CELEX: 31995M0616
Language: en
Date: 1995-07-20 00:00:00
Title: COMMISSION DECISION of 20/07/1995 declaring a concentration to be compatible with the common market (Case No IV/M.616 - Swissair / Sabena (II)) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31995M0616

COMMISSION DECISION of 20/07/1995 declaring a concentration to be compatible with the common market (Case No IV/M.616 - Swissair / Sabena (II)) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 200 , 04/08/1995 P. 0010

  COMMISSION DECISION of 20/07/1995 declaring a concentration  to be compatible with the common market (Case No IV/M.616 -  Swissair / Sabena (II)) according to Council Regulation  (EEC) No 4064/89   (Only the English text is authentic).  The full text is  availablethrough CEN, the English version of CELEX)  The paper version of the decision is available through the  sales offices of the Office of Official Publications of the  European Communities  PUBLIC VERSION  MERGER PROCEDURE  ARTICLE 6(1)(b) DECISION  To the notifying parties  Dear Sirs,  Subject :<ind> Case No IV/M.616  Swissair / Sabena  <ind> Notification of 23.06.1995 pursuant to Article 4 of  Council Regulation No 4064/89  1.<ind> The present notification concerns a Shareholders'  and Master Agreement (SMA) between the Belgian State and  Swissair signed on 4 May 1994 and a Cooperation Agreement  between Sabena and Swissair (CA) which forms an integral  part of the SMA. The SMA provides in particular for the  acquisition by Swissair of a 49.5% stake in Sabena. The  remainder of Sabena's shares amounting to 50.5% of the  equity capital and voting rights will be held by the Belgian  State, directly or indirectly though SFI (Société Fédérale  d'Investissement/Federale Investeringsmaatschappij) and  Belgian institutional investors.  2.<ind> An original concentration plan concerning the  acquisition of joint control by Swissair and the Belgian  State over Sabena was notified to the Commission on 12 May  1995. The initial notification was withdrawn on 20.06.1995,  and a new notification was made on 23.06.1995, following a  modification of the original concentration.  3<ind> After examination of the notification, the Commission  has concluded that the proposed operation falls within the  scope of Council Regulation No4064/89 and does not raise  serious doubts as to its compatibility with the common  market and the functioning of the EEA Agreement.  I.<ind> The parties  4.<ind> Swissair and Sabena are respectively the major Swiss  and the major Belgian airline. They are principally engaged  in the carriage of passengers and freight. In addition, they  are active in sectors related to the air transport business,  such as airport services (ground handling, catering and  maintenance of aircraft and engines) and the hotel trade  sector. Sabena is currently jointly controlled by the  Belgian State, which owns 62.5% of the voting rights, and by  Air France, which owns the remaining 37.5%, through the  holding company Finacta S.A.[See Commission Decision of  05.10.1992 in Case IV/M.157  Air France/Sabena.]  5.<ind> The Belgian State is active in the air transport  sector only through Sabena.  II.<ind> The operation  6.<ind> Sabena and the Belgian State will terminate their  agreements with Air France, and the Belgian State will  transfer 49.5% of Sabena's shares to Swissair on the basis  of the abovementioned SMA. The remaining 50.5% of Sabena's  shares will be held by the Belgian State and by Belgian  institutional investors on the basis of arrangements  ensuring that in all major voting matters, the views of the  Belgian State and SFI will always prevail. The SMA will  govern the corporate structure as well as the management  organisation of Sabena. It will include a CA setting out the  main principles upon which the combination of the Swissair  and Sabena operations will be achieved.  III.<ind> Concentrative joint venture  <ind> Joint venture  7.<ind> According to [Deleted  business secret.] the SMA,  all key policy and strategic issues, including the business  plan, the annual budget, material fleet investments and  material changes to network will be decided by Sabena's  Board of Directors acting by simple majority [Deleted   business secret.]. The Board will consist of 12 members, 6  of which will be appointed by the Belgian State and 5 by  Swissair. The twelfth member will be jointly proposed by  Swissair and the Belgian State although, in case of  disagreement, Swissair's proposal will be deemed to be the  joint proposal and the Shareholder's meeting where the  Belgian State has the majority of votes will be free to  accept or reject him [The twelfth member will also be the  Chairman of the Board. The Belgian State can at all times  require his resignation.]. Consequently, only the Belgian  State will be in a position to veto the decisions of the  Board without the need for any further support from other  Board members.By contrast, Swissair will only be able to  veto such decisions, if it secures the support of the  twelfth member.  8.<ind> It follows from the above that, at the level of the  Board, the Belgian State appears to have a stronger  influence than Swissair. However, in the light of a number  of elements described below, it can be concluded that each  of the two parents will have the possibility to exercise a  decisive influence on Sabena's commercial policy within the  meaning of Article 3(1)(b) of the Merger Regulation.  