CELEX: 51991PC0272(02)
Language: en
Date: 1991-08-07
Title: PROPOSAL FOR A COUNCIL REGULATION ( EEC ) AMENDING REGULATION ( EEC ) NO 3976/87 ON THE APPLICATION OF ARTICLE 85 ( 3 ) OF THE TREATY TO CERTAIN CATEGORIES OF AGREEMENTS AND CONCERTED PRACTICES IN THE AIR TRANSPORT SECTOR

COMMISSION OF THE EUROPEAN COMMUNITIES
                                           C0M(91) 272 final
                                           Brussels, 7 August 1991
                                 Proposal for a
                           COUNCIL REGULATION (EEC)
            amending Regulation (EEC) No 3975/87 laying down the
  HiH*          procedure for the application of the rules on
                      competition to undertakings in the
                             air transport sector,
                                       and
                                 Proposal for a
                           COUNCIL REGULATION (EEC)
Safe'     amending Regulation (EEC) No 3976/87 on the application
          of Article 85(3) of the Treaty to certain categories of
                  agreements and concerted practices in the
                              air transport sector
   wm
                         (presented by the Commission)
 ---pagebreak---                                     - 2 -
A.  AMENDMENT   TO REGULATION   (EEC) No 3975/87 ON       PROCEDURE   FOR   THE
    APPLICATION OF COMPETITION RULES
1.  The Commission's powers to enforce the competition rules in the air
    transport   sector  by means of    fact-finding,    imposing orders and
    sanctions and granting individual exemptions is limited, by Council
    Regulation (EEC) No 3975/87< 1 >, to international transport between
    Member   States. The Commission's powers do not extend          to either
    domestic transport nor to transport between a Member State and a
    third country.
2.   In its Judgment of 11 April 1989 in the "Ahmed Saeed" case (1) the
    Court   of   Justice   confirmed   its  Judgment     in  the   "Nouvelles
                       (2)
    Frontières case"       as regards the application of Article 85 of
    the Treaty and ruled that Article 86         is directly applicable by
    national courts, even in the absence of an implementing regulation
    under Article 87 or of action by a Member State cartel authority or
    by the Commission (under Article 88 or Article 89 respectively).
    The Court's judgment means that where a dominant airline succeeds,
    other than by normal competitive means, in eliminating competition,
    even on a domestic or on a Community-third country           route, this
    behaviour   is 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,   the    elimination    of     price
    competition resulting from such discussions or agreements is liable
    to be an abuse of the dominant or joint dominant position which in
    many instances exists on such routes. The Court also ruled that a
    Member State is in breach of its Treaty obligations if it approves
    fares which    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).
(1) OJ No L 374, 31.12.1987.
(2) Judgment of 11 April 1989 in Case 66/86, [1989] ECR
 ---pagebreak---                                       - 3 -
3.  Since,   in respect of both domestic and of EC-third country air
    transport, the Commission has no power to grant exemptions under
    Article 85(3) nor to use normal procedures to rule on abuses of
    dominant   position    under    Article   86,    there    is   now   a  serious
    uncertainty in which air carriers can not 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 compensation.
    Moreover,    Member    States     face   comparable     uncertainties      when
    approving the fares filed by carriers on such routes. In order to
    establish a framework of certainty, the Council should now give the
    Commission the necessary powers to clarify how Articles 85 and 86
    apply to domestic and to extra-Community air transport.
4.  The   Commission   accordingly     proposed (3 )   that   the   Council   adopt
    regulations   extending     the  scope   of   its   powers    to   enforce  the
    competition   rules   in respect     of domestic     and   third-country air
    transport. The Council has however not yet acted on that proposal.
5.  Since the Council has committed         itself, in the framework of the
    third package of air transport liberalisation measures, to lay down
    rules on cabotage it will be necessary to adopt at the same time
    measures enabling the Commission to enforce the competition rules
    to transport within a Member State.
6.  Therefore the Commission now withdraws its earlier proposal insofar
    as   it applied   to domestic     transport, and makes a new proposal
    (Annex I) consisting      in a regulation to delete the limitation to
    international    transport    within   the Community,      so   that   domestic
    transport entirely within a single Member State is also covered by
    Regulation (EEC) No 3975/87. (Annex I).
