Proposal for a Council Regulation repealing Regulation (EEC) No 3975/87 and amending Regulation (EEC) No 3976/87 and Regulation (EC) No 1/2003, in connection with air transport between the Community and third countries
Date: 2003-02-24
Institutions: European Commission
Subjects: EC Regulation, air transport, competition, inter-company agreement, intra-EU transport, repeal

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 24.02.2003
COM(2003) 91 final

2003/0038 (CNS)

Proposal for a

COUNCIL REGULATION

repealing Regulation (EEC) No 3975/87 and amending Regulation (EEC) No 3976/87
and Regulation (EC) No 1/2003, in connection with air transport between the
Community and third countries

(presented by the Commission)

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EXPLANATORY MEMORANDUM

INTRODUCTION

The scope of Council Regulation (EEC) No 3975/871, laying down the procedure for
the  application  of  the  EC  competition  rules  in  the  air  transport,  is  limited  to  air
transport between Community airports.2 Council Regulation (EC) No 1/20033, which
will  replace  the  procedural  provisions  of  Regulation  (EEC)  No  3975/87  as  from  1
May 2004, does not change this4. Therefore the Commission has only limited powers
to  enforce  the  competition  rules,  by  means  of  e.g.  fact  finding,  requiring
undertakings to bring to an end infringements imposing remedies and penalties with
regard to air transport between the Community and third countries.

From a regulatory point of view this is an anomaly. For all other economic sectors,
with  a  few  minor  exceptions,  procedural  implementing  regulations  have  been
adopted and are fully applicable, when the effects of anti-competitive agreements or
abusive behaviour are felt on the EU market.5 Furthermore, the Merger Regulation6
does  not  make  a  distinction  between  intra-Community  air  traffic  and  air  traffic
between the EC and third countries. This leads to a situation where similar structural
transactions  -  (global)  airline  alliances  on  the  one  hand,  full  scale  mergers  on  the
other hand - are treated by very different competition enforcement regimes. From a
regulatory,  in  particular  competition  policy  perspective,  however  any  decision
towards structural changes in the airline industry should be triggered by the needs of
the  individual  actors  and  not  be  affected  by  the  institutional  advantages  or
disadvantages  of  different  available  competition  rules  enforcement  regimes.  It  is
obvious  that the present regulatory situation  does  not  provide  the  industry  with  the
necessary  level  playing  field.  The  EU  therefore  needs  to  ensure  that  the  same
competition  rules  and  enforcement  tools  apply  to  international  aviation  as  apply  to
internal-EU routes.

The Commission submitted in the past several proposals to the Council to extend the
scope  of  Regulation  (EEC)  No  3975/87  to  cover  also  air  transport  between  the
Community  and  third  countries.  In  fact,  the  initial  proposal  of  the  Commission  of
1981 for Regulation (EEC) No 3975/87 included international air transport with third
countries.7 However, in the course of the discussion of the Commission's proposal in
the  Council  at  the  time  it  became  clear  that,  in  order  to  reach  agreement  on  the

OJ No L 374 of 31.12.1987, as amended by Council Regulation (EEC) No 1284/91 (OJ No L 122 of
17.5.1991), Council Regulation (EEC) No 2410/92 (OJ L 240 of 24.8.1992) and by Council Regulation
(EC) 1/2003 of 16 December 2002 (OJ L 1, 04.01.03, p. 1).
Article 1 of the Regulation.
OJ No L 1 of 04.01.03, p. 1.
Article  32  under  c  of  Regulation  (EC)  No  1/2003  excludes  from  its  scope  air  transport  between
Community airports and third countries.
The exceptions being tramp vessel services and cabotage (see  Article 1 of Regulation (EEC) 4056/86
applying the EC competition rules to maritime transport, this exclusion is also contained in Article 32,
under a) and b) of Regulation (EEC) No 1/2003.
Regulation (EEC) No 4064/89, as amended by Regulation (EC) No 1310/97 (OJ L 180, 9.7.1997, p. 1).
Submitted by the Commission to the Council on 10 August 1981 (OJ C 291 of 12.11.1981, p. 4).

