CELEX: 51997DC0218
Language: en
Date: 1997-05-16 00:00:00
Title: Memorandum from the Commission - Application of the competition rules to air transport

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                Brussels, 16.05 1997
                                               COM(97) 218 final
                                               97/0137 (CNS)
                                               97/0138 (CNS)
                   MEMORANDUM FROM THE COMMISSION
                  Application of the competition rules to air transport
                                      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
                                      Proposal for a
                           COUNCIL REGULATION CEO
  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
                             (presented by the Commission)
 ---pagebreak---  ---pagebreak---                        MEMORANDUM FROM THE COMMISSION
                   Application of the competition rules to air transport
A.       AMENDMENT OF COUNCIL REGULATION (EEC) No 3975/87 LAYING
         DOWN THE PROCEDURE FOR THE APPLICATION OF THE
         COMPETITION RULES
Background
 1.      In 1981 the Commission made a proposal to the Council for a Regulation laying
         down the procedure for the application of the competition rules to air transport,
         and included within the scope of the Regulation international air transport with
         third countries1. In the course of the discussion of the Commission's proposal in
         the Council it became clear that, in order to reach agreement on the proposal, its
         scope would have to be restricted to international air transport within the
         Community, a change which was made at the time of Memorandum No 22 and was
         incorporated in Article 1(2) of Regulation (EEC) No 3975/873.
2.       The Commission's powers to enforce the competition rules in the air transport
         sector by means of fact-finding, taking decisions, imposing penalties and granting
         individual exemptions were initially limited by Regulation (EEC) No 3975/87 to
         international transport between Member States. The Commission's powers did not
         extend either to domestic transport or to transport between a Member State and a
        third country.
3.       In its judgment of 11 April 1989 in the Ahmed Saeed case4 the Court of Justice
        confirmed its judgment in Nouvelles Frontières5 as regards the application of
        Article 85 of the Treaty and ruled that Article 86 of the Treaty is directly
        applicable by national courts, even in the absence of an implementing regulation
        under Article 87 of the Treaty or of action by a Member State cartel authority or
        by the Commission (under Article 88 or Article 89 of the Treaty respectively). The
        Court's judgment means that, where a dominant airline succeeds, other than by
        normal competitive means, in eliminating all price competition, even on a domestic
        or on a Community third country route, this behayiour is to be deemed an abuse
        contrary to Article 86. Since there is no block exemption for airlines to discuss, let
        alone agree, fares on Community third country routes, such discussions or
        agreements are prohibited by Article 85 and hence are automatically void where
        either the authorities in the Member State in which the head office of one of the
        airlines concerned is situated or the Commission, acting under Articles 88 and 89
        respectively, find that they are incompatible with Article 85. The Court also ruled
        that a Member State is in breach of its Treaty obligations if it approves fares which
1
    OJ No C 291, 12.11.198)
2   COM(84) 72 final or 15 March 1984.
3   OJNoL374, 31.12.1987, p. 1.
4
    Case 66/86 11989] ECR 803.
5
    Joined Cases 209-213/84 11986] ECR 1425.
 ---pagebreak---        infringe Article 85 or Article 86. Such would be the case, for instance, where a
       uniform, agreed price structure has resulted from consultations which have not
        been exempted pursuant to Article 85(3).
4.      Since, in respect of both domestic and EC third country air transport, the
        Commission had at that time no power to grant exemptions under Article 85(3) or
        to use normal procedures to rule on abuses of dominant positions under
        Article 86, there was and still is a climate of serious uncertainty in which air
        carriers cannot know what practices and arrangements they may legitimately
        engage in on such routes. If, even inadvertently, they act unlawfully, they run the
        risk of actions in national courts leading to the payment of damages. Moreover,
        prior to the third package of measures liberalizing air transport, which introduced
        via Regulation (EEC) No 2409/926 the freedom in principle to set fares and rates,
        Member States faced comparable uncertainties when approving the fares filed by
        carriers on such routes. In order to establish a framework of certainty, the
        Commission asked the Council to give it the necessary powers to clarify how
        Articles 85 and 86 apply to domestic and extra-Community air transport.
5.      The Commission accordingly proposed again in 19897 that the Council adopt
        regulations extending the scope of its powers to enforce the competition rules so
        as to include domestic and EC third country air transport.