9.<ind> First, it appears that the Belgian State and  Swissair have a strong common interest to run Sabena in  active cooperation. Although the Belgian State will be the  larger shareholder, Swissair, being a major airline with  considerable expertise, is expected to play an active role  in Sabena's management and operations.  10.<ind> Second, the Chief Executive Officer (CEO), who will  be responsible for the daily management of Sabena, cannot be  appointed by the Board of Directors without the joint  proposal of both parties [Deleted  business secret.]. The  other members of the executive management of Sabena cannot  be appointed and dismissed by the Board of Directors without  the recommendation of the Chief Executive Officer [Deleted   business secret.]. Sabena's secondtier management will be  appointed by the Chief Executive Officer [Deleted  business  secret.]. Consequently, already the SMA contains some  institutional mechanisms ensuring that Swissair can  exercise, jointly with the Belgian State, decisive influence  within the meaning of Article 3 (1) b of the Merger  Regulation.  11.<ind> Finally, the provisions of the CA between Swissair  and Sabena also give expression to the decisive influence  within the meaning of Article 3 (1) b of the Merger  Regulation that the two parent companies will exercise over  Sabena. The purpose of the CA is to achieve operational  synergies between Swissair and Sabena in areas of great  strategic and commercial importance, including fleet  plannning, strategic network development, financial  planning, route management, yield management, sales and  marketing. [Deleted  business secret.]  12.<ind> In the light of the abovementioned elements taken  as a whole, the Commission therefore concludes that the  Belgian State and Swissair have joint control over Sabena  within the meaning of Article 3 (1) b of the Merger  Regulation.  <ind> Autonomous economic entity  13.<ind> Sabena is an existing undertaking with all the  financial resources, staff, assets and other means necessary  for it to operate as an independent entity on the market. As  regards the duration of the joint venture, the duration of  the SMA is [Deleted  business secret. The period of time is  long.] years, while the CA will be in force for an initial  term of approximately [Deleted  business secret. The period  of time is long.] years and tacitly renewable for successive  periods of [Deleted  business secret.] years thereafter. As  a result, the joint venture will perform on a lasting basis  all the functions of an autonomous economic entity.  <ind> Absence of coordination of competitive behaviour  14.<ind> All activities of the Belgian State in the field of  air transport are included in the joint venture. The Belgian  State does not control any other air carrier or undertaking  active in the markets of the joint venture. There is,  therefore, no scope for coordination between the parents of  the joint venture.  IV.<ind> Community dimension  15.<ind> The present operation has a Community dimension  within the meaning of Article 1(2) of the Merger Regulation.  In 1994, the combined aggregate worldwide turnover of  Swissair and Sabena amounted to 5337 million Ecu and each  undertaking achieved a Communitywide turnover of more than  250 million Ecu. The two undertakings did not achieve more  than twothirds of their respective Communitywide turnover  within one and the same Member State [The geographic  allocation of turnover was made on the basis of the point of  sales method. In any event, the operation will also have a  Community dimension on the basis of the 50/50 method  See  case No IV/M.130  Delta Air Lines/Pan Am and case No  IV/M.157  Air France/Sabena, point 19.] [There is no need in  the present case to calculate the turnover of the Belgian  State, even though it is an undertaking concerned within the  meaning of Article 1 of the Merger Regulation (see also  paras. 4145 of the Commission notice on the notion of the  undertakings concerned, OJ C 385/12, of 31.12.94).].  V.<ind> Compatibility with the common market  16.<ind> The concentration involves three main sectors of  activities:  <ind> a)<ind> air transport, which is the core business of  both Sabena and Swissair;  <ind> b)<ind> airport services, such as ground handling,  catering and maintenance of aircraft and engines;  <ind> c)<ind> the hotel trade sector.  17.<ind> As regards catering, maintenance of aircraft and  engines and the hotel trade sector, the competitive impact  of the transaction is nonexistent or insignificant, either  because there is no overlap between the activities of the  parties or because the combined market share of the parties  is very small. As a result, the following analysis will  focus on the effects of the operation on the rest of the  abovementioned sectors.  <tab> Air transport  <ind> A.<tab> Introduction  18.<ind> The Court of Justice has stated [See judgment in  Case 66/86  Ahmed Saeed Flugreisen and Other v/Zentrale zur  Bekaenntfung unlauteren Wettbewerb [1989] ECR 803.] and the  Court of First Instance has recently confirmed [See judgment  in Case 2/93  Air France v/Commission (TAT) [1994] ECR 323.]  