).
German CRS market is estimated to be 5,1 %.

Its share of

Lufthansa is based in Cologne in Germany and is the
largest airline in the Community. In 1997 its turnover
was DEM 23 149 million.

the capital of Amadeus
Lufthansa owns 29,2 % of
Global Travel Distribution SA (‘AGTD’) which owns and
operates the CRS commonly known as ‘Amadeus’. Luft-
hansa also owns 50 % of the capital of START Holding
GmbH. START Holding GmbH in turn owns 95 % of
START Amadeus Vertrieb GmbH (‘START Amadeus’)
which is solely responsible for marketing the Amadeus
CRS in Germany. The remaining 5 % of START
Amadeus is owned by members of the AGTD group.
The Amadeus share of the world CRS market is estima-
ted to be 33,8 % (by number of travel agency locations).
The START Amadeus share of the German CRS market
is estimated to be 88,6 %.

3. The code of conduct

The code of conduct was adopted by the Council to
regulate a sector that plays an essential role in the
distribution of air transport products. The code ensures
that
the operation of CRSs does not discriminate
between carriers participating in their facilities both in
terms of the technical functions offered to carriers and
the fees for those services. It also prevents owner carriers
from refusing to distribute their products
through
competing CRSs thereby limiting the attractiveness of
the latter in the market place.

4. The facts

a) Electronic ticketing

(9)

Electronic ticketing is a recent development in the air
transport industry designed to eliminate the need for
paper based ticketing and to facilitate the check-in
procedures at airports. Electronic tickets are effectively
travel documents that only exist in a carrier's internal
reservation system. On check-in at the airport counter

upon identification, the passenger is issued a boarding
pass by reference to the record in the carrier's system
and not by reference to a conventional paper-based
ticket. IATA estimates that the cost of the conventional
paper ticket is typically USD 8 whereas an electronic
ticket costs between USD 1 and USD 2. The economies
arising from the adoption of electronic ticketing have led
to the rapid growth of its use. The largest US carrier,
United Airlines, used electronic tickets for 40 % of its
domestic services in 1996.

b) CRSs

(10) A CRS is a computer system containing information
about, inter alia, air carriers' schedules, availability, fares,
and related services, with or without facilities through
which reservations may be made, or tickets may be
issued, to the extent that some or all of these services are
made available to subscribers. It is estimated that over
85 % of all IATA travel agency sales of scheduled air
services are made through CRSs. Therefore, a CRS is an
essential tool for the travel agent.

(11) Unlike the other CRSs operating in the Community
(Galileo, SABRE and Worldspan) Amadeus does not
have its own ticketing function, and therefore ticketing
is carried out on its behalf by its local distribution
company, which in Germany is START Amadeus.
START Amadeus provides the interface between travel
agents in Germany and the Amadeus CRS. When dealing
with a customer, a travel agent
logs on to START
Amadeus to obtain information on schedules, availabili-
ties and fares from the Amadeus central core. It then
enters the booking data through the START Amadeus
interface to Amadeus, which then returns certain
elements of the data to a separate function in START
Amadeus to enable it to generate a ticket and carry out
the associated accounting operations.

c) Development of electronic ticketing by Lufthansa

(12)

In response to the SABRE complaint, Lufthansa stated in
its letter of 19 February 1997 that the introduction of
electronic ticketing (ETIX) is a very complex project and
therefore Lufthansa decided to implement it in three
phases: phase 1 as from 1 March 1996 for the German
market, including for START Amadeus the most widely
used ticketing system in Germany (‘ETIX für den deut-
schen Markt... ETIX über das am meisten verbreitete
Ticketing-System in Deutschland (START Amadeus)’);
phase 2 as from 1 November 1996 for international
on-line flights; phase 3 as from 1997, expansion to
computer reservation systems. Lufthansa stated that the
first two phases were necessary to maximise the volume
of ETIX in order to amortise the relatively large develop-
ment costs.

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(13)

(14)

(15)

(16)

Lufthansa went further in its letter to the Commission of
14 May 1997 where it stated that ‘Temporary focusing
on extending the existing Lufthansa/START Amadeus
interface was the only technical and economically justifi-
able way of expanding the pilot phase.’

Lufthansa developed its electronic ticketing functionality
from its existing airport check-in programme. As a pilot
phase during the period May to December 1995 ETIX
was initially offered to a limited group of 600 travel
agents in Germany. In order to extend the number of
agents in as short a time as possible, in March 1996 it
then transferred the functionality to START Amadeus
(phase 1).

