Antitrust: Commission market tests commitments from Star alliance members Lufthansa, United and Air Canada concerning transatlantic cooperation

Brussels, 27-12-2012 — /europawire.eu/ — The European Commission has invited interested parties to comment on commitments proposed by Lufthansa, United and Air Canada to address competition concerns about their transatlantic cooperation. The Commission has concerns that this cooperation may harm premium passengers on the Frankfurt-New York route because it could result in higher prices, in breach of EU antitrust rules. The parties have offered to make landing and take-off slots available at Frankfurt and/or New York to facilitate the entry of competitors on this route. The parties are also prepared to enter into fare combinability and special prorate agreements with competitors to enable them to offer tickets on their flights and facilitate access to connecting traffic. If the market test confirms that the proposed commitments remedy the competition concerns, the Commission may adopt a decision under Article 9 of Regulation 1/2003, making the commitments legally binding on the parties.

The extensive cooperation between Lufthansa, United and Air Canada involves revenue-sharing and the joint management of schedules, pricing and capacity. At this stage, the Commission has concerns that this may result in higher prices on the Frankfurt – New York route for time-sensitive and flexibility-focussed passengers (so-called “premium passengers”). The companies jointly offered a set of commitments to alleviate the Commission’s concerns.

The commitments offered by the airlines are primarily aimed at enabling competing airlines to start operating or extend existing operations on the Frankfurt-New York route by lowering barriers to entry and to expansion. More concretely, they offer to make available landing and take-off slots at Frankfurt am Main and/or New York John F. Kennedy/Newark Liberty airports on the route from Frankfurt to New York. In addition, the parties commit to enter into fare combinability and special prorate agreements with competitors on the Frankfurt-New York route. These agreements would enable competitors to offer tickets on the parties’ flights and facilitate access to connecting traffic.

The parties are also prepared to allow passengers of new entrants without an equivalent frequent flyer programme to accrue and redeem miles on the parties’ frequent flyer programmes.

Interested third parties are invited to submit their comments to the Commission within one month from the date of publication.

Background

Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the EEA Agreement prohibit agreements and concerted practices which may affect trade and prevent or restrict competition.

In April 2009, the Commission opened a formal investigation into the cooperation of Star Alliance members Continental, United, Lufthansa and Air Canada on passenger transport on routes between Europe and North America (see MEMO/09/168). In 2010 Continental and United merged, creating the holding company United Continental Holdings Inc.

The companies have now offered commitments, with a view to alleviating the Commission’s competition concerns. If the market test indicates that the commitments are suitable to remedy the concerns, the Commission may adopt a decision under Article 9 of the EU’s antitrust Regulation 1/2003, to make them legally binding on Lufthansa, United and Air Canada.

More information, including the full non-confidential version of the commitments, is available on the competition website, in the Commission’s public case register under the case number 39595.