Air transport within a Member State
6.       The Council having committed itself, within the framework of the third package of
        air transport liberalization measures, to lay down rules on cabotage, it was
        necessary to adopt at the same time measures enabling the Commission to apply
        the competition rules to transport within a Member State.
7.       This induced the Commission to withdraw its 1989 proposal8 in so far as it
         concerned domestic transport and to present, on 25 July 1991, a new proposal for
         a Regulation9 whereby Regulation (EEC) No 3975/87 would also apply
         henceforth to transport entirely within a Member State. The latter proposal was
         adopted by the Council on 23 July 1992 as Regulation (EEC) No 2410/9210.
Air transport on Community third country routes
8.       The Council has, however, yet to act on the Commission's proposals concerning
         air transport on Community third country routes.
9.       As regards air transport on such routes, the Commission considers that a number
         of new factors have arisen since its 1989 proposals were last examined by the
         Council. In its view, these new factors make it more necessary than ever to
         endow the Commission as of now with the same powers of action vis-à-vis
        transport on such routes as those which are currently conferred on it by
6
    OJ No L 240, 24.8.1992, p. 15.
7
    COM(89) 417 final of 8 September 1989.
8
    OJ No C 248, 29.9.1989, p. 9.
9
    OJNoC225, 30.8.1991, p. 9.
10
    OJ No L 240, 24.8.1992, p. 18.
 ---pagebreak---        Regulation (EEC) No 3975/87 with a view to ensuring compliance with the
       competition rules in the case of air transport between Community airports.
 10.    Apart from the reasons which gave rise to a lack of legal certainty back in 1989
        and which still apply today (see points 3 and 4 above), these new factors are
        as follows
 10.1   Liberalization of the internal market
        The regulatory context has changed substantially since the introduction of the
        third package of air transport liberalization measures with effect from
        1 January 1993, with the resulting greater liberalization of the internal aviation
        market, which is to be rounded off by the unrestricted introduction of cabotage
        scheduled for April 1997.
        As one by one the existing regulatory restrictions on the commercial conduct of air
        carriers are removed, competition issues become increasingly pressing. When an
        airline operates in a more competitive environment, experience gained by the
       Commission in other sectors shows the need for more extensive and more effective
       means of coping with this new liberalized regulatory context so as to ensure fair
       competition between operators and to safeguard the interests of consumers.
       It is clear that for some major, mainly non-Community, air carriers, or for certain
       alliances, flights in the Community market are in some cases no more than an
       initial stage in, or a prolongation of, a flight bound for a third country. In such a
       case, intra-Community flights may be organized using the practice of code sharing
       with a partner and are viewed as only one stage in the journey.
       Equipping the Commission with such means of action is essential if the beneficial
       effects of the liberalization process that is under way are not to be partially offset
       by restrictive or abusive conduct on the part of European or non-European
       commercial operators. It would also make it possible to protect more effectively
      and more rapidly, for example by granting interim measures, small and
      medium-sized airlines, which are more often than not Community in origin and
      which might be harmed by such conduct.
10.2  Weakness of the external aspect
      The liberalization of the Community aviation market, an objective decided on and
      gradually implemented by the Council through the adoption of the three
      liberalization packages, remains fragile, however, inasmuch as the market is still
      incomplete externally. It remains subject to bilateral agreements between
      Community Member States and third countries. These agreements do not normally
      include any mechanism providing for a system of effective application of the
      Community competition rules, whereas some third countries apply their antitrust
      law to routes between themselves and the Community. The existence of these
      agreements is partly responsible for the lack of competitive pressure on the
 ---pagebreak---          Community market, as referred to in the Commission report of 22 October 1996
         on the impact of the third package of air transport liberalization measures11.
         It was to safeguard the internal aviation market and to be able to control the
         impact bilateral agreements might have on the Community market that the
         Commission proposed negotiations with the third countries concerned. This factor
         was instrumental in inducing the Council to issue a brief to conduct Community
         negotiations, first in March 1995 with Switzerland and in June 1996 with the
         United States, and secondly with the associated countries of central Europe, in the
         course of which competition issues were also raised.
         What is more, the Council has already agreed in the past to confer on the
         Commission the power to apply the competition rules on certain Community third
         country routes. The Agreement concluded in 1992 and amended in 199312
         between the Community on the one hand and Norway and Sweden on the other
         included a section on competition. The Agreement establishing the
         European Economic Area, which entered into force on 1 January 1994, replaced
         the above Agreement and likewise includes such a section.