(3) C0M(417) final, 8.9.1989.
 ---pagebreak---                                       - 4 -
 B.   AMENDMENT TO REGULATION (EEC) No 3976/87 ON GROUP EXEMPTIONS
 7.   The Commission's powers to adopt group exemptions            is limited, by
                                               4
      Council Regulation (EEC) No 3976/87< >, to International transport
      between   Member   States. For   similar   reasons    to   those  set   forth
      above, these powers should now be extended to domestic             transport
      entirely within a Member State.
 8.  As part of the second package of liberalisation measures in the air
      transport sector     the Council extended the validity of Regulation
      (EEC) No 3976/87 empowering the Commission to adopt for a limited
      period a number of group exemptions to the competition              rules so
      that air carriers could adapt progressively to a more competitive
     envIronment.
     The Commission on that basis adopted three Régulâtions (5) :
     -   Regulation    (EEC) No 82/91 of     26 July    1988 concerning      ground
         hand Iing services;
     -   Regulation    (EEC)   No  83/91  relating    to  computer     reservation
         systems for air transport services; and
     -   Regulation     (EEC)   No  84/91   concerning     Joint    planning    and
         coordination of capacity, consultations on tariffs on scheduled
         air services and slot allocation at airports.
9.   The Commission's general experience with these group exemptions is
     that   they satisfy a genuine need for        legal certainty      among air
     carriers and other market operators, while providing an             incentive
     to abandon previous more restrictive agreements.
10. In view of the further liberalisation now proposed, the Commission
     is of the opinion that the same objectives can be pursued after
    31 December     1992.    This   would   imply    that,     subject    to   the
    circumstances as they appear at the time, in particular the terms
(4) OJ No L 374, 31.12.1987.
(5) OJ No L 10, 15.1.1991.
 ---pagebreak---                                     - 5 -
    of the third package adopted by the Council,        the group exemptions
    will   be  substantially   renewed    subject  to    some   tightening   of
    conditions (as set out below) which is made desirable by progress
    attained    in  creating    a   more    competitive    environment.     The
    possibilities for cooperation to be left to airlines will depend on
    the extent to which the new regulatory framework creates room for
    increased competition.
11. The Commission    intends to make       the following     changes  to the
    existing regulations :
    -   replacement of the exemption for capacity discussions by an
       exemption for binding schedule coordination (the exemption for
       non-binding schedule consultations will be maintained);
    -   (if appropriate) alignment of the exemption for slot allocation
       discussions on the results of discussions by the Council on
        common rules for slot allocation (subject to the need to ensure
       compatibility of the outcome of the discussions with Article
       85(3) of the EEC Treaty).
    The   exemptions   for   computer    reservation   systems-    and  ground
    handling agreements can be renewed without significant changes,
    except for changes necessary to take account of alterations in the
    arrangements of the computer reservation systems. The exemption
    for tariff consultations, including the obligations to interline,
    will be renewed with some minor changes which will not affect the
    substance   of  air  carriers' obligations       but   will   clarify   the
    conditions in practice.
    The Commission considers it useful to have power to adopt          a group
    exemption   in  favour  of    Joint   operations   on   new   routes   with
    relatively few passengers for limited periods, in line with the
    practice which was developed in individual cases during the past
    few years.
 ---pagebreak---                                            - 6 -
        12. In order to secure adoption of the new group exemptions by the time
             the present exemptions expire, on 31 December 1992, the extension
             of Regulation (EEC) No 3976/87 in order to enable the Commission to
             adopt these new group exemptions, should be in place by 30 June
             1992.
             The Commission will then follow the normal procedure provided by
             Regulation (EEC) No 3976/87, i.e. it will invite comments by third
             parties and consult the Advisory Committee on Restrictive Practices
             and Dominant Positions in Air Transport.