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proposal, its scope would have to be restricted to international air transport within the
Community.8

In 1989, the Court of Justice in its judgment of 11  April 1989 in  the Ahmed Saeed
case9 confirmed its judgment in Nouvelles Frontières10 as regards the application of
Article 81 of the Treaty and ruled that Article 82 of the Treaty is directly applicable
by national courts, even in the absence of an implementing regulation under Article
83  of  the  Treaty  or  of  action  by  a  Member  State  Competition  authority  or  by  the
Commission  (under Article 84 or Article  85  of  the  Treaty  respectively).  In  light  of
the  judgment,  the  Commission  proposed  again  that  the  Council  adopt  regulations
extending  the scope of its  powers to  enforce  the  competition  rules  so  as  to  include
EC  third  country  air  transport.11  The  Council  did  however  not  act  on  the
Commission's proposal.

In 1997, the Commission considered that a number of new factors had arisen which
made  it  even  more  necessary  to  endow  the  Commission  with  the  same  powers  of
action  vis-à-vis  transport  on  Community  third  country  routes  as  those  which  are
conferred to it by Regulation (EEC) No 3975/87 for intra-Community air transport12.
In particular, the Commission referred to the regulatory context, which had changed
substantially,  since  the  introduction  of  the  third  air  transport  liberalisation  package
with  effect  from  1993.  As  the  Commission  noted,  with  the  removal  of  regulatory
restrictions  on  the  commercial  conduct  of  air  carriers,  competition  issues  became
increasingly  pressing.  The  Commission  therefore  considered  that  it  should  be
equipped with the appropriate enforcement tools to ensure that the beneficial effects
of the liberalization process were not to  be  partially  offset by  restrictive or  abusive
behaviour  on  the  part  of  European  or  non-European  commercial  operators,  to  the
detriment of consumers. Furthermore, the Commission emphasised the weakness of
the  external  aspect  of  the  aviation  market  with  its  system  of  bilateral  agreements
between  Community  Member  States  and  third  countries  and  the  need  to  create  a
more structured legal framework.

The  above  reasons  are  still  valid  today.  In  addition,  recently  important  new
developments  have  taken  place  which  render  the  need  for  appropriate  enforcement
tools to apply the competition rules to air transport between the Community and third
countries  even  more  pressing.  First,  international  aviation  alliances  have  become
increasingly  important  and  significantly  impact  the  play  of  competition  within
today's airline industry. Second, from the logic of the Court's recent judgment in the
open  skies  cases  follows  the  need  for  a  coherent  policy  for  international  aviation,
including an effective enforcement of the Community competition rules. These two
industry-shaping developments are as follows.

This change was made by Memorandum No 2 and incorporated in Article 1(2) of Regulation (EEC) No
3975/87  (OJ  No  L  374,  31.12.1987,  p.  1).  Initially  the  Commission’s  powers  did  therefore  also  not
extend to domestic transport. However, in the context of the third package of air transport liberalization
measures the scope of Regulation (EEC) No 3975/87 was extended to cover also air transport within a
Member State (Council Regulation (EEC) No 2410/9210 of 23 July 1992, OJ No L 240 of 24.8.1992).
Case 66/86 [1989] ECR 803.
Joint Cases 209-213/84 [1986] ECR 1425.
COM(89) 417 final of 8.9.1989 (OJ no C 248 of 29.9.89 p. 7).
COM(97) 218 final of 16.05.1997 (OJ No C 165 of 31.05.1997, p. 13).

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INCREASING  IMPORTANCE  OF  INTERNATIONAL  CO-OPERATION  AGREEMENTS  IN
THE AVIATION SECTOR

The number of international alliances and other forms of co-operation agreements in
the aviation sector between Community airlines and airlines from third countries has
increased  significantly  in  recent  years.  Like  intra-Community  air  transport  alliance
agreements,  such  international  co-operation  agreements  often  comprise  close  co-
operation  on  the  key  parameters  on  which  airlines  normally  compete,  such  as
schedules, capacity, tariffs, revenues, frequent flyer programmes etc and therewith in
principle fall within the scope of the EC competition rules13.