10.3     Need to create a more structured legal framework in order to make good the
         deficiencies of the present system
         The recent rapid development of a new generation of alliances between air carriers
         covering EC third country (in particular EC-USA) routes having a major impact
         on competition13, notably within the Community market, induced the Commission
         in July 1996 to initiate the procedure provided for in Article 89 of the Treaty in
         respect of some of them with a view to carrying out a thorough examination both
         of their compatibility and of the compatibility of certain restrictive practices which
         they entail with the Community competition rules.
         At the same time as the Commission was initiating the Article 89 procedure,
         two Member States considered it necessary also to initiate a procedure under
         Article 88 of the Treaty in order to rule on the admissibility of two of these
         alliances under the same competition rules.
         A dual examination of one and the same agreement by two authorities, that of a
         Member State under Article 88 of the Treaty, and the European Commission
         under Article 89, is not only costly for the airlines party to the agreement in terms
          of both money and time, but is also a source of great legal insecurity for
         those airlines.
11
    COM(96) 514 final of 22 October 1996.
12
    Council Decision of 22 June 1992 concerning the conclusion of an Agreement between the
    European Economic Community, the Kingdom of Norway and the Kingdom of Sweden on civil
    aviation, OJ No L 200, 18.7.1992, and Council Decision of 22 July 1993 amending that Agreement,
    OJNoL212, 23.8.1993, p. 17.
13
    Such alliances are liable, at least where they involve major operators in a strong market position, to
    make it difficult for operators who are not able to face up to such a dominant position to gain access
    to the market.
                                                     5
 ---pagebreak---         The extension of the scope of Regulation (EEC) No 3975/87 to include
        international air links with third countries would therefore afford airlines the clear
        benefit of a single set of controls 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 89 of the Treaty, without their being any risk of
        conflicting decisions.
        Cooperation agreements between European and US airlines are closely scrutinized
        by the US authorities, who apply their antitrust law to routes between the US and
        the Community, imposing where appropriate conditions on European airlines,
        whereas the Commission has as yet no power to impose any conditions on
        US airlines on the strength of Article 85(3) of the Treaty with a view, if necessary,
        to exempting such agreements.
        At the level of the continent of Europe, the same phenomenon of alliances is likely
        to arise as on EC/US routes. There has also been a sharp increase in the number
        of flights between Member States and other third countries such as Switzerland,
        for example. Any cooperation agreements between air carriers concerning routes
        between Switzerland and the Community or some of its Member States are for the
        time being14 not amenable to Commission control under Regulation (EEC)
        No 3975/87. The Commission can examine them only under Article 89 of the
        Treaty. On 27 November 1996 it decided to initiate a procedure under the latter
        provision in respect of a cooperation agreement concerning such routes with a
        view to examining its compatibility with the competition rules.
        The expected changes in the conditions under which air transport operates in
        eastern Europe following the political and economic transformation that is taking
        place there will probably lead to the conclusion of numerous cooperation
        agreements with European airlines which are liable to have an impact in
        the Community.
11.     The Commission accordingly proposes once more that the Council adopt
        two Regulations which would enable the Commission to apply the Community
        competition rules to air transport on Community third country routes. It presents
        to that end two new proposals which, as is explained in point 21 of this
        memorandum, replace those which it presented in 1989.
12.     The first Regulation would modify Regulation (EEC) No 3975/87 in two ways:
        (i)    Deletion of Article 1(2), which limits the scope to air transport between
               Community airports.
               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.
14
    The present proposals are without prejudice to the agreement on transport, including air transport,
    envisaged between the Community and Switzerland.
                                                  6
 ---pagebreak---         (ii)    Addition of an Article providing for consultations and, where necessary,
                negotiations under Council directives in the event of a conflict between
                Community competition law and the laws, regulations or administrative
                provisions of third countries15 or the provisions of air service agreements
                between Member States and third countries.
B       AUTHORIZATION OF THE COMMISSION WITH RESPECT TO THE
        POWER TO GRANT CERTAIN BLOCK EXEMPTIONS
13.     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 so as to enable air carriers to adapt gradually to
        a more competitive environment.
14.     The Commission's general experience with these 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.
15.      On this basis, were Regulation (EEC) No 3975/87 also to cover 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, as amended by Regulation (EEC)
        No 2411/9216.