        13. The Commission accordingly proposes that the Council adopt a
             regulation modifying Regulation (EEC) No 3976/87 in the following
             ways (Annex II):
               (I) the   Regulation  would  also apply   to domestic    transport
 i£                entirely within a single Member State;
È*            (il) the Regulation is given an indefinite validity;
             (ill) the possibility of an exemption for joint operations between
                   airlines will be provided for;
              (iv) the conditions contained in Article 2(2) of the Regulations
|j.,               are deleted, as is appropriate in a regulation of indefinite
£ .                duration; and
%'             (v) a standard clause (new Article 3) is included on the duration
t                  and review of the Commission's implementing regulations.
£-.
i. *•'
I\     C. CHANGES TO EARLIER PROPOSAL TO ENFORCE THE COMPETITION RULES IN
K           RESPECT OF DOMESTIC AND THIRD-COUNTRY TRANSPORT
5*
       14. In view of the inclusion of domestic air transport in the proposals
            for a third air transport package, the Commission now limits its
           earlier proposal to enforce the competition rules in respect of
           domestic and third-country transport, to transport to third
           countries .
           As a result, Annex II of the earlier proposal (C0M(89) 417 final,
           OJ No C 248 of 29 September 1989, p. 9) is withdrawn.
 ---pagebreak---                                      - 7 -
                                                                  ANNEX I
                                Proposal for a
                           COUNCIL REGULATION (EECÏ
                    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 COMMUNITIES,
Having    regard   to  the   Treaty  establishing   the   European   Economic
Community, and in particular, Article 87 thereof,
Having regard to the proposal from the Commission^)
Having regard to the opinion of the European Pari lament<2>,
Having regard to the opinion of the Economic and Social Committee*3^
Whereas Regulation (EEC) No 3975/87<4) 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 to international air transport between Community
airports;
 Whereas,    therefore,   the  Commission  has   no   means  at   present  of
 investigating directly cases of suspected      infringement of Article 85
 and 86 of the Treaty in respect of air transport within a Member State
 and   lacks such powers to take decisions or       impose penalties as are
 necessary for    it to authorise agreements under Article 85(3) and to
  (1) OJ No C
  (2) OJ No C
  (3) OJ No C
  (4) OJ No L 374, 31.12.1987, p.1.
 ---pagebreak---                                             - 8 -
       bring   to an   end   infringements established       by   it   in relation  to
       transport within a Member State;
       Whereas air    transport  entirely within a Member          State now also    is
       subject to Community liberalisation measures; 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, in
       situations where trade between Member States may be affected;
      Whereas there is a need to produce a secure and clear legal framework
       for domestic air transport within a Member State, while ensuring a
       coherent application of the competition rules; whereas therefore the
       scope of Regulation (EEC) No 3975/87 should be extended to this area of
       air transport,
      HAS ADOPTED THIS REGULATION :
 r                                       Article 1
 L-,
I      The   word   "international"   is   hereby    deleted    in   Article  1(2)  of
rf-._ Regulation (EEC) No 3975/87.
 *-
                                         Article 2
      This Regulation shall enter into force on the day following that of its
      publication in the Official Journal of the European Commun!tes.
      This    Regulation   shall  be   binding    in   its   entirety    and  directly
      applicable in all Member States.
      Done at Brussels,                                For the Council
                                                       The President
 ---pagebreak---                                                                 ANNEX II
                                Proposal for a
                           CWNCIU RE6UIATIQN (EEC)
                   amending Regulation (EEC) No 3976/87
      on the application of Article 85(3) of the Treaty to certain
             categories of agreements and concerted practices
                         in the air transport sector
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having   regard   to   the   Treaty  establishing   the  European  Economic
Community, and in particular Article 87 thereof,
Having regard to the proposal from the Commission*1),
Having regard to the opinion of the European P a N lament* 2 ),    ,
Hav ing regard to the opinion of the Economic and Socla I ComrnltteeC3^,
Whereas in accordance with Council Regulation (EEC) No 3975/87*4), as
                                           (5)
amended by Regulation (EEC) No                 ,  the Commission has power
to implement the competition rules in respect of air transport within a
Member State; whereas it is therefore desirable to provide for the
possibility of adopting block exemptions applicable to that area of
transport;
(1) OJ No C
(2) OJ No C
(3) OJ No C
(4) OJ No L 374,     31.12.1987, p. 1
(5) OJ No
 ---pagebreak---                                       - 10 -
Whereas   Council    Regulation     (EEC)   No   3976/87(6),   as   amended  by
                                (7)
Regulation (EEC) No 2344/90         , empowers the Commission 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 the power to adopt these block exemptions has been granted for
a  limited   period,   expiring   on   31  December   1992, during    which air
carriers can adapt to the more competitive environment            introduced by
changes   in   the   regulatory     systems   applicable    to  intra-Community
international air transport;
Whereas a continuation of block exemptions after that date is justified
by the further measures to liberalize the air transport sector adopted
by the Community; whereas the scope of these block exemptions and the
conditions attached to them should be defined by the Commission,             in
close liaison with the Member States, taking           into account changes to
the competitive    environment    achieved   since   the entry   into force of
Regulation (EEC) No 3976/87,
HAS ADOPTED THIS REGULATION :
                                    Article 1
Regulation (EEC) No 3976/87 is hereby amended as follows:
1.  The word "international" is deleted in Article 1.
2.  Article 2(2) is replaced by the following:
    "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:
(6) OJ No L 374, 31.12.1987, p. 9.
(7) OJ No L 217, 11.8.1990, p. 15.
 ---pagebreak---                                  - 11 -
         -   joint planning and coordination of airline schedules;
         -  consultations on tariffs for the carriage of passengers
            and baggage and of freight on scheduled air services;
         -  Joint operations on new scheduled air services;
         -  slot allocation at airports and airport scheduling;
         -  common purchase, development     and operation of   computer
            reservation systems relating to timetabling, reservations
            and ticketing by air transport undertakings;
         -  technical   and operational   ground handling at airports,
            such   as aircraft   push  back,  refuelling,  cleaning  and
            security;
         -  handling of    passengers, mail, freight    and  baggage  at
            airports;
        ^, services for the provision of In-flight caterIngv" •*•••'-••
3. Article 3 is replaced by the following:
                               "Article 3
   A regulation pursuant to Article 2 shall be made for a specified
   period.
   It may be repealed or amended where circumstance have changed with
   respect to any factor which was basic to its being made; in such
   case, a period shall be fixed for modification of the agreements
   and concerted practices to which the earlier Regulation applies."
4. Article 8 Is deleted.
 ---pagebreak---                                  - 12 -
                               Article 2
This Regulation shall enter into force on 1 July 1992.
This  Regulation  shall   be binding    in its  entirety  and directly
applicable in all Member States.
Done at Brussels,                          For the Counci
                                           The President
 ---pagebreak---                                  - 13 -
                 Fiche d'impact sur les PME  et l'emploi
 1. OBLIGATIONS ADMINISTRATIVES DECOULANT     DE   L'APPLICATION     DE LA
    LEGISLATION POUR LES ENTREPRISES
 Les compagnies aériennes devront suivre certaines procédures en vue de
 respecter les régies de concurrence.
 2. AVANTAGES POUR L'ENTREPRISE
 L'environnement plus concurrentiel devrait bénéficier           tous les
 opérateurs économiques, y compris les PME. En outre les régies de
 concurrence protègent des petites compagnies aériennes contre des
 pratiques abusives éventuelles de la part de concurrents en position
 dominante.
 Les exemptions par catégorie envisagées par la proposition augmenteront
 la sécurité juridique des compagnies qui participent à des accords
 compatibles avec l'article 85 $ 3 du Traité CEE.
 3. INCONVENIENTS POUR L'ENTREPRISE (Coût supplémentaire)
 Non
 4. EFFETS SUR L'EMPLOI
 Non
 5. r *-T~lL EU CONCERTATION PREALABLE AVEC LES PARTENAIRES SOCIAUX ?
 Non
•m Y A-T-IL UNE ALTERNATIVE*Wim    XmfHMGHMm      ï^ ^^^^^^^^^^^^^^^^^^ r  * ^
 Non
 ---pagebreak---  ---pagebreak---                                                                      ISSN 0254-1475
                                                              COM(91) 272 final
                                                      DOCUMENTS
EN                                                                         08 07
                                 Catalogue number : CB-CO-91-369-EN-C
                                                             ISBN 92-77-75280-7
Office for Official Publications of the European Communities
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