The  Commission  has  investigated  in  particular  a  number  of  alliance  agreements
between  Community  and  US  airlines,  as  to  their  compatibility  under  the  EC
competition  rules.  In  1996,  the  Commission  initiated  proceedings  in  various  air
alliance cases,  focussing  on  the transatlantic  routes  covered  by  those  alliances.14  In
the  absence  of  a  specific  enforcement  Regulation  for  the  application  of  the  EC
competition rules on transport between the Community and third countries, the legal
basis  for  these  proceedings  was  Article  85  (ex-  Article  89)  of  the  Treaty,  which
empowers the Commission, if it finds that there has been an infringement of the EC
competition rules, to propose appropriate measures to bring it to an end and, if this is
not  done,  record  such  infringement  in  a  reasoned  decisionand  authorise  Member
States  to  take  the  measures,  the  conditions  and  details  of  which  it  shall  determine,
needed to remedy the situation.

The  Commission's  experience  in  dealing  with  these  cases  under  Article  85  of  the
Treaty has shown that, although eventually in the cases at stake a satisfying solution
for the identified competition issues was found15, the lack of appropriate enforcement
powers  is  unsatisfactory  from  the  point  of  view  of  enforcement  as  well  as  time-
consuming  and  cumbersome.  In  particular,  the  Commission  lacks  the  appropriate
tools,  which  are  necessary  for  the  fact-finding  process.  Although  the  Commission
applies as much as possible mutatis mutandis the procedures of Regulation (EEC) No
3975/87,  in  practice  it  has  to  rely  on  the  willingness  of  the  parties  to  provide  the
Commission  with  the  necessary  facts.  Furthermore,  Article  85  of  the  Treaty  does
empower  the  Commission  to  record  an  infringement  in  a  reasoned  decision.
However,  it  does  not  empower  the  Commission  to  adopt  a  decision  requiring  the
undertakings  concerned  to  bring  such  infringement  to  an  end  and  imposing  the
remedies  which  are  necessary  to  address  the  competition  concerns,  as  foreseen  in
Article 7 of Regulation (EC) No 1/2003. Such measures will have to be taken by the
competent authorities in the Member States concerned. Although the Commission in
its  recent  investigations  into  transatlantic  alliance  agreements  in  the  aviation  sector
closely co-operated with the competent authorities of the Member States concerned,
it is clear that this practice does not ensure fully an effective and coherent application
of EC competition law. The EU therefore needs to ensure that the same competition
and enforcement rules are applied to international aviation as they are to internal EU
routes.

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.
Annual Competition Report 1996.
On  24  October  2002  the  Commission  decided  to  close  its  proceedings  with  regard  to  the  alliance
agreements  between  KLM/NorthWest  and  Lufthansa/SAS/United  respectively,  in  the  latter  case  after
the parties had proposed certain remedies addressing the identified competition issues.

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The extension of the competition enforcement rules to include also international air
transport  to  and  from  the  Community  would  afford  airlines  the  clear  benefit  of  a
common EU-wide enforcement system 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 85 of the Treaty. Also after Council Regulation (EC)
No 1/2003 will become applicable the Commission will continue to play a prominent
role  in  the  application  of  EC  competition  law  in  the  field  of  international  air
transport. In order to ensure a coherent competition approach within the network of
EC  competition  authorities,  the  Commission  envisages  continuing  setting  policy
through  its  decisions  practice  in  appropriate  cases.  Only  by  overcoming  the
Commission's  existing 
the  airline
investigation  and  enforcement 
industry's  need  for  a  level  playing  field  for  all  air  transport  activities  as  basis  for
growth and consumer welfare can be ensured.

limitations 

THE COURT'S JUDGMENTS IN THE "OPEN SKIES" CASES

The  recent  Court's  ruling  in  the  "open  skies"  cases16  is  expected  to  accelerate  the
pace  of  change  in  the  aviation  sector.  Changes  in  the  international  regulatory
environment will increase  the possibilities for  European  airlines  to  restructure  their
businesses  and  regroup  by  engaging  in  alliance,  merger  and  acquisition  activity.
Moreover, with the introduction of the European Company Statute, airlines will have
the  possibility  of  becoming  truly  European  businesses  with  a  European-wide
operational platform.