In its letter of 14 May 1997, Lufthansa stated that
‘Lufthansa is currently in the last phase of introducing
the product. Once the technical conditions for the inter-
national use of ETIX are established Lufthansa will
operate ETIX via other CRS systems.’

In July 1996, Lufthansa announced that it would reduce
its commission to travel agents in Germany for sales of
tickets for travel wholly within the German domestic
market. However, in its letter to the Commission dated
14 May 1997, Lufthansa contradicts SABRE's assertion
that travel agents are being offered incentives to use
ETIX when it states that ‘... so far there has been no
agency promotion. To date agencies have merely been
promised an ETIX incentive, this being due to start as
from July 1997.’

(17) At a meeting held with Commission representatives on
25 July 1997, representatives of Lufthansa confirmed
that commission payments of 0,5 % of the price of each
electronic ticket sold for travel within Germany and to
London and Paris have been made to travel agents in
Germany since 1 July 1997. In its letter of 27 August
1997, Lufthansa stated that a corporate client incentive
scheme was implemented on 1 January 1997. The
incentive was 1 % of gross ETIX revenue on amounts
exceeding DEM 50 000; 1,5 % for revenues greater than
DEM 2,5 million and 2 % for
revenues exceeding
DEM 5 million.

(18)

In the absence of the ETIX facility being available to
SABRE and any other CRS operating in Germany, only
those travel agents subscribing to the START Amadeus
service were able to benefit from the additional commis-
sion payments.

(19) At a subsequent meeting with Commission representa-
tives,
in June 1998, the issue of the incentives was
discussed again. Lufthansa now explained that, with
effect from May 1998, six months after the Statement of
Objections was issued, commission payments to travel

(20)

(21)

(22)

agents had actually been increased from 0,5 % to 1 %.
Furthermore, for internal German flights, a discount of
DEM 10 had been offered to any passenger purchasing
an electronic ticket since January 1998, although the
corporate client scheme was ended in the same month.
to
These
encourage higher levels of ETIX sales which to date,
according to Lufthansa, had been substantially less than
their potential.

in incentives had been made

increases

d) IATA industry standards

Independently of the development of electronic ticketing
by Lufthansa, and in response to a recognised need for
an industry-wide standard for electronic ticketing, IATA
has published an industry standard method of inter-
facing CRSs and airline systems for issuing electronic
tickets. The standards were developed by IATA working
groups over a two-year period. The airlines present at
the IATA Passenger Services Conference in Los Angeles
in October 1996 unanimously (including Lufthansa)
adopted the Electronic Ticketing Resolutions Nos 722f
and 722g (1). A fundamental component in creating an
industry standard was to establish the Electronic Data
Interchange for Administration Commerce and Trans-
port (‘EDIFACT’) message standard for the transmission
of ETIX data elements. The resolutions were scheduled
to become effective on 1 January 1997. In its letter of
14 May 1997, Lufthansa accepted that the standards
‘have been valid as from 1 January 1997’.

the

IATA resolutions were

Even before
adopted,
SABRE's system used the ‘EDIFACT’ message standard
which was in accordance with the domestic US ATA
standard. It was an enhanced version of this EDIFACT
standard which was subsequently incorporated into the
ETIX standard by the IATA resolutions. By contrast,
Lufthansa's ETIX standard through START Amadeus was
purely an in-house system which did not use the
EDIFACT standard at all.

In its letter of 14 May 1997, Lufthansa stated that
‘Lufthansa had at no time abolished or ignored IATA
standards.... At the time of developing ETIX Lufthansa
could not have circumvented any standards since none
existed.’ It considers that the solution it developed for
electronic ticketing was chosen because it was a high
quality product. Lufthansa also states in its letter of 14
May 1997 that ‘Lufthansa has at no time refused to
adapt the system to the IATA standards.... Lufthansa is
still interested in cooperation. Experience gained in the
interim will make this easier.’ In its reply to the State-
ment of Objections, Lufthansa claimed: ‘Once it emerged
that an IATA standard for Electronic ticketing would be
adopted, Lufthansa began to implement this standard on
the basis of the experience of its own ETIX system.’

(23)

Yet on the first day (1 January 1997) that the IATA ETIX
resolutions were accepted by Lufthansa as having come
into force, it introduced the first of the incentives, linked
to START
to an internal ETIX system exclusive
Amadeus.