16.      The second Regulation that is proposed to the Council would accordingly
         empower the Commission to grant block exemptions to airline agreements,
         decisions and concerted practices in respect of international air transport between
         the Community and third countries and concerned with joint planning, the
         coordination of capacity and schedules, revenue sharing, the holding of
         consultations on tariffs for passengers with their accompanying baggage in so far
         as they are essential to interlining, the joint operation of a service on a new or less
         busy route, and slot allocation at airports.
17.      This second Regulation is broadly similar to Regulation (EEC) No 3976/87, as
         amended by Regulation (EEC) No 2411/92. However, the list of agreements in
         respect of which the Commission seeks authorization to grant block exemptions
         differs in that, to take account of the situation on certain Community third country
         routes, it includes the sharing of revenue and the coordination of capacity. The
         Regulation also contains an additional provision (Article 7(4)) designed to deal
         with the special situation where breaches of conditions or obligations, or effects
         incompatible with Article 85(3), are due to the laws, regulations or administrative
          provisions of third countries or the provisions of air service agreements between
 15
    There is a provision of this type in Council Regulation (EEC) No 4056/86, which lays down detailed
    rales for the application of Articles 85 and 86 to maritime transport, namely Article 9 on conflicts of
    international law.
 16
    OJ No L 374, 31.12.1987, p. 9, and OJ No L 240, 24.8.1992, p. 19.
                                                      7
 ---pagebreak---        Member States and third countries. In the case of extra-Community routes, the
       Community is bound to take account of such conflicts of rules and of the need to
       pay due regard to Community law when dealing with them.
18.    The Commission recognizes that restrictions of competition on routes between the
       Community and third countries are likely in certain cases to have direct distortive
       effects within the Community in the same way as restrictions on routes within
       the Community.
19.    It therefore intends to adopt, on the basis of powers to be granted to it by the
       proposed Council Regulation, an implementing regulation granting a block
       exemption subject to compliance with certain conditions and obligations while
       taking account of the situation obtaining as regards the block exemptions currently
       applicable in the sector of air transport between Community airports. Such a block
       exemption would in principle take account of the existing general regulatory
       framework applicable to links with third countries. 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.
20.    It goes without saying that airlines would still be free to conclude other forms of
       cooperation agreement and to notify them to the Commission with a view to
       obtaining the benefit of an individual exemption.
C      WITHDRAWAL OF THE PREVIOUS 1989 PROPOSALS AIMED AT
       APPLYING THE COMPETITION RULES AND AT ENABLING THE
       COMMISSION TO ADOPT BLOCK EXEMPTIONS FOR AIR TRANSPORT
       OPERATIONS BETWEEN THE COMMUNITY AND THIRD COUNTRIES
21.    The two proposals for Regulations presented by the Commission with this
        memorandum fall within a field covered by the European Economic Area and are
        accordingly of relevance to it. They replace those submitted in 1989, as set out in
        document COM(89) 417 final (in Annexes I and III) and presented to the Council
        on 8 September of that year.
22.     The two Commission proposals dating from 198917 are accordingly withdrawn.
 17
    OJ No C 248, 29.9.1989. pp. 7 and 10 respectively.
                                                   8
 ---pagebreak---                                        Proposal for a
                                COUNCIL REGULATION (EC)                      97/0137 (CNS)
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
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, and in particular
Article 87 thereof,
Having regard to the proposal from the Commission18,
Having regard to the opinion of the European Parliament19,
Having regard to the opinion of the Economic and Social Committee20,
Whereas Regulation (EEC) No 3975/8721, as last amended by Regulation (EEC)
No 2410/9222, formed part of a package of interrelated measures adopted by the Council
as a first step towards completing the internal market in transport; whereas its scope was
accordingly limited initially to international air transport between Community airports;
whereas, following the Council's decision to regulate cabotage as part of the
third package of air transport liberalization measures and to make air transport operations
taking place entirely within a Member State also subject to Community liberalization
measures, measures had to be adopted to enable the Commission to apply the competition
rules to air transport within a Member State; whereas to that end the Council amended the
scope of Regulation (EEC) No 3975/87 by Regulation (EEC) No'2410/92 by including in
it air transport entirely within a Member State;
Whereas, therefore, the Commission has no means at present of investigating directly
cases of suspected infringement of Articles 85 and 86 of the Treaty in respect of air
transport between a Community airport and an airport in a third country and lacks such
powers to take decisions or impose penalties as are necessary for it to bring to an end
infringements established by it;
Whereas practices which affect competition in the area of air transport between the
Community and third countries may affect trade between Member States; whereas it is
therefore desirable that rules should be laid down under which the Commission, acting in
close and constant liaison with the competent authorities of the Member States, may take
the requisite measures for the application of Articles 85 and 86 of the Treaty to this area
of air transport;
18
     OJNoC
19
     OJNoC
20
     OJNoC
21
     OJNoL 374, 31.12.1987, p. 1.