The Court found that Member States acted illegally in agreeing bilateral agreements
that  discriminate between  Community  air carriers  on  the  basis  of  the  nationality  of
their  owners.  Under  Community  law,  such  discrimination  is  illegal  and  all
Community  carriers, as long as  they  have  some  sort  of  establishment  in  a  Member
State, must be able to fly international routes from there, regardless of where in the
Community their principle place of business is, or of where in the Community their
owners originate. It arises from the judgments of the Court that the principle of non-
discrimination on the basis of nationality prevails in all the  agreements, even if the
air transport relation is organised bilaterally by the Member States without touching
the Community competences which would justify an agreement by the Community.

Member  States  are  required  to  open  their  traffic  to  the  companies  of  the  other
Member States. Under these conditions, the air transport sector cannot be any longer
considered  as  fragmented  along  national  borders.  There  is  no  longer  reason  for
competition rules applied to air transport within the Community to be different from
those involving third countries. The Commission should consequently have the same
powers  when  dealing  with  an  intra-Community  co-operation  between  airlines  than

Cases C-466/98, C-467/98, C-468/98, C-469/98, C-471/98, C-472/98, C-475/98 and C-476/98 against
the  United  Kingdom,  Denmark,  Sweden,  Finland,  Belgium,  Luxembourg,  Austria,  Germany.  The
judgment  establishes  that  Member  States  acted  illegally  when  they  entered  into  agreements  with  the
United  States  on  a  number  of  issues  where  Community  laws  are  in  place.  The  judgment  specifically
identified  slots,  intra-Community  fares  and  Computerised  Reservation  Systems  as  being  matters  of
Community competence. The Court also found that Member States acted illegally in agreeing bilateral
agreements  that  discriminate  between  Community  air  carriers  on  the  basis  of  the  nationality  of  their
owners.

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with  co-operation  agreements  between  a  Community  company  and  a  carrier
originating from a third country.

Furthermore,  following  the  Court's  judgment  the  Commission  has  requested  the
Council to grant the Commission the appropriate mandate for negotiations with the
United States in order to establish a coherent policy for international air transport.17
An effective enforcement of Community competition laws is an essential part of such
a co-ordinated air transport policy. The current competition regime does not provide
sufficient level playing field either to the industry or to Member States since internal
EU  air  traffic  and  international  traffic  to  and  from  the  Community  are  subject  to
different enforcement regimes, even though companies and alliances treat them as a
single  business.  Accordingly,  the  need  for  an  effective  enforcement  of  the  EC
competition rules to international air transport has become yet more important in the
light of the Court's judgment.

NO FURTHER NEED TO RETAIN REGULATION (EEC) NO 3975/87

As said Regulation (EC) No 1/2003 will as from 1 May 2004 replace the procedural
provisions  laid  down  in  the  Regulation  (EEC)  No  3975/8718.  The  substantive
provisions of Regulation (EEC) No 3975/87 will however remain in place.

