Communication of the Commission published pursuant to Article 27(4) of Council Regulation (EC) No 1/2003 in Case COMP/39964 — Air France-KLM/Alitalia/Delta
Date: 2014-10-23
Institutions: European Commission
Subjects: air transport, infringement of EU law, inter-company agreement, market access, restriction on competition, transport company








C_2014376EN.01001201.xml










23.10.2014   


EN


Official Journal of the European Union


C 376/12





Communication of the Commission published pursuant to Article 27(4) of Council Regulation (EC) No 1/2003 in Case COMP/39964 — Air France-KLM/Alitalia/Delta
2014/C 376/11
1.   INTRODUCTION







(1)


According to Article 9 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation 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. 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.   SUMMARY OF THE CASE







(2)


On 20 May 2009, Air France, Delta, KLM and Northwest (2) entered into a Transatlantic Joint Venture Agreement covering all their passenger transport services on transatlantic routes (the ‘TAJV Agreement’). The TAJV Agreement was implemented on 20 June 2009 (with retroactive effect as from 1 April 2009). On 5 July 2010, the TAJV Agreement was expanded to include Alitalia (3). The TAJV Agreement provides for cooperation between the Parties on all the key parameters of competition, including pricing, capacity, schedules and marketing.










(3)


On 23 January 2012, the Commission opened an ex officio investigation into the TAJV Agreement.










(4)


On 26 September 2014, the Commission adopted a preliminary assessment within the meaning of Article 9(1) of Regulation (EC) No 1/2003, in which it expressed preliminary concerns as to the compatibility of the TAJV Agreement with Article 101 of the Treaty. The preliminary assessment finds that the TAJV Agreement is likely to restrict competition by object.










(5)


Although the TAJV Agreement concerns all the transatlantic routes operated by the Parties, the preliminary assessment focuses on three routes where the Commission considered that there was a high probability that the conditions under Article 101(3) of the Treaty would not be met. These routes are Amsterdam-New York, Rome-New York and Paris-New York. In addition the Commission considers that, due to the closeness of competition between the Parties, as well as their significant combined market position, the TAJV Agreement is likely to produce appreciable anti-competitive effects on these routes.










(6)


Specifically, in the preliminary assessment, the Commission takes the view that the TAJV Agreement has eliminated the competition which existed between the Parties on these three routes before their cooperation. This competition is unlikely to be replaced by competition from existing competitors or from likely, timely and sufficient new entry or expansion, because there are significant barriers to entry and expansion in these markets. These barriers include, in particular, slot constraints at the airports concerned, the Parties’ frequency advantage and hub dominance, as well as network effects resulting from the Parties’ frequent flyer programmes.










(7)


On Paris-New York, the Commission’s concerns are limited to the premium passenger market (encompassing services in all cabin and fare classes except services in restricted economy), whereas on the Amsterdam-New York and Rome-New York routes, the competition concerns relate to both the premium and non-premium markets.




3.   MAIN CONTENT OF THE OFFERED COMMITMENTS







(8)


The Parties have offered commitments pursuant to Article 9 of Regulation (EC) No 1/2003, to meet the Commission’s competition concerns. The Parties have emphasised that this should not be interpreted as an acknowledgement that they have infringed the EU competition rules or that the TAJV Agreement is incompatible with Article 101 TFEU.










(9)


The commitments are briefly described below and published in full in English on the website of the Directorate-General for Competition at:
http://ec.europa.eu/competition/index_en.html










(10)


The Parties offer commitments on three routes, namely Amsterdam-New York, Rome-New York and Paris-New York (together referred to as ‘the Identified City Pairs’).