22
     OJ No L 240, 24.8.1992, p. 18.
 ---pagebreak--- Whereas Regulation (EEC) No 3975/87 has established a clear and satisfactory legal
framework for applying the competition rules to air transport between Community
airports; whereas the scope of that Regulation should therefore be extended to include air
transport between the Community and third countries;
Whereas, in view of the characteristics of international air transport between the
Community and third countries, account should be taken of the fact that the application to
such transport of the provisions of Regulation (EEC) No 3975/87 may in some cases
result in conflicts with the laws and rules of third countries or with the provisions of
international agreements between Member States and third countries applicable to air
services on the route or routes concerned; whereas it is necessary in such cases to take,
paying due regard to Community law, appropriate action in accordance with Community
interests and with Community obligations under international law,
HAS ADOPTED THIS REGULATION:
                                         Article 1
Regulation (EEC) No 3975/87 is hereby amended as follows.
1.      Paragraph 2 of Article 1 shall be deleted.
2.      The following new Article shall be inserted.
                                        "Article 18a
                                      Conflicts of rules
        Where the application of this Regulation in a particular case is liable to lead to a
        conflict with provisions laid down by law, regulation or administrative action of a
        third country or with the provisions of air service agreements between a
        Member State and a third country, the Commission shall, at the earliest
        opportunity, hold consultations with the competent authorities of the
        country concerned."
                                         Article 2
This Regulation shall enter into force on the day following that of its publication in the
Official Journal of the European C immunities.
This Regulation shall be binding in its entirety and directly applicable in all
Member States.
Done at Brussels,                                            For the Council
                                                             The President
                                              10
 ---pagebreak---                                             Proposal for a
                                  COUNCIL REGULATION (EC>                  97/0138 (CNS)
    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
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, and in particular
Article 87 thereof,
Having regard to the proposal from the Commission23,
Having regard to the opinion of the European Parliament24,
Having regard to the opinion of the Economic and Social Committee25,
Whereas Council Regulation (EEC) No 3975/87,26 as last amended by Regulation (EC)
No 27, lays down the procedure for the application of the rules on competition to
undertakings in the air transport sector;
Whereas international air transport between the Community and third countries is at
present governed by a network of international and bilateral agreements between
Member States and third countries; whereas many of these agreements encourage or allow
air carriers to cooperate in matters of commercial importance; whereas in observing these
agreements air carriers should not infringe the Treaty's competition rules, which apply
fully to all air transport activities within the scope of Community law; whereas the
application of the competition rules must nevertheless take account of the desirability of
dealing with any conflicts of rules, paying due regard to Community law; whereas air
carriers should be enabled to conduct their business within a framework affording a
reasonable degree of legal certainty in relation to the competition rules;
Whereas the Commission should therefore be enabled to declare by way of Regulation
that the provisions of Article 85(1) do not apply to certain categories of agreements
between undertakings, decisions by associations of undertakings and concerted practices;
Whereas it is desirable, in particular, that block exemptions be granted for certain
categories of agreements, decisions and concerted practices; whereas the Commission, in
close liaison with the Member States, should be able to define precisely the scope of these
exemptions and the conditions attached to them;
23
     OJNoC
24
     OJNoC
 25
     OJNoC
26
     OJNoL374, 31 12 1987, p. 1.
 27
     See page . of this Official Journal.
                                                   11
 ---pagebreak---  Whereas there can be no exemption if the conditions set out in Article 85(3) are not
 satisfied; whereas the Commission should therefore have the power to take the
appropriate measures where an agreement proves to have effects incompatible with
 Article 85(3); whereas it should consequently be able first to address recommendations to
the parties and then to take decisions;
Whereas this Regulation is without prejudice to the application of Articles 86 and 90 of
the Treaty,
HAS ADOPTED THIS REGULATION:
                                          Article 1
This Regulation shall apply to international air transport between the Community and
third countries.