The provisions in Regulation (EEC) No 3975/87 which Regulation (EC) No 1/2003
does  not  repeal  are  Article  1  (setting  out  the  scope  of  the  Regulation),  Article  2
(providing  for  an  exception  for  technical  agreements),  and  Article  20  (the  entering
into  force  of  the  Regulation).  In  addition,  Article  6(3)  continues  to  apply  as  a
transitional  regime  to  exemptions  under  Article  81(3)  granted  before  1  May  2004
until the date of expiration of those decisions. The practical meaning of Article 1 will
be reduced if, as it is proposed, the competition enforcement rules will also apply to
air transport between the Community and third countries and the limitation in scope
in Article 1 would thus have to be removed. Article 20 has no independent standing.
Therefore,  basically  the  only  really  substantive  provision  of  Regulation  (EEC)  No
3975/87 would be Article 2, providing for an exception for certain types of technical
agreements.19

Article 2 of Regulation (EEC) No 3975/87 has been interpreted very strictly by  the
Commission  as  relating  only  to  purely  technical  agreements20.  It  has  never  been
formally applied so far in practice and is of a merely declaratory nature.21 Moreover,
in appropriate cases, there would be alternative ways for the Commission to provide
its  views  on  purely  technical  provisions  falling  outside  the  scope  of  Article  81(1),

Declaration of the European Commission on the implications of the judgements of the Court of Justice
in the "open skies" cases of 19 November 2002 (COM(2002) 649 final).
Article 39 of the Regulation.
In this regard Regulation (EEC) No 3975/87 is different from other regulations in the transport sector,
notably Regulation (EEC) No 1017/68 (inland transport) and Regulation (EEC) No 4056/86 (maritime
transport), which both contain block exemptions.
That is, agreements with the sole object and effect to achieve technical improvement or cooperation.
See  in  this  sense  the  Commission  decisions  in  the  FEFC  (OJ  L  378,  31.12.1994,  p.  17  par  66)  and
FETTCSA  (OJ  L  268,  20.10.2000,  p.  1  par  146-147)  cases,  with  regard  to  a  similar  provision  for
technical  agreements  in  Article  3  of  Regulation  (EEC)  No  1017/68  and  Article  2(1)  of  Regulation
(EEC) No 4056/86 respectively.

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e.g. by deciding in an individual case on the inapplicability of Article 81, where the
Community public interest so requires, or by possibly issuing a Commission notice.

Since there is after Regulation (EC) No 1/2003 becomes applicable no longer a clear
justification  for  the  continued  existence  of  Regulation  (EEC)  No  3975/87  it  is
proposed, rather than to extend the scope of Regulation (EEC) No 3975/87, to repeal
the remaining provisions of Regulation (EEC) No 3975/87 entirely  and achieve  the
envisaged  extension  of  the  competition  enforcement  rules  to  air  transport  between
the  Community  and  third  countries  by  making  the  appropriate  amendment  in
Regulation  (EC)  No  1/2003.  As  a  result  an  important  simplification  of  legislation
will  be  achieved,  with  all  forms  of  air  transport  being  covered  by  Regulation  (EC)
No 1/2003.

DATE OF APPLICATION

In order to avoid a complicated transitionally regime it would be most advisable to
apply the proposed Regulation as from the date that the amendments of  Regulation
(EEC) No 3975/87 by means of Regulation (EEC) No 1/2003 will apply, therefore as
from  1  May  2004.  Following  that  date,  only  Article  6(3)  of  Regulation  (EEC)  No.
3975/87 should continue to apply to the existing exemption decisions until the date
of expiration of those decisions.

AUTHORIZATION TO GRANT CERTAIN BLOCK EXEMPTIONS

The  proposed  amendments  for  the  competition  enforcement  rules  to  cover  also  air
transport between the Community and third countries should logically be combined
with the power of the Commission to grant also block exemptions in those cases, as
it can already do in the case of air transport between Community airports pursuant to
Council Regulation (EEC) No 3976/8722.

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.

The Commission's general experience with such 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.

In  regard  of  the  concomitant  proposal  to  extend  the  EC  competition  enforcement
rules  to  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.

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OJ  No  374, 31.12.1987, p.  9,  as  most  recently  amended  by  Regulation  (EEC)  No  2411/92  (OJ  No  L
240, 24.8.1992, p. 19).

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27.