that in the air transport sector, the definition of the  relevant market has to start from the route itself, or a  bundle of routes to the extent that there is  substitutability between them according to the features of  each case. Furthermore, the structural conditions prevailing  at airports and airport capacity must also be considered  both in connection with the routes and separately. Finally  the impact of an extensive or high volume network in a given  geographical area [See also Commission Decisions of  13.09.1991 (Delta Air Lines/Pan Am), 01.10.1992 (Air  France/Sabena), 27.11.1992 (British Airways/TAT), 17.02.1993  (British Airways/Dan Air).] must be analysed, because  competition in the air transport sector also takes place at  the level of major airports as well as between networks.  19.<ind> The substitutability between routes depends on a  number of factors such as the distance between the point of  origin and the point of destination, the distance between  the different airports situated on each side of the route  and the number of frequencies available on each route  [Commission Decision of 05.10.1992 (Air France/Sabena),  point 25; of 27.11.1992 (British Airways/TAT), point 19; of  17.02.1993 (British Airways/Dan Air), point 10.].  <ind> B.<ind> African destinations  20.<ind> With respect to African destinations, the parties  have argued that the relevant market is the bundle of routes  between all departure points in the EU and EFTA countries,  including Switzerland, on the one hand, and each of the  individual African destinations on the other hand. The  parties have mentioned a number of factors supporting this  conclusion, such as the long duration of flights, the  limited number of frequencies, the good possibilities for  intraEuropean connections on the European side and the  absence of substitutability on the African side. This  definition, which was also used in the Air France/Sabena  decision [See point 39 of the decision.], appears to be  correct.  21.<ind> In this context, there is an overlap between  Swissair and Sabena on the bundles of routes between the EEA  (including Switzerland) on the one hand and each of the  following destinations on the other hand: Abidjan, Banjul,  Brazzaville, Dakar, Douala, Johannesburg, Kinshasa, Lagos,  Libreville, Nairobi and Yaounde. For each of these  destinations, the combined market share of the parties after  the operation will not exceed 20%  except for Brazzaville  [Deleted business secret  Between 25 and 50%.] and Kinshasa  [Deleted business secret  Between 25 and 50%.]  in terms of  passengers carried. The new entity will face at least one  competitor on each of these markets, including major  European carriers like Air France and/or the African flag  carriers. With regard to certain destinations constituting  mainly tourist destinations, such as Banjul and Nairobi,  there is also competition from charter flights. As regards  Brazzaville, the new entity will face competition from Air  France, which has a market share of [Deleted business secret   Between 50 and 75%.]. Finally, as regards Kinshasa, the new  entity will compete against two airlines, namely Air Zaire  [Deleted business secret  Between 10 and 25%.] market share)  and SCIBE ([Deleted business secret  Between 25 and 50%.]  market share). No dominance is therefore expected to arise  at the level of the bundle of routes between Europe and each  of the abovementioned Africandestinations.  22.<ind> As regards the network consisting of all the routes  between the EEA (including Switzerland) and Africa, the new  entity will serve 25 African destinations. Nevertheless, no  dominant position will be strengthened or created, given Air  France's existing network which is of a similar size to that  of Swissair and Sabena.  <ind> C.<ind> NorthAmerican destinations  23.<ind> In view of the volume of traffic on the  NorthAtlantic routes and the distance between Brussels and  Zuerich or Geneva, the parties do not consider that there is  sufficient substitutability between the routes having a  departure point from Brussels and those having a departure  point from Zuerich or Geneva. Were this definition to be  adopted, there would be no overlap between Swissair and  Sabena. In any case, even if a broader market definition  were to be adopted, there would still be no creation or  strengthening of dominance, since all major EEA and US or  Canadian carriers operate between North America and Europe,  and Swissair and Sabena represent together [Deleted business  secret  Less than 5%.] of the all passengers carried in this  area.  <ind> D.<ind> Destinations in the Far East  24.<ind> Sabena only operates on the BrusselsTokyo route.  Swissair is not active on this route but flies to Tokyo from  Zuerick and Geneva. If the BrusselsTokyo route on one side,  the ZuerickTokyo and GenevaTokyo routes on the other side are  considered to be separate markets, there is no overlap  between the operations of the two parties. If, as the  parties argue, there is, because of the long distance, a  sufficient degree of substitutability between the major  international airports in Europe, there would still be no  dominance, because the new entity will have a market share  of only [Deleted business secret  Less than 5%.] in terms of  passengers carried and will face competition by the major EU  airlines (British Airways, Air France, Lufthansa, KLM) as  well as by All Nippon Airways.  <ind> E.