(11)


They offer:






(a)


to make arrival and departure slot pairs available at Amsterdam airport and/or New York JFK/Newark Liberty airports, as well as at Rome airport and/or New York JFK/Newark Liberty airports — at the prospective entrant’s choice — to allow one or more prospective entrant(s) to operate or increase up to seven (7) new or additional frequencies weekly on each of Amsterdam-New York and Rome-New York.
The offer is subject to certain conditions, including: (a) that the prospective entrant has exhausted all reasonable efforts to obtain the necessary slots through the general slot allocation process; and (b) that with regard to the New York end, the combined aggregate holding of slots held at New York JFK/Newark Liberty airports by: (i) the prospective entrant; (ii) its regional affiliates; and (iii) any other carriers with which it has a transatlantic joint venture which has been granted antitrust immunity by the DOT and those carriers’ regional affiliates, is not greater than 200 daily slots;










(b)


to enter into fare combinability agreements, as follows:






i.


with an eligible non-stop air services provider which, after the date when the commitments take effect, has started to operate a new or increased competitive air service on an Identified City Pair; and










ii.


with an eligible non-stop air services provider which already operates a competitive air service on Paris-New York,




provided in each case that the eligible non-stop air services provider or its alliance partners do not operate a hub at both ends of the Identified City Pair.
Such fare combinability agreements shall be available for all classes of passengers, except on Paris-New York, where they shall cover premium passengers only (as defined in paragraph (7) above);










(c)


to enter into special prorate agreements for traffic with a true origin and a true destination in Europe or North America/the Caribbean/Central America, as follows:






i.


with a new non-stop air services provider which, after the date when the commitments take effect, has started to operate a new or increased competitive air service on an Identified City Pair, irrespective of whether the competitive air service is commenced on the basis of slots obtained from the Parties under the proposed commitments; and










ii.


with an eligible non-stop air services provider which already operates a competitive air service on Paris-New York.




Such special prorate agreements shall be available for all classes of passengers, except for Paris-New York, where they shall cover premium passengers only (as defined in paragraph (7) above). The Parties shall not be obliged to enter into a special prorate agreement on any of the Identified City Pairs with any requesting air services provider which, alone or in combination with its alliance partners, operates a hub at both ends of the Identified City Pair;










(d)


to open their frequent flyer programmes to any New Non-stop Air Service Provider which, after the date when the commitments take effect, commences or increases a service on an Identified City Pair, provided such new non-stop air service provider does not have a comparable programme of its own and does not already participate in any of the Parties’ frequent flyer programmes.














(12)


The Parties offer to give responsibility to a trustee to monitor the application of the commitments. In case of disagreement between a new entrant and the Parties on the commitments, the Parties offer a dispute resolution process, under which an arbitral tribunal will ultimately decide on the matter.




4.   INVITATION TO MAKE COMMENTS







(13)


Subject to market testing, the Commission intends to adopt a decision under Article 9(1) of Regulation (EC) No 1/2003 declaring binding the commitments summarised above and published on the internet, on the website of the Directorate-General for Competition.










(14)


In accordance with Article 27(4) of Regulation (EC) No 1/2003, the Commission invites interested 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 any information they claim to be business secrets and other confidential information should be deleted and replaced as required by a non-confidential summary or by the words ‘business secrets’ or ‘confidential’.










(15)


Answers and comments should preferably be reasoned and should set out the relevant facts. If you identify a problem with any part of the proposed commitments, the Commission would also invite you to suggest a possible solution.










(16)


Observations can be sent to the Commission under reference number case COMP/39964 — Air France-KLM/Alitalia/Delta either by e-mail (COMP-GREFFE-ANTITRUST@ec.europa.eu), by fax (+32 22950128) or by post, to the following address:





European Commission




Directorate-General for Competition




Antitrust Registry




1049 Bruxelles/Brussel




BELGIQUE/BELGIË










(1)  OJ L 1, 4.1.2003, p. 1. With effect from 1 December 2009, Articles 81 and 82 of the EC Treaty have become Articles 101 and, respectively, 102 of the Treaty on the Functioning of the European Union (‘TFEU’). The two sets of provisions are in substance identical. For the purposes of this notice, references to Articles 101 and 102 of the TFEU should be understood as references to Articles 81 and 82 of the EC Treaty when applicable.

(2)  In 2008, Delta merged with Northwest Airlines (see Commission Decision in case COMP/M.5181 Delta Air Lines/Northwest Airlines). As of February 2010, after the full integration of Northwest into Delta, the separate Northwest brand and flight numbers ceased to exist. http://news.delta.com/index.php?s=43&item=911

(3)  In this communication, Air France, Delta, KLM and Alitalia are together referred to as ‘the Parties’.