Therefore  it  is  proposed  to  amend  the  scope  of  Council  Regulation  (EEC)  No
3976/87 to cover also air transport between the Community and third countries. This
will empower the Commission also to grant block exemptions to airline agreements,
decisions and concerted practices in respect of international air transport between the
Community  and  third  countries  with  regard  to  joint  planning  and  co-ordination  of
airline  schedules,  the  holding  of  consultations  on  tariffs  for  passengers  with  their
accompanying baggage in so far as they are essential to interlining, consultations on
tariffs for freight on scheduled air services, the joint operation of a service on a new
or  less  busy  route,  slot  allocation  at  airports,  and  common  purchase  and  the
development and operation of computer reservation systems.

The  Commission  recognizes  that  restrictions  of  competition  on  routes  between  the
Community  and  third  countries  are  likely  to  have  distortive  effects  within  the
Community in the same way as restrictions on routes within the Community.

It  therefore  intends  to  adopt,  on  the  basis  of  powers  to  be  granted  to  it  by  the
proposed extension of Council Regulation (EEC) No 3976/87, a regulation granting a
block exemption subject to compliance with certain conditions and obligations while
taking account of the situation as regards the block exemption currently applicable in
the sector of air transport between Community airports23. 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.

CONCLUSION

The  Commission  accordingly  proposes  that  the  Council  adopts  the  proposed
Regulation, amending Regulation (EEC) No 3975/87, Regulation (EEC) No 3976/87
and  Regulation  (EC)  No  1/2003,  enabling  the  Commission  to  enforce  the
Community  competition  rules  and  adopt  block  exemptions  for  air  transport
operations between the Community and third countries

28.

The proposed Regulation will make the following amendments to these Regulations:

a.

b.

c.

repeal Regulation (EEC) No 3975/87, with the exception of Article 6(3) which
provides  for  a  transitional  provision  allowing  the  Commission  to  revoke  or
amend existing exemption decisions;

deletion of the words "between Community airports" in Article 1 of Regulation
(EEC) No 3976/87;

deletion  of  Article  32  point  (c)  in  Regulation  (EC)  1/2003,  which  excludes
from its scope air transport between the Community and third countries;

The  Commission  accordingly  proposes  that  the  Council  adopt  the  proposed
Regulation, amending Regulation (EEC) No 3975/87, Regulation (EEC) No 3976/87

At present the only block exemption Commission Regulation based on Council Regulation (EEC) No
3976/87 is Regulation (EEC) No 1617/93 (OJ No L 155, 26.6.1993, p. 18) as most recently amended by
Regulation  (EC)  No  1105/2002.  This  regulation  provides  for  a  block  exemption  under  certain
conditions  and  obligations  as  regards  consultations  on  passenger  tariffs  and  slot  allocation  at  airports
until 30 June 2005.

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and  Regulation  (EC)  No  1/2003.  The  proposed  Regulation  replaces  the  proposals
submitted by the Commission in 199724, which are accordingly withdrawn.

30.

The proposed Regulation presented by the Commission with this memorandum falls
within  the  field  covered  by  the  European  Economic  Area  and  is  accordingly  of
relevance to it.

24

COM(97) 218 final, OJ No C 165, 31.05.1997 p 13.

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2003/0038 (CNS)

Proposal for a

COUNCIL REGULATION

repealing Regulation (EEC) No 3975/87 and amending Regulation (EEC) No 3976/87
and Regulation (EC) No 1/2003, in connection with air transport between the
Community and third countries

(Text with EEA relevance)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article
83 thereof,

Having regard to the proposal from the Commission25,

Having regard to the opinion of the European Parliament26,

Having regard to the opinion of the European Economic and Social Committee27,

Whereas:

(1)

(2)

Neither Council Regulation (EEC) No 3975/87 of 14 December 1987 laying down the
procedure  for  the  application  of  the  rules  on  competition  to  undertakings  in  the  air
transport  sector28,  as  last  amended  by  Regulation  (EC)  No  1/200329,  nor  Regulation
(EC)  No  1/2003  itself  applies  to  air  transport  between  the  Community  and  third
countries.