<ind> Routes between Switzerland and Belgium  25.<ind> There are four routes between the two countries:  Brussels/Bern, Brussels/Basle, Brussels/Geneva and  Brussels/Zuerich. In 1993, the total traffic on each of these  routes was: (i) for passengers 9,731, 50,203, 183,175 and  166,294 respectively; (ii) for freight (in tonnes) 2, 133,  1,537 and 3,028 respectively.   26.<ind> According to the parties, each of the four routes  between Switzerland and Belgium constitutes a distinct  market, given in particular the duration of the journey, the  distance between the different Belgian and Swiss airports  and the number of frequencies available on each route. As to  the substitutability between direct and indirect flights  between Belgium and Switzerland, it appears to be quite  unlikely that a passenger would in this case consider doing  the journey through an intermediate point, in view of the  short distance between Brussels and each of the four Swiss  destinations, as well as the sufficient number of  frequencies available on each route. Finally, although there  may be a limited degree of substitutability beween scheduled  air travel and other forms of transport, such as rail  transport, available on these routes, this substitutability  is too imperfect to be taken into account, in view a number  of factors, such as price differences or the considerably  longer duration of the journey.  27.<ind> Following the operation, the competitive situation  on each of these routes will be as follows:  <ind> (i)<ind> On each of Brussels/Basle, Brussels/Geneva  and Brussels/Zuerich the combined market share of the  parties, both for passengers and for freight, will amount to  100%. Following the proposed operation, a monopoly situation  will therefore be created on these routes. In 1993, the  individual market shares of the parties on each of these  routes were:   Passengers  <tab> Brussels / Basle <tab> Brussels / Geneva <tab>  Brussels / Zuerich  Swissair <tab> [ ]% <tab> [ ]% <tab> [ ]%  Sabena <tab>[ ]% <tab> [ ]% <tab> [ ]%  Total <tab> 100% <tab> 100% <tab> 100%  Freight  <tab> Brussels / Basle <tab> Brussels / Geneva <tab>  Brussels / Zuerich  Swissair <tab> [ ]% <tab> [ ]% <tab> [ ]%  Sabena <tab>[ ]% <tab> [ ]% <tab> [ ]%  Total <tab> 100% <tab> 100% <tab> 100%  [ ] Deleted business secret  (ii) On Brussels/Bern, there is no overlap between the  parties, because the only operator on the route, both for  passengers and for freight, is Crossair, a Swissair  subsidiary. Nevertheless, the proposed operation is also  likely to lead to a monopoly situation on this route by  eliminating competition from the most likely and significant  potential entrant, namely Sabena.  28. The Commission considers that, in the absence of the  modifications to the initial concentration plan set out  under section H. below, the monopoly situation resulting  from the proposed operation on the routes between Belgium  and Switzerland is likely to persist in the foreseeable  future. This is due to a number of regulatory and other  barriers to entry which would significantly impede effective  competition.   29. First, the terms and conditions of entry into the routes  between Belgium and Switzerland are governed by the  bilateral air services transport agreement of 24 March 1960.  This agreement provides that each Government at the end of  the route is allowed to designate only one carrier owned and  controlled by its own nationals (monodesignation). The only  airlines designated to fly on these routes are Swissair,  Sabena or airlines belonging to the Swissair or Sabena  groups (e.g. Crossair).   30.<ind> In this context, it must be noted that on 14 March  1995, the Council of Ministers adopted a decision  authorising the Commission to negotiate a comprehensive air  transport agreement between the Community and Switzerland.  The Council decision envisages that, subject to certain  exceptions, the rules governing the Community's air  transport market should be extended to Switzerland. However,  the negotiations between the Commission and Switzerland have  not yet led to the conclusion of an agreement, and the  abovementioned regulatory regime governing access to the  routes between Belgium and Switzerland is, as result, still  in place. For the reasons explained above, the Commission  considers that this regime prevents effective new entry into  the routes betweeen Belgium and Switzerland and thus  perpetuates the monopoly situation resulting from the  proposed operation.     31.<ind> In addition, the following factors can be  mentioned. First Swissair and Sabena are the major carriers  of the two States involved and are both wellestablished in  the airports concerned. More importantly, as set out below,  the situation regarding slot availability at some of the  airports concerned is of a nature to prevent or deter  effective new entry into the routes between Belgium and  Switzerland.  <ind> F. Airports   32.<ind> In assessing the proposed operation, the Commission  must consider the structural conditions prevailing at  airports both as a factor influencing entry into the routes  between Belgium and Switzerland and separately, as essential  facilities affecting competition between airlines on a  larger scale.   33.