Notice published pursuant to Article 27(4) of Council Regulation (EC) No 1/2003 in Case COMP/37.984 — SkyTeam (Text with EEA relevance)
Date: 2007-10-19
Institutions: European Commission
Subjects: air transport, carriage of goods, carriage of passengers, competition law, cooperation agreement, transport company

C 245/46

EN

Official Journal of the European Union

19.10.2007

Notice published pursuant

to Article 27(4) of Council Regulation (EC) No 1/2003 in Case

COMP/37.984 — SkyTeam

(Text with EEA relevance)

(2007/C 245/13)

1. INTRODUCTION

1. According to Article 9 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implemen-
tation of the rules on competition laid down in Articles 81 and 82 of the Treaty (1), the Commission
may decide — in cases where it intends to adopt a decision requiring that an infringement is brought
to an end and the parties concerned offer commitments to meet the concerns expressed to them by the
Commission in its preliminary assessment — to make those commitments binding on the undertakings.
Such a decision may be adopted for a specified period and shall conclude that there are no longer
grounds for action by the Commission, without finding whether or not there had been or still was an
infringement. According to Article 27(4) of the same Regulation, the Commission shall publish a
concise summary of the case and the main content of the commitments. Interested parties may submit
their observations within the time limit fixed by the Commission.

2. The European Commission has received a set of commitments formally submitted by Aerovias de
México S.A. (‘Aeromexico’), Alitalia — Linee Aeree Italiane S.p.A. (‘Alitalia’), České Aerolinie a.s. (‘ČSA’),
Delta Air Lines, Inc. (‘Delta’), Koninklijke Luchtvaart Maatschappij N.V. (‘KLM’), Korean Air Lines Co. Ltd
(‘Korean Air’), Northwest Airlines, Inc. (‘Northwest’) and Société Air France S.A. (‘Air France’), which are
members of the SkyTeam airline alliance. These commitments were submitted in the course of the
Commission investigation pursuant to Article 81 of the EC Treaty concerning the effects of the coopera-
tion concluded within the framework of SkyTeam.

2. SUMMARY OF THE CASE

3.

SkyTeam is a worldwide alliance of airlines focusing on long term strategic cooperation on passenger
and cargo air transport services. The alliance includes currently ten member airlines which have entered
into various multilateral and bilateral agreements. While the minimum level of SkyTeam members'
cooperation covers their adherence to the framework agreement as well as reciprocal codesharing,
Frequent Flyer Programs and lounge access, some of the members have entered into more advanced
cooperation leading to full coordination of key competition parameters in specific geographic markets.

4. The Commission has examined the effects of the cooperation concluded within the framework of
SkyTeam on the city-pairs between the EU and the USA and European city-pairs which have not been
examined in previous Commission cases (2) as well as on city-pairs between the EU and third coun-
tries (3).

5. On 15 June 2006 the Commission issued a Statement of Objections relating to a proceeding under
Article 81 of the EC Treaty, and provided access to the Commission's file, to the following SkyTeam
members (4): Aeromexico, Alitalia, ČSA, Delta, KLM, Korean Air, Northwest, Air France as well as
Continental Airlines, Inc. On 25 April 2007 the Commission sent a Letter of Facts and provided access
to the Commission's file to Aeromexico, Alitalia, ČSA, Delta, KLM, Korean Air, Northwest and Air
France. The Statement of Objections, which was supplemented by the Letter of Facts, is deemed to
constitute the preliminary assessment within the meaning of Article 9(1) of Regulation (EC) No 1/2003.

(1) OJ L 1, 4.1.2003, p. 1.
(2) Commission Decision of 7 April 2004, in Case COMP/D-2/38.284 Air France/Alitalia (OJ L 362, 9.12.2004, p. 17) and

Commission Decision of 11 February 2004 in Case COMP/M.3280 Air France/KLM (OJ C 60, 9.3.2004, p. 5).

(3) See Commission Notice on Investigation of an alliance agreement in the field of air transport (OJ C 76, 27.3.2002, p. 12).
(4) An investigation of the effects of cooperation with Aeroflot Russian Airlines, which only joined SkyTeam on 14 April

2006, was not included in this Statement of Objections.

19.10.2007

EN

Official Journal of the European Union

C 245/47

6.