Consequently,  the  Commission  does  not  enjoy  powers  of  investigation  and
enforcement  with  regard  to  infringements  of  Articles  81  and  82  of  the  Treaty  in
respect of air transport between the Community and third countries equivalent to those
enjoyed as regards air transport within the Community. In particular, the Commission
lacks  the  requisite  fact-finding  tools  and  the  powers  to  impose  remedies  which  are
necessary to bring infringements to an end or to impose penalties in respect of proven
infringements.  Furthermore,  the  specific  rights,  powers  and  obligations  assigned  to
national  courts  and  the  competition  authorities  of  the  Member  States  by  Regulation
1/2003 do not apply to air transport between the Community and third countries; the
same holds true for the mechanism for co-operation between the Commission and the
competition authorities of the Member States provided for in Regulation 1/2003.

25

26

27

28

29

OJ C […], […], p. […].
OJ C […], […], p. […].
OJ C […], […], p. […].
OJ L 374, 31.12.1987, p.1
OJ L 1, 4.1.2003, p. 1.

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(3)

(4)

(5)

(6)

Anti-competitive practices in air transport between the Community and third countries
may  affect  trade  between  Member  States.  Since  the  mechanisms  enshrined  in
Regulation  (EC)  No  1/2003,  the  function  of  which  is  to  implement  the  rules  on
competition  under  Articles  81  and  82  of  the  Treaty,  are  equally  appropriate  for
applying  the  competition  rules  to  air  transport  between  the  Community  and  third
countries, the scope of that Regulation should be extended to cover such transport.

Article 2 of Regulation (EEC) No 3975/87 is of a purely declaratory nature and should
therefore  be  deleted.  With  the  exception  of  Article  6(3),  which  should  continue  to
apply to decisions adopted pursuant to Article 81(3) of the Treaty prior to the date of
application  of  this  Regulation  until  the  date  of  expiry  of  those  decisions,  Regulation
(EEC) No 3975/87 will, following the deletion of most of its provisions by Regulation
(EC) No 1/2003, cease to serve any further purpose; it should therefore be repealed.

By  the  same  token,  an  equivalent  amendment  should  also  be  made  to  Council
Regulation (EEC) No 3976/87 of 14 December 1987 on the application of Article 81
(3) of the Treaty to certain categories of agreements and concerted practices in the air
transport  sector30,  as  last  amended  by  Regulation  (EC)  No  1/2003.  That  Regulation,
which empowers the Commission to declare by way of Regulation that the provisions
of  Article  81(1)  do  not  apply  to  certain  categories  of  agreements  between
undertakings, decisions by associations of undertakings and concerted practices, is at
present explicitly limited to air transport between Community airports.

The Commission should be empowered to grant block exemptions in the air transport
sector  in  respect  of  traffic  between  the  Community  and  third  countries  as  well  as  in
respect of traffic within the Community. Accordingly, the scope of Regulation (EEC)
No 3976/87 should be broadened by abolishing its limitation to air transport between
Community airports.

(7)

Consequently,  Regulation  (EEC)  No  3975/87  should  be  repealed,  and  Regulation
(EEC) No 3976/87 and Regulation (EC) No 1/2003 should be amended accordingly,

HAS ADOPTED THIS REGULATION:

Article 1

Regulation  (EEC)  No  3975/87  is  repealed,  with  the  exception  of  Article  6(3),  which  shall
continue to apply to decisions adopted pursuant to Article 81(3) of the Treaty prior to the date
of application of Regulation (EC) No 1/2003 until the date of expiry of those decisions.

In Article 1 of Regulation (EEC) No 3976/87, the words "between Community airports" are
deleted.

Article 2

30

OJ L 374, 31.12.1987, p. 9.

11

                                                
In Article 32 of Regulation (EC) No 1/2003, point (c) is deleted.

Article 3

Article 4

This Regulation shall enter into force on the third day following that of its publication in the
Official Journal of the European Communities.

It shall apply as from 1 May 2004.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, […]

For the Council
The President

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