<ind> The airports directly affected by the present  operation are Brussels, Zuerich, Geneva, Basle and Bern.  34<ind> As far as ground handling is concerned, on all  airports concerned selfhandling is in principle allowed, and  neither Swissair nor Sabena enjoy monopoly rights with  regard to thirdparty handling. It does not therefore appear  that the situation with regard to ground handling will  constitute an additional barrier to entry into the market.  35.<ind> The Commission has also examined the situation in  terms of slots at the airports concerned. Availability of  slots is an essential condition for the creation of a stable  regular service and thus effective new entry into the routes  between Switzerland and Belgium. This is particularly  important on those routes Brussels/Zuerich and  Brussels/Geneva where, in view of the large number of  frequencies offered by the incumbent carriers, a newcomer  can compete effectively only with a sufficient number of  return flights reasonably spread throughout the day.     36.<ind> Slot availability appears to be an issue at three  of the airports concerned, namely Zuerich, Brussels and  Geneva. In particular, according to the present time  schedules for the 1995 summer season, the airport at Zuerich  appears to be congested at peak hours. Although the slot  situation at Brussels and Geneva appears to be better than  at Zuerich, these airports are close to congestion at some  peak hours. As a result, the Commission considers that  thesituation with regard to slots at all three airports is  likely to affect effective new entry and thus reinforce the  parties' position on the routes between Belgium and  Switzerland.  37.<ind> As stated above, slot availability must be viewed  not only in connection with specific routes, but also  separately, as an essential facility to operate from a given  airport. Swissair and Sabena's combined share of all slots  allocated at the three main airports is as follows (figures  for the 1995 summer season): Zuerich about [Deleted business  secret  between 50 and 60%.], Brussels about [Deleted  business secret  between 40 and 50%.], Geneva about [Deleted  business secret  between 40 and 50%.]. The overlap of  Swissair and Sabena at each of these airports is not very  significant: [Deleted business secret  less than 5%.] at  Zuerich, [Deleted business secret  less than 5%.] at each of  Brussels and Geneva. Moreover, it is not expected that the  combined operations of the parties from these airports to  the EEA and vice versa, following the concentration, will  increase demand for slots to such an extent that the ability  of competitors of the Swissair and Sabena groups to offer  new services will be significantly impeded.   <ind> G.<ind> Network effects  38.<ind> It is clear from the above that the combination of  the parties' networks will lead to a monopoly with regard to  air transport between Switzerland and Belgium. As to the  effect of the combination of the parties' network at a wider  European level, out of the total number of passengers  transported within W. Europe, the combined share of Swissair  and Sabena alone is relatively small (about [Deleted  business secret  less than 15%.] in 1993). Nevertheless, the  impact of the proposed operation becomes much more  significant when Swissair's participation in the European  Quality Alliance (EQA) is also taken into account.   39.<ind> Three airlines, Swissair, SAS and Austrian  Airlines, are currently participating in the EQA  arrangements which consist of bilateral Cooperation Frame  Agreements (CFA) and implementing agreements. Swissair is a  party to two CFAs: the CFA between Swissair and SAS of June  6, 1990 and the CFA between Swissair and Austrian Airlines  of July 17, 1992. The EQA involves extensive cooperation  among its partner airlines, inter alia through the  coordination of their route network and scheduling, in a  manner allowing the specialisation of their hubs.   40.<ind> One of the parties to the EQA, SAS has entered into  a cooperation agreement with Lufthansa the purpose of which  will be to integrate the parties' respective air transport  services between Germany and Scandinavia. This agreement has  been notified to the Commission and is the subject of  examination under Article 85 of the EC Treaty.  41.<ind> The coexistence of the three alliances, namely the  proposed concentration, the EQA and the Lufthansa/SAS  cooperation agreement, will enable the participating  airlines to establish an extensive integrated European  network. According to the information available to the  Commission, together these airlines would account for  approximately 35% of passenger traffic within Europe and  would carry in Europe more than twice as many passengers as  the next largest carrier.   <ind> H.<ind> The modifications to the original  concentration  42.<ind> On the basis of the above, the Commision has come  to the conclusion that the proposed operation will raise  serious doubts as to its compatibility with the common  market, because it will lead to the creation of a dominant  position as a result of which effective competition will be  significantly impeded in the common market. However,  Swissair and Sabena have entered into commitments and the  Swiss and Belgian governments have made a declaration which  remove the serious doubts in the manner described below.   43.