(1) IATA Resolution 722f: Electronic Ticketing/Electronic Miscellaneous
IATA Resolution 722g: Electronic Ticket/Elec-

Documents — Airline.
tronic Miscellaneous Documents — Neutral.

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L 244/59

(24)

(25)

(26)

(27)

e) Contacts between Lufthansa and SABRE and other system

vendors

SABRE asserts that it has attempted to reach agreement
with Lufthansa on the possibility of
its subscribers
issuing electronic tickets on Lufthansa flights. Meetings
took place in June 1995,
in April 1996 and on two
subsequent occasions, to discuss the SABRE electronic
ticketing product. In September of 1996 Lufthansa in-
dicated its willingness to start discussions on the subject
at the beginning of 1997. The first meeting took place
on 13 January 1997 (see below).

Lufthansa further states that, at the meeting held on 13
January 1997, SABRE acknowledged its understanding
of the approach adopted by Lufthansa in defining its
priorities for the development of electronic ticketing. It
also considers that electronic ticketing is only a ticketing
functionality and thus independent from the usual CRSs.

In its observations dated 21 March 1997 on the Luft-
hansa response, SABRE restated the arguments set out in
its original complaint. SABRE also added, at the meeting
of 13 January 1997, that it fully understood the prioriti-
sation process adopted by Lufthansa but
it did not
indicate its acceptance of it. Furthermore, during the
course of the same meeting it reminded Lufthansa that it
had been ready to initiate ETIX development with Lufth-
ansa for more than a year, but that cooperation was not
forthcoming.

In November 1997, SABRE and Lufthansa reached
agreement for the implementation of electronic tick-
eting. Under this agreement, Lufthansa was to ensure
that all the necessary work to be carried out on its part
would be done to ensure implementation could be
completed by 30 September 1998 at the latest. However
if SABRE informed Lufthansa in writing that
imple-
mentation could be completed by 30 June 1998, Luft-
hansa would dedicate the resource necessary to meet
this earlier date. As SABRE did not issue such a notice,
Lufthansa therefore completed its part of the work on
14 September 1998.

(28)

SABRE then proceeded to carry out the necessary testing
after which, on 8 December 1998, the ETIX function
became operational

in the SABRE CRS.

(29) As regards other CRSs, Lufthansa reached agreement on
a timetable for installation with one system vendor in
September 1997 and testing was expected to begin in
March 1998. As yet implementation has still not been
completed however. In November 1997 it had written

(30)

(31)

(32)

(33)

(34)

to the other two system vendors requesting them to
implement the ETIX function into their systems. Agree-
ments were reached during 1998 and implementation is
foreseen to be completed during the course of this year.

In a letter dated 2 November 1998, Lufthansa informed
the Commission that it would cease all incentives linked
to electronic tickets at the end of 1998.

Subsequently, by letter of 21 April 1999, SABRE
informed the Commission explaining that a new
commercial agreement with Lufthansa, designed to
resolve all
the issues that SABRE had raised in the
original complaint, had been signed on 2 April 1999.

II. LEGAL ASSESSMENT

In the reply to the Statement of Objections, Lufthansa
claimed that
the same procedural guarantees and
defence rights as are acknowledged in competition law
procedures and enshrined in Council Regulations (EEC)
No 17/62 (1), (EEC) No 1017/68 (2) and (EEC) No 3975/
87 (3) apply to the code of conduct. In seeking to apply
these provisions the airline requested an oral hearing in
the form laid down for procedures pursuant to Regula-
tion No 99/63/EEC (4).

This case has not been addressed pursuant to Articles 81
and 82 of the Treaty, the procedure for which is set out
by the abovementioned Regulations, but under the code
of conduct. The code does not provide for the same
procedures but the Commission has taken care to ensure
an equivalent
the rights of
level of protection for
defence.

In accordance with Article 19(1) of the code of conduct
Lufthansa was served notice of the Commission's objec-
tions. In February 1998 Lufthansa was given access to
the Commission's file in order to prepare its reply to the
Statement of Objections. After its reply to the Statement
of Objections, the Commission, by letter of 4 May 1998,
offered Lufthansa the opportunity to amplify its views
orally but the airline did not take up this offer.