                                          Article 2
1.        Without prejudice to the application of Regulation (EEC) No 3975/87 and in
         accordance with Article 85(3) of the Treaty, the Commission may, by Regulation,
         declare that Article 85(1) shall not apply to certain categories of agreements
         between undertakings, decisions by associations of undertakings and concerted
         practices on international air routes between the Community and one or more
         third countries.
2.       The Commission may, in particular, 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 consistency of these rules with the Code of Conduct
                  adopted by the Council.
3.        Without prejudice to paragraph 2, such Commission Regulations shall define the
          categories of agreements, decisions or concerted practices to which they apply and
          shall specify in particular:
          (a)      the restrictions or clauses which may, or may not, appear in the
                   agreements, decisions and concerted practices;
                                                  12
 ---pagebreak---        (b)     the clauses which must be contained in the agreements, decisions and
                concerted practices, or any other conditions which must be satisfied;
       (c)      the routes to which they apply.
                                        Article 3
A Regulation adopted pursuant to Article 2 shall apply for a specified period.
It may be repealed or amended where circumstances have changed with respect to any
factor which was fundamental to its adoption; in such a case, a period shall be fixed
for modification of the agreements and concerted practices to which the earlier
Regulation applies.
                                        Article 4
Regulations adopted pursuant to Article 2 may include a provision that they apply with
retroactive effect to agreements, decisions and concerted practices which were in
existence on the date of the entry into force of such Regulations.
                                        Article 5
 Before adopting a Regulation, the Commission shall publish a draft thereof and invite all
 persons and organizations concerned to submit their comments within such reasonable
time-limit, being not less than one month, as the Commission shall fix.
                                        Article 6
 The Commission shall consult the Advisory Committee on Agreements and Dominant
Positions in Air Transport established by Article 8(3) of Regulation (EEC) No 3975/87
before publishing any such draft Regulation and before adopting any such Regulation.
                                        Article 7
 1.     Subject to paragraph 4, where the natural or legal persons concerned are in breach
        of a condition or obligation which attaches to an exemption granted by a
        Regulation adopted pursuant to Article 2, the Commission may, in order to put an
        end to such a breach.
        (a)      address recommendations to the persons concerned, and
        (b)     in the event of failure by such persons to observe those recommendations,
                and depending on the gravity of the breach concerned, adopt a decision
                that either prohibits them from carrying out, or requires them to perform,
                specific acts or, while withdrawing the benefit of the block exemption
                which they enjoyed, grants them an individual exemption in accordance
                with Article 4(3) of Regulation (EEC) No 3975/87 or withdraws the
                benefit of the block exemption which they enjoyed.
 2.     Subject to paragraph 4, where the Commission, either on its own initiative or at
        the request of a Member State or of natural or legal persons claiming a legitimate
        interest, finds that in any particular case an agreement, decision or concerted
        practice to which a block exemption granted by a Regulation adopted pursuant to
                                                13
 ---pagebreak---        Article 2(2) applies nevertheless has effects which are incompatible with
       Article 85(3) or are prohibited by Article 86, it may withdraw the benefit of the
       block exemption from those agreements, decisions or concerted practices and
       take, pursuant to Article 13 of Regulation (EEC) No 3975/87, all appropriate
        measures for the purpose of bringing these infringements to an end.
3.      Before taking a decision under paragraph 2, the Commission may address
        recommendations for termination of the infringement to the persons concerned.
4.      To the extent that the situation referred to in paragraph 1 or in paragraph 2 results
        from provisions laid down by law, regulation or administrative action of a
        third country or from the provisions of an air service agreement between a
        Member State and a third country, the Commission shall, before withdrawing
        the benefit of the block exemption, apply Article 18a of Regulation (EEC)
        No 3975/87.
                                       Article8
This Regulation shall enter into force on the day following that of its publication in the
Official Journal of the European Communities.
This Regulation shall be binding in its entirety and directly applicable in all
Member States.
Done at Brussels,                                              For the Council
                                                               The President
                                              14
 ---pagebreak---                                                                   ISSN 0254-1475
                                                           COM(97) 218 final
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