<ind> First, the Belgian and Swiss governments have  declared that they will take the steps necessary to change,  before 31 July 1995, the existing regulatory situation  regarding the terms and conditions of access by air carriers  to the routes between Belgium and Switzerland in the  following respects:  <ind> <ind> the present system of monodesignation will be  changed into a regime of multiple designation;   <ind> <ind> any capacity restriction will be abolished;  <ind> <ind> as far as pricing is concerned, the country of  origin principle will apply; and  <ind> <ind> four EEA carriers will be admitted on the routes  concerned (on the basis of the "first come, first serve"  principle)for fifth freedom operations.  44.<ind> The Commission has taken the declaration of the  Belgian and Swiss governments into account in its final  assessment of the effects of the proposed concentration. The  Commission considers that the implementation of this  declaration will lead to the lessening of the existing  regulatory barriers to entry into the routes to the extent  required to generate sufficient competition to Swissair and  Sabena. It constitutes, therefore, an important element in  the analysis of the case enabling the Commission to conclude  that there are no serious doubts as to the compatibility of  the concentration with the common market.  45.<ind> Second, the companies entered into a number of  commitments vis à vis the Commission relating to slot  availability at the airports concerned, interlining and  participation into Frequent Flyer Programmes (FFPs). The  text of these commitments is annexed to the present decision  and forms an integral part thereof.  46.<ind> More specifically, in order to facilitate new entry  into the routes between Belgium and Switzerland, Swissair  and Sabena have entered into the following cumulative  commitments which will remain valid until the end of the  Winter 1999/2000 traffic period:  <ind> (i)<ind> In respect of the routes BrusselsZuerich and  BrusselsGeneva, if a carrier wishing to start or increase a  scheduled service on these routes cannot obtain the  necessary slots through the normal allocation precedure,  Swissair will make available per season a maximum of 12  daily slots at Zuerich and 12 daily slots at Geneva, in order  to enable the operation of a number of frequencies equal to  the aggregate number of frequencies operated by Swissair and  Sabena on each route.  <ind> (ii)<ind> In respect of the routes BrusselsZuerich,  BrusselsGeneva, BrusselsBerne and BrusselsBasle, if a  carrier wishing to start or increase a scehduled service on  these routes cannot obtain the necessary slots through the  normal allocation precedure, Sabena will make available per  season a maximum of 18 daily slots at Brussels, in order to  enable the operation of a number of frequencies equal to the  aggregate number of frequencies operated by Swissair and  Sabena on each route.  <ind> (iii)<ind> Provided that a new entrant has requested  to service these routes, Swissair and Sabena will be  prevented from increasing, without prior approval, the  aggregate number of frequencies on each route beyond 25%  above the present level.  <ind> (iv)<ind> Swissair and Sabena will enter into  interline agreements with new entrants for a period of five  years from the date of new entry.  <ind> (v)<ind> Swissair and Sabena will offer to new  entrants who do not already participate in a FFP the  possibility to participate in their FFP.   <ind> The respective coordinators at Brussels and at the  Swiss airports have taken note of these commitments and have  indicated to the Commission that they will bring them into  effect to the extent that they fall within their areas of  responsibility under applicable legislation.   47.<ind> The Commission considers that all these commitments  taken together create the conditions required for effective  new entry into the routes between Belgium and Switzerland.  Given the importance of the routes involved in terms of  traffic and/or facility of combination with other routes in  the context of the networks of other European airliines, new  entry is expected to occur with a sufficient degree of  probability. These commitments, therefore, enable the  Commission to conclude that the proposed concentration will  not create or strengthen a dominant position both at the  level of individual routes and at the level of the entire  air transport network between the two countries.  48.<ind> Third, Swissair has undertaken vis à vis the  Commission to terminate all effective cooperation with SAS  under the EQA as from [Deleted business secret.] and  [Deleted business secret.]. The implementation of this  commitment will ensure that there is the potential for  internetwork competition between Lufthansa/SAS and their  associated airlines on the one hand and Swissair/Sabena and  their associated airlines on the other hand. The Commission,  therefore, considers that it is of a nature to eliminate any  serious doubts as to the compatibility of the concentration  with the common market arising from Swissair's participation  in the EQA.  VI.<ind> Conclusion  49.<ind> For the abovementioned reasons, and especially in  light ofthe declaration made by the Swiss and Belgian  governments and the commitments given by Swissair and  Sabena, the Commission has concluded that the notified  operation does not raise serious doubts as to its  compatibility with the common market and with the  functioning of the EEA Agreement. This decision is adopted  in application of Article 6(1)(b) of Council Regulation No  4064/89.  