Application of the code of conduct for CRSs

a) The code of conduct for CRSs

(35) Article 11 of the code provides that the Commission,
acting on receipt of a complaint or on its own initiative,
shall initiate procedures to terminate infringement of the
provisions of the Regulation. Accordingly it has exam-
ined the SABRE complaint against Lufthansa concerning
alleged infringements of Article 8 of the code in accord-
ance with Article 11.

(1) OJ 13, 21.2.1962, pp. 204/62.
(2) OJ L 175, 23.7.1968, p. 1.
(3) OJ L 274, 31.12.1987, p. 1.
(4) OJ 127, 20.8.1963, pp. 2268/63.

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b) The scope of the code of conduct for CRSs

(38)

i ) S T A R T A m a d e u s

(36) At the outset it is necessary to determine whether the
ticket issuing facility in question here forms part of the
‘computer reservation system’ (CRS) for the purposes of
the code and the position of START Amadeus under the
code.

Article 2(f) of the code defines a CRS as:

Furthermore, on 18 July 1995, the Commission wrote
to START Amadeus informing it that as it acted as a
ticket issuer on behalf of the CRS Amadeus, it fell within
the scope of the code, and informing it that it was under
the obligation to submit its ticketing activities to annual
audit as required by Article 21a of the code which
requires a system vendor to ensure the ‘technical compli-
ance of its CRS’ with certain articles of the code. In its
letter of 29 November 1995, START Amadeus informed
the Commission of
the auditor it had
the name of
appointed to ensure compliance of its system with the
code. For
the
complaint, the CRS in question is that distributed in the
German market by the system vendor START Amadeus.

the assessment of

the purposes of

‘a computerised system containing information about,
inter alia, air carriers'

i i ) L u f t h a n s a

— schedules,

— availability,

— fares, and

— related services,

with or without facilities through which:

— reservations may be made, or

— tickets may be issued,

to the extent that some or all of these services are made
available to subscribers.’

Article 2(g) provides that ‘distribution facilities’ means
facilities provided by a system vendor for the provision
of information about air carriers' schedules, availability,
fares and related services and for making reservations
and/or issuing tickets, and for any other related services.

Pursuant to Article 2(h),
‘System vendor’ means any
entity and its affiliates which is or are responsible for the
operation or marketing of a CRS.

And lastly, pursuant to Article 2(1), ‘Subscriber’ means a
person or an undertaking, other than a participating
carrier, using the distribution facilities for air transport
products of a CRS under contract or other arrangement
with a system vendor.

(37)

START Amadeus is solely responsible for the marketing
in Germany of the Amadeus CRS and is thus a system
vendor within the meaning of Article 2(h). The distribu-
tion facilities offered by START Amadeus to subscribers
include not only information on schedules, availability
and fares (obtained from the Amadeus central core op-
erated by AGTD) but also facilities for issuing tickets. In
so far as these latter facilities are ‘made available to
subscribers’, in the words of the last line of Article 2(f),
they also form part of the computer reservation system
as defined by the code.

(39) Article 2(i) defines a parent carrier as ‘any air carrier
which directly or indirectly, alone or jointly with others,
owns or effectively controls a system vendor, as well as
any air carrier which it owns or effectively controls’.
Since Lufthansa owns 50 % of Start Holding GmbH
which in turn owns 95 % of START Amadeus, it indir-
ectly, and jointly with others, owns START Amadeus
and is therefore a parent carrier.

i i i ) A r t i c l e 2 ( a ) ,
p r o d u c t

( b ) a n d ( c ) — a i r t r a n s p o r t

(40) Article 2(c) defines air

transport product as
unbundled and bundled air transport products’.

‘both

(41) Article 2(a) defines an unbundled air transport product
as ‘the carriage by air of a passenger between two
airports including any related ancillary services and addi-
tional benefits offered for sale and/or sold as an integral
part of that product’.

(42) Article 2(b) defines a bundled air transport product as ‘a
pre-arranged combination of an unbundled air transport
product with other services not ancillary to air transport,
offered for sale and/or sold at an inclusive price’.

c) Article 8(1)

(43)

The relevant Article states that:

‘A parent carrier shall neither directly nor indirectly link
the use of any specific CRS by a subscriber with the
receipt of any commission or other incentive or disin-
centive for the sale of air transport products available on
its flights.’

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(44) One of the Commission's conclusions in the Statement
of Objections was that
incentives operating through
electronic tickets, when the functionality was only avail-
able to START Amadeus subscribers, constituted an
infringement of Article 8(1).