Pursuant to the Commission's preliminary assessment, cooperation between the SkyTeam members
raises concern as to its compatibility with Article 81 of the EC Treaty on a number of city-pairs,
including in particular Amsterdam-Detroit, Amsterdam-Minneapolis, Paris-Atlanta, Paris-Cincinnati,
Rome-Atlanta, Milan-New York City, Paris-Prague, Milan-Prague, Rome-Prague, Amsterdam-Prague and
Paris-Seoul. On most of these city-pairs, and subject to the specific characteristics that may apply to
some of these routes, the relevant SkyTeam members have entered into an enhanced level of coopera-
tion on all key competition parameters. According to the Commission's preliminary assessment, this
enhanced cooperation would be likely to have anticompetitive effects in view of the strong market posi-
tion of the SkyTeam members involved coupled with the existence of significant barriers to entry. The
entry barriers include, in particular, slot constraints at the main EU airports, the parties' frequency
advantage and hub dominance as well as network effects from the parties' joint Frequent Flyer Programs
and other incentive schemes.

7. The addressees of the Statement of Objections and the Letter of Facts expressed their views in their

written replies but waived their right for an oral Hearing.

3. THE MAIN CONTENT OF THE OFFERED COMMITMENTS

8. Although the parties disagreed with the Commission's preliminary assessment, Aeromexico, Alitalia,
ČSA, Delta, KLM, Korean Air, Northwest and Air France have offered to abide by a set of commitments
which are designed to remedy the Commission's concerns.

9. The commitments are briefly summarised below and are published in full in English on the website of

the Directorate-General for Competition, at:

http://www.ec.europa.eu/comm/competition/index-en.html

10. On the city-pairs listed in paragraph 6, the above-mentioned parties offer to:

(a) make slots available at the appropriate EU airports to allow competitors to operate new or addi-

tional services;

(b) share their Frequent Flyer Programs with the new entrant,

if

it does not have a comparable

program;

(c) enter into interlining agreements with the new entrant. This will enable the new entrant, for
instance, to offer round-trips where the first flight is operated by the new entrant and the second
by the parties;

(d) enter into special prorate agreements for behind and beyond traffic on the intra-EU routes;

(e) facilitate inter-modal services.

11. On city-pairs between the EU and the USA, the parties offer commitments for one prospective new
entrant to operate one new or additional service. This new service must be operated at least 6 days a
week and may be either direct or via a European hub or any US airport.

12. On European city-pairs, the parties offer commitments to enable competitors to operate in aggregate
2 daily services on Amsterdam-Prague and Milan-Prague, 3 daily services on Paris-Prague and
one daily service on Rome-Prague. Existing services by competitors will be discounted from this total.
Only non-stop services operated every day from Monday to Friday with a regular schedule are consid-
ered.

13. On the Paris-Seoul city-pair, the parties offer commitments for up to 2 new entrants, each operating a

service at least 3 days per week.

14. The parties also offer to establish a trustee to monitor the accomplishment of the commitments. In
case of a disagreement between a new entrant and the parties on the terms of an agreement, the parties
offer a dispute resolution process where the monitoring trustee will ultimately decide on the terms.

C 245/48

EN

Official Journal of the European Union

19.10.2007

15. The parties offer these commitments for five years on long-haul city-pairs to/from destinations in the
United States and for six years on all other city-pairs as of the date of notification of the Commission
decision to the parties.

4. INVITATION TO MAKE COMMENTS

16. The Commission intends, subject to market testing, to adopt a decision under Article 9(1) of Regulation
(EC) No 1/2003 declaring the proposed commitments which have been summarised above and
published on the Internet, on the website of the Directorate General for Competition, to be binding on
Aeromexico, Alitalia, ČSA, Delta, KLM, Korean Air, Northwest and Air France.

17. In accordance with Article 27(4) of Council Regulation (EC) No 1/2003, the Commission invites inter-
ested third parties to submit their observations on the proposed commitments. These observations
must reach the Commission not later than one month following the date of this publication. Interested
third parties are also asked to submit a non-confidential version of their comments, in which commer-
cial secrets and other confidential passages are deleted and are replaced as required by a non-confiden-
tial summary or by the words ‘[commercial secrets]’ or ‘[confidential]’. Legitimate requests will be
respected.

18. Observations can be sent to the Commission, under reference number COMP/37.984 — SkyTeam,
either by e-mail (COMP-GREFFE-ANTITRUST@ec.europa.eu), by fax ((32-2) 295 01 28) or by post to
the following address:

European Commission
Directorate-General for Competition
Antitrust Registry
B-1049 Brussels