For the Commission,    Undertaking by Swissair and Sabena    1. Market access    Swissair and Sabena will not oppose the measures taken by  the Swiss and Belgian governments allowing for  multidesignation and competition in respect of any route  between Belgium and Switzerland, without capacity  limitations or price restraints.    2. Interline agreement    SWISSAIR and SABENA will enter into an interline agreement  in respect of the routes concerned with any new entrant on  the routes BrusselsZurich, BrusselsGeneva, BrusselsBasel and  BrusselsBerne for a period of five years from the date of  such new entry.  Such agreements shall be on reasonable  terms and in accordance with the conditions which are normal  in the industry (in particular as to creditworthiness and  reciprocity) without prejudice to community law rules with  respect to interline agreements.    3. Frequent Flyer Programme    SWISSAIR and SABENA will offer to those competitors on  BrusselsZurich, BrusselsGeneva, BrusselsBasel and  BrusselsBerne who so request, and who do not directly or  indirectly participate in a Frequent Flyer Programme, the  opportunity to participate in their FFP under reasonable and  nondiscriminatory financial conditions.  This engagement is  strictly limited to the present operation and does not  prejudge the position of SWISSAIR and SABENA in this field.   It is also understood that such a commitment will terminate  when a European Union regulation concerning FFP has come  into force.    4. Slots and frequencies    4.1<ind> In respect of the routes between either Zurich or  Geneva and Brussels airport, SWISSAIR will make available to  carriers. not part of the SWISSAIR, or SABENA groups, which  wish to commence or to increase a scheduled service on these  routes, such slots at Geneva or Zurich as may be necessary  to enable the aggregate of those carriers to operate a  number of frequencies equal to the aggregate number of  frequencies operated by SWISSAIR and SABENA on the relevant  route.  Slots will be made available only if the carriers  concerned have made all reasonable efforts to obtain slots  for their services through the normal workings of the slot  allocation procedures and have failed to obtain them within  sixty minutes (either way) of the time requested.  SWISSAIR  will make available slots to the carriers concerned within  sixty minutes (either way) of the requested times, provided  that SWISSAIR holds such slots and save that SWISSAIR will  not be obliged to make available two similar slots for the  same carrier less than two hours apart nor to make available  a slot within two hours of a similar slot already held by a  carrier for use on the route.    4.2<ind> In respect of the routes between Brussels and  either Zurich, Geneva, Basel or Berne, SABENA will make  available to carriers, not part of the SWISSAIR or SABENA  groups, which wish to commence or to increase a scheduled  service on these routes. such slots at Brussels as may be  necessary to enable the aggregate of those carriers to  operate a number of frequencies equal to the aggregate  number of frequencies operated by SWISSAIR and SABENA on  each relevant route.  Slots will be made available only if  the carriers concerned have made all reasonable efforts to  obtain slots for their services through the normal workings  of the slot allocation procedures and have failed to obtain  them within sixty minutes (either way) of the time  requested.  SABENA will make available slots to the carriers  concerned within sixty minutes(either way) of the requested  times, provided that SABENA holds such slots and save that  SABENA will not be obliged to make available two similar  slots for the same carrier less than two hours apart nor to  make available a slot within two hours of a similar slot  already held by a carrier for use on the route.    4.3<ind> Swissair and Sabena shall abstain from scheduling  flights for the sole purpose of obstructing new entries  while they expect similar fair behaviour of such new  entrants, as well as from the other carriers.    <ind> If SWISSAIR and SABENA increase the aggregate number  of frequencies by 25 % (to be rounded upwards to the nearest  integral number) above the present level on each of the  routes BrusselsZurich, BrusselsGeneva, BrusselsBasel and  BrusselsBerne (i.e. six on each of the routes BrusselsZurich  and BrusselsGeneva, and seven on the route BrusselsBasel of  which 3 fly on to Berne) and provided a new entrant has  requested to service each or either of these routes, the  parties shall seek the prior approval of the DirectorGeneral  for competition for any further increase of frequencies.   Frequencies related to longhaul routes (stopover on longhaul  flights with same aircraft) are not counted with regard to  the abovementioned level of frequencies.    