(45)

In its reply Lufthansa contested that an airline ticket,
electronic or otherwise, was an ‘air transport product’ as
defined under Article 2 and hence did not fall within the
scope of Article 8(1). Reference was made to the original
article 8(1), before the code revision in 1993 (1), which
had also referred to tickets as well as air transport
products and thus concluded that this did indeed consti-
tute a distinction.

(50)

itself

to transport

(46) However, Article 8(1) refers to the sale of an air trans-
port product, i.e. the fact that a service provider (the
carrier) concludes (directly or through a travel agent) a
transport contract with a customer by which the carrier
the passenger and the
commits
customer accepts to pay a price. The conclusion of this
contract between the parties is usually materialised by
the act of issuing a ticket, regardless of the format of
that ticket (paper format or electronic). Therefore, the
act of
the
performance of the air transport service, is an integral
part of
the act of selling this transport service and
accordingly falls under the scope of Article 8(1).

issuing a ticket, even if not part of

ucts through other (i.e. conventional) tickets in START
Amadeus would not give rise to these incentives. More-
over,
it took the view that these incentives were not
inducements to use START Amadeus since they were
offered to all travel agents regardless of the CRS used.
However, Lufthansa was fully aware that its announce-
ment to offer incentives to subscribers to issue electronic
tickets could only have been taken up by subscribers to
the system of which it was a parent carrier. All the
subscribers to other CRSs operating in Germany would
from this incentive
not have been able to benefit
scheme.

the ETIX,

introduction of

Lufthansa claimed that the incentives were needed for
that
ensuring a successful
cooperation was necessary both from a technical
perspective and also for travel agents to encourage
customers to use electronic tickets and that the same
argument applies to corporate clients and passengers in
general. Lufthansa added that, despite these incentives,
the take up of ETIX sales was very low. However,
whether an inducement was required to launch elec-
tronic ticketing or not (which may be questioned), the
code of conduct in any event simply prohibits linking
the use of a specific CRS with the receipt of incentives
for whatever reason they were allegedly introduced.
Whether these incentives constituted an expense or
simply passed on a cost saving, Lufthansa was under a
duty not to limit their availability to its own CRS START
Amadeus. There is thus no need for any teleological
interpretation of Article 8 by reference to Article 3 of
the Treaty as Lufthansa alleged.

(47)

Furthermore, any interpretation of the term ‘products’ to
exclude the electronic ticketing would deprive Article
8(1) of a large part of its intended effect. In addition, the
Commission is of the view that it is paradoxical that
Lufthansa, in order to support its argument, pleads in
aid the text of the former Article 8(1), which text has
clearly been replaced in 1993 by the new text which
drops any distinction between air transport products
and ticketing.

(48) Article 8(1) of the code is aimed at preventing a parent
carrier of a system vendor from distorting competition
between CRSs by the granting of
to
incentives
subscribers (travel agents) to use its own system.

(51)

Therefore Lufthansa has infringed Article 8(1) of the
code by directly or indirectly linking the use of the CRS
START Amadeus by a subscriber with the receipt of a
commission or other incentive for the sale of air trans-
port products available on its German domestic flights
and those between Germany and London and Paris.

(49)

The action of Lufthansa in only collaborating, in its role
as parent carrier, with START Amadeus for the introduc-
tion of electronic ticketing clearly disadvantages all other
CRSs in the German CRS market and means that the
commissions and incentives offered by Lufthansa for the
use of electronic ticketing could only be earned by those
using the services of START Amadeus. Lufthansa
believed that the incentives were not linked to the use of
START Amadeus because sales of its air transport prod-

(1) OJ L 278, 11.11.1993, p. 1.

(52)

The corporate client
incentive scheme ran from 1
January 1997 until 31 December 1997, the travel agent
incentive scheme ran from 1 July 1997 until 31
December 1998 and the passenger discount scheme ran
from 1 January 1998 until 31 December 1998.
However, Lufthansa had given SABRE the possibility to
offer electronic ticketing by 30 June 1998,
in conse-
quence after this date SABRE could have offered elec-
tronic tickets on Lufthansa flights and therefore Lufth-
ansa was no longer linking the use of the specific CRS
START Amadeus to the receipt of an incentive. The
period encompassing the infringement was thus from 1
January 1997 until 30 June 1998.

