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30.7.

98 EN Official Journal of the European Communities C 239/5

Commission notice concerning the alliance between Lufthansa, SAS and United Airlines

(98/C 239/04)

(Text with EEA relevance)

On 9 August 1996 Lufthansa, SAS and United Airlines The Commission has come to the preliminary view that
(United) concluded a coordination agreement aimed at the agreements infringe Article 85 of the Treaty.
establishing a worldwide alliance. This followed two
bilateral agreements, one between Lufthansa and United
concluded on 9 January 1996, and one between SAS and
United concluded on 28 June 1996. On 3 July 1996 the The Commission could then issue a proposal under
Commission decided to initiate proceedings under Article Article 89(1) of the Treaty, outlining its analysis and
89 of the EC Treaty in respect of those bilateral setting out appropriate measures to bring the
agreements in so far as they related to air transport infringement to an end.
services between Europe and the United States. On 18
September 1996 it did the same in respect of the coordi-
nation agreement between Lufthansa, SAS and United.
The measures might be as follows:
The Commission has analysed the agreements only with
respect to the transport of passengers, and its analysis
here is without prejudice to any position it may adopt
with respect to the transport of goods. A. Reduction in frequencies

This assessment is likewise without prejudice to any


A.1. Relevant routes and maximum number of frequencies
position the Commission may adopt on any reper-
to be given up
cussions on transatlantic services of new agreements
announced between US airlines and new alliances
between European airlines.

1.ÙOn the two hub-to-hub routes on which total annual


On 2 October 1996 the Commission published a traffic is greater than or equal to 120Ø000 passengers
summary of the agreements in the Official Journal of the and on which the alliance operates more than 12
European Communities (Î) asking Member States and frequencies per week (Frankfurt-Chicago and
other intersted parties to submit observations. Frankfurt-Washington), the parties should, if so
requested by a competitor, reduce their combined
number of weekly frequencies so as to allow their
competitors to operate up to 55Ø% of frequencies on
the relevant route, in accordance with the following
(Î)ÙOJ C 289, 2.10.1996, p. 8. calculation:

(1) (2) (3)=(1)+(2) (4)=(3)0,45 (5)=(1)Ø–Ø(4)


or 12

Number of Number of other Number of


Route airlines’ 45Ø% of total weekly
LH/SAS/UA Total frequencies
frequencies frequencies frequencies, frequencies
weekly minimum 12 to be given up
weekly weekly
(1997 average) (1997 average) by LH/SAS/UA

Frankfurt-Chicago 19 8 27 12 7

Frankfurt-Washington 17 2 19 12 5
C 239/6 EN Official Journal of the European Communities 30.7.98

2.ÙThe hub-to-hub route where total annual traffic is accordance with the usual allocation mechanisms,
greater than or equal to 120Ø000 passengers but the necessary slots and airport facilities are to be
where the alliance operates fewer than 12 made available by the alliance on the same terms as
frequencies per week, Frankfurt-San Francisco, is in Frankfurt.
considered in section B.

7.ÙAt the end of the period of six months from the first
A.2. General principles applicable day of the IATA season following the adoption of
the decision of the national authority concerned, the
measure regarding the giving-up of frequencies will
cease to have effect. Slots linked to frequencies not
3.ÙLufthansa, SAS and United are to give up those given up in that period may continue to be held by
frequencies if and to the extent requested by any the alliance. There is no reason to require that those
competitor wishing to expand its presence or to slots be transferred to the market in the transport of
develop new services on those routes. non-time-sensitive passengers, as for that type of
passenger there is sufficient competition between
hubs in the different Member States.
—ÙThe members of the alliance need not give up
frequencies where that would have the effect of
placing any single competitor or any single trans-
atlantic alliance in a position where it controlled 8.ÙIf a competitor of the alliance which has obtained
more frequencies than the alliance on any one frequencies and the slots linked to them pursuant to
route, this measure withdraws from the relevant route, the
slots given up by the alliance are to be returned to it,
and to