4.4 <ind> In respect of each the above undertakings:    (i)<ind> the obligation in respect of slots and frequencies  available shall expire at the end of Winter 1999 / 2000  traffic period;    ii)<ind> the number of slots to be made available per season  shall not exceed 12 daily slots at Zurich airport, 12 daily  slots at Geneva airport and 18 daily slots at Brussels  airport;    (iii)<ind> it shall be a condition that the slots made  available by SWISSAIR and/or SABENA shall be used only for  the purpose of operating on the route in respect of which  they were made available and the receiving carrier will be  expected to give an undertaking to SWISSAIR and/or SABENA so  to use them on that route for a period of two consecutive  seasons, unless the carrier withdraws from the route;    (iv)<ind> the undertaking to SWISSAIR and/or SABENA expected  from the receiving carrier will not prevent it from  exchanging those slots for others closer to the times it  originally requested but that undertaking shall apply  instead to the slots so obtained;    (v)<ind> the undertaking given by the receiving carrier,  will require it, if it ceases to operate on the route in  question during the period of its undertaking, to take such  steps as it can in order that the slots made available to it  can be returned to SWISSAIR or SABENA as the case may be in  accordance with applicable regulations;    (vi)<ind> SWISSAIR and SABENA shall not be obliged to make  slots available during any traffic period unless a request  has been made by an airline entitled to benefit from these  undertakings within 1 month after the closing of the IATA  scheduling meeting at which the coordination of slots for  that season has been undertaken, save that for Winter 1995 /  96 traffic period SWISSAIR and SABENA will make slots  available if required by these undertakings provided a valid  request is made within one month after publication of the  Commission's decision in the Official Journal;    (vii)<ind> for the purpose of these undertakings the  SWISSAIR group or SABENA group shall comprise SWISSAIR or  SABENA and any air carrier over which either company can  exercise a decisive influence in the meaning of Article 3 of  Regulation 4064/89;    (viii)<ind> 'similar slots' mean slots to be used for the  same purpose (i.e. to takeoff or to land);    (ix)<ind> SWISSAIR and/or SABENA will make available to a  carrier to which it has made available slots in accordance  with theseundertakings in one traffic period the same slots,  or as near to the same slots as it is able, in the following  traffic period, if it is necessary for the carrier to be  able to continue its service (the slot shall be defined in  local time for the purpose of this subparagraph); and    (x)<ind> SWISSAIR and/or SABENA will take account of the  operational needs of any carrier to which slots are given,  in view of the purpose of these undertakings being to  facilitate the operation of a viable commercial service; in  this context SWISSAIR and/or SABENA recognise the  desirability of meeting any requirement that turnaround  times be kept within a period of 90 minutes on routes such  as these;    (xi)<ind> reference to carriers who can avail themselves of  these undertakings is to EEA licensed carriers or Swiss  carriers designated on a route between Switzerland and  Belgium.    4.5<ind> These undertakings will be given effect as  follows:    A carrier wishing to avail itself of the benefits of these  undertakings shall write to SWISSAIR or SABENA respectively  requesting it to make slots available in accordance with the  undertakings.  Providing: the undertaking in respect of the  route in question has not already been fulfilled; the  request has been made within the time required, the carrier  making the request has made every normal effort to obtain  the slots necessary for its planned operation on the route  which save in respect of the Winter 1995 / 96 traffic  period, must include an application to the coordinator for  slots by the due date prior to the slot meeting for the  season concerned; then SWISSAIR and/or SABENA will make  slots available as necessary.  Should there be two or more  requests made during the same period which could not all be  met within the limits of the slots which SWISSAIR or SABENA  is making available in accordance with its undertakings,  then SWISSAIR or SABENA will enter into discussions with the  carriers with a view to reaching agreement as to how the  available slots shall be distributed.  Should it be  impossible to reach agreement, then the issue shall be  resolved by an independent arbitrator, whose appointment  will be agreed by the parties concerned. In the event that  no agreement is reached within a reasonable time, SWISSAIR  or SABENA will nominate an arbitrator, whose appointment  will fall to be confirmed by or on behalf of the Director  General for Competition of the European Commission. The  carrier receiving the slots shall give in writing the  undertakings set out in (iii) to (v) of paragraph 4.4.    Having reached agreement with the receiving carrier SWISSAIR  or SABENA will then ask the coordinator to transfer of the  slots.    Should circumstances or conditions change from those now  pertaining so that SWISSAIR or SABENA wishes to depart from  the undertakings set out in this letter, SWISSAIR or SABENA,  whichever is relevant, shall be free to discuss the matter  with the Commission. SWISSAIR and SABENA will not depart  from any of these undertakings except to the extent that the  Commission confirms acceptable.    SWISSAIR, Swiss Air Transport Company Ltd., Signed at  Zurich, on June 21, 1995    SABENA S.A. / N.V., Signed at Brussels on June 22, 1995