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From Antitrust Law Daily, May 23, 2013

EC Approves Commitments Resolving Investigation into Transatlantic Cooperation Agreement Among Three Star Alliance Airlines

By Jeffrey May, J.D.

Commitments made by Star Alliance members Air Canada, United, and Lufthansa to make slots available at Frankfurt and New York airports and to enter into agreements with competitors, allowing them to offer more attractive services, will resolve European Commission (EC) concerns that the carriers’ cooperation under a revenue-sharing joint venture eliminated competition between the parties on price and capacity. The EC announced today that it made the commitments, which were offered in December 2012, legally binding on the three airlines for a period of ten years.

It appears that the EC will continue to monitor the impact of the cooperation. The carriers have agreed to submit data concerning their cooperation to enable the EC to evaluate the effect that their pact will have on the markets over time.

Market tests confirmed that these remedies were adequate. A breach of the commitment by a carrier could result in a fine of up to 10% of that carrier's total turnover.

In April 2009, the EC opened a formal antitrust investigation into existing and planned cooperation between Star Alliance members Air Canada, Continental, Lufthansa, and United relating to passenger air transport on routes between Europe and North America. The airlines intended to coordinate commercial, marketing, and operational activities on transatlantic routes, and the EC was concerned that the level of cooperation proposed appeared to be far more extensive than the general cooperation between alliance members.

These current commitments are aimed at facilitating the entry of new competitors on the Frankfurt-New York route. The parties also offered to enter into agreements allowing competitors to offer tickets on the parties' flights (reducing competitors' frequency disadvantage) and to get better access to the parties' connecting traffic, according to the EC.

oneworld alliance. Also back in April 2009, the EC announced an investigation into proposed cooperation between three members of the oneworld alliance—American Airlines, British Airways, and Iberia. In July 2010, the EC cleared a proposal by those carriers to expand their alliance through a joint venture, on the condition that the airlines honor certain legally binding commitments. Under the commitments, among other things, the carriers offered to make landing and take off slots available at London Heathrow or London Gatwick airports to facilitate the entry or expansion of competitors on routes between London and New York, Boston, Dallas, and Miami.

Companies: Air Canada; Deutsche Lufthansa AG; United Air Lines Inc., American Airlines; British Airways; Iberia

MainStory: TopStory Antitrust

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