(53)

(54)

(55)

(56)

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Official Journal of the European Communities

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III. CONCLUSION

and passengers and thus bring about technical progress
and that all

incentives ceased at the end of 1998.

these have been travel agents

Lufthansa has offered incentives when selling air trans-
port products through the use of electronic tickets. The
beneficiaries of
in
Germany in the case of German domestic flights and
services to London and Paris and corporate clients for
German domestic flights. There has also been an incent-
ive to all passengers for internal German flights in the
form of a specific discount of DEM 10.

Lufthansa has developed an electronic ticketing function-
ality that has until 30 June 1998 been only available to
START Amadeus and not to competing CRSs. Therefore,
the possibility to offer electronic tickets was only avail-
able to those travel agents that subscribe to START
Amadeus, of which Lufthansa is a parent carrier. In these
circumstances, the Commission considers that Lufthansa
is in breach of Article 8(1) of the code by indirectly
linking the use of START Amadeus with the receipt of a
commission or other incentive.

(57)

Therefore the Commission concludes that the infringe-
ment is relatively minor. The Commission also acknow-
ledges that this is the first case in which the code of
conduct has led to a formal decision.

(58) On the other hand, the Commission also notes that
Lufthansa actually increased the incentives in respect of
electronic tickets both in value and in number since the
Statement of Objections was issued.

(59) As to the duration of the infringement, this was relat-
ively short composed of 12 months of corporate incen-
tives, 12 months of travel agents'
incentives and six
months of passenger discounts.

(60)

The Commission considers that this infringement justi-
fies the imposition of a token fine upon Lufthansa under
Article 16(2) of the code,

HAS ADOPTED THIS DECISION:

Article 16(2) of the code

Article 1

Pursuant to Article 16(2) of the code the Commission
may impose a fine on system vendors, parent carriers
and participating carriers and/or subscribers of up to
10 % of the annual turnover for the relevant activity (1)
of the undertaking concerned. In fixing the amount of
the fine, regard shall be given to both the seriousness
and duration of the infringement.

In assessing the gravity of the infringement, account
must be taken of its nature and its actual impact on the
market. The nature of the infringement was the creation
of an indirect, not direct,
link between receipt of a
commission and the use of a specific CRS. Although
such action has been to the exclusion and therefore
disadvantage of the other CRSs, as to the impact on the
actual market, the Commission does not consider that
the disadvantage towards the other CRSs was such as to
create an insurmountable handicap on their commercial
activities in the market concerned. Nor have some other
system vendors clearly demonstrated an overall urgency
to implement the electronic ticketing function into their
systems as early and as quickly as possible. Furthermore,
the Commission also notes Lufthansa's opinion that the
incentives were necessary in order to encourage market
acceptance of this new type of ticket by both subscribers

(1) In a letter dated 27 August 1997, Lufthansa explained that ‘included
in the incentive scheme (for electronic tickets)
is travel within
Germany and travel to London and Paris’. This is taken as being the
relevant activity in this case.

Lufthansa AG has infringed Article 8(1) of the code of conduct
for CRSs by indirectly linking the use of START Amadeus with
the receipt of a commission or other incentive.

The period of the infringement is from 1 January 1997 until
31 December 1997, as far as incentives to corporate clients are
concerned, and, as far as travel agents more generally are
concerned, from 1 July 1997 until 30 June 1998. In the case of
the passenger discount, the period ran from 1 January 1998
until 30 June 1998.

Article 2

A fine of EUR 10 000 Euro is hereby imposed against
1.
Lufthansa AG for the infringement referred to in Article 1.

2.
This fine shall be paid, in euro, within three months of
the date of notification of this Decision into bank account
No 310-0933000-43 of the European Commission, Banque
Bruxelles Lambert, Agence Européenne, Rond-Point Schuman
5, B-1040 Brussels.

that period,

After expiry of
interest shall be automatically
payable on the fine at the rate charged by the European Central
Bank to its repo operations on the first working day of the
month in which this Decision is adopted, plus 3,5 percentage
points, namely 6 %.

16. 9. 1999

EN

Official Journal of the European Communities

L 244/63

This Decision is addressed to Deutsche Lufthansa AG, Von-Gablenz-Strasse 2-6, D-50679 Cologne,
Germany.

Article 3

Done at Brussels, 20 July 1999.

For the Commission

Neil KINNOCK

Member of the Commission