Verbod kartelvorming: Commissie heft uitzondering voor prijsstelling vliegtuigtarieven in IATA-verband op (en)

(see also IP/05/1432)

What is a Block Exemption Regulation?

Article 81(1) of the EC Treaty prohibits agreements which affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market. Under Article 81(3) a restrictive agreement may be exempted from the prohibition of Article 81(1) if the positive effects brought about by the agreement outweigh its negative effects and a fair share of these benefits are passed on to consumers.

The Commission can "block exempt" categories of agreements by means of adopting Regulations and thus provide the agreements with a safe harbour clarifying that they are compatible with the competition rules on condition that they respect the rules laid down in the Regulations. In order to grant a block exemption, the Commission needs to be absolutely certain that the agreements covered are compatible with the competition rules.

Why is the Commission proposing to withdraw the IATA passenger tariff conferences block exemption for routes within the EU?

Use of the IATA system for interlining within the EU is declining. More than 97% of all passenger air journeys within Europe are either journeys which are not interlined, or are interlined through a system which does not depend on IATA Tariff Conferences. The benefits to consumers of the IATA system are therefore less than they once were. The risks to competition, however, remain. These risks result from the regular meetings of competitors to exchange commercially sensitive information with a view to agreeing prices for interlined tickets.

The Commission believes that the benefits brought about by the tariff conferences no longer outweigh these risks to competition sufficiently clearly to justify a Block Exemption Regulation. In the future, IATA and its members must look at their agreements and decide for themselves whether they are compatible with the competition rules.

Does this withdrawal of the block exemption mean that interlining on routes within the EU has to stop?

No. Discontinuing a Block Exemption is not the same as prohibiting interlining. Rather, it is about withdrawing the legal assurance that the organisation of the tariff conferences is compatible with the competition rules.

Any agreement which meets the conditions of Article 81(3) is legal and enforceable without the need for a prior decision from the Commission, or any other authority, to that effect. In the air transport sector, as in any other sector, it is therefore for the industry to ensure that its agreements and concerted practices are compliant with the competition rules. In other words, in the first place, it is for the airlines to decide for themselves whether they wish to continue with the conferences, whether in their present or in a modified form.

In addition, the draft Regulation grants a transitional period until the end of 2006 for industry to conduct this assessment. In parallel, discussions between the European Commission and IATA are continuing on a possible new system for multilateral interlining. One of the key subjects in these discussions is whether an alternative system can be devised which maintains the benefits of interlining (allowing consumers to combine the services of different carriers into one journey), while removing the risks to competition identified in the present system.

What is likely to be the impact on consumers and air travel in Europe?

Positive. The Commission has consulted widely before making the current proposal and in general consumer organisations, including representatives of corporate consumer groups, asked for the block exemption for passenger tariff conferences on intra EU routes to be withdrawn because they considered that this would be in the best interests of consumers.

The view taken by consumer organisations reflects the changing reality of air transport in Europe. IATA passenger tariff conferences have previously been important to allow consumers to interline. Their importance is steadily decreasing as other forms of cooperation between airlines which also allow for interlining have overtaken the IATA system in the European Union. These other forms of cooperation include in particular global airline alliances and code share agreements that have proliferated over the past years.

In any event, and as indicated above, the Commission is not prohibiting the IATA passenger tariff conferences, but is merely withdrawing the legal assurance that the agreements are compatible with the competition rules.

Were IATA to decide to discontinue its passenger tariff conferences, and therefore its interlining system in its current form, the short term impact on consumers would be limited. More than 97% of all passenger air journeys within Europe are either journeys which are not interlined, or are interlined through a system which does not depend on IATA Tariff Conferences.

The remaining 3% of journeys are done on the basis of bilateral agreements or through the IATA interlining system.

Moreover, evidence submitted to the Commission suggests that alternative forms of interlining are substantially less expensive than prices for IATA interlinable tickets: on average the price per flown mile for IATA fully flexible tickets is around 7 times the cost per mile of the airlines.

Will the proposed Regulation be bad for remote and peripheral regions?

Smaller and/or regional carriers in the EU are increasingly part of the general industry-wide trend towards airline alliances and code-share agreements. As such, these carriers and the remote/peripheral points they serve, increasingly enjoy the benefits of being connected to wider airline networks through forms of cooperation between airlines which are distinct from the IATA system for interlining.

Although IATA tariff conferences do not deal with traffic within the United States, Canada or Australia, it is not particularly difficult to interline to/from remote/peripheral destinations in the United States, Canada or Australia. Based on this experience, there is no reason to believe that interlining to/from remote/peripheral destinations in the EU should become particularly difficult if IATA tariff conferences were not to deal any more with traffic within the EU. Moreover, a Block Exemption Regulation covering all routes within the EU indistinctly is not the appropriate instrument to address any potential regional issues.

Will the ending of the Block Exemption Regulation for IATA slots and scheduling conferences require them to be terminated?

No. Once again, discontinuing a Block Exemption is not the same as prohibiting the agreements concerned. Rather, it is about withdrawing the legal assurance that the agreements concerned are compatible with the competition rules, and putting the onus on IATA and its members to ensure that their agreements are compliant with the competition rules. However, the logic for the Commission withdrawing the Block Exemption Regulation for IATA slots and scheduling conferences is that they are already compliant in their current form because the benefits to consumers in terms of well-coordinated journeys clearly outweigh any possible negative effects on competition. Therefore IATA slots and scheduling conferences do not need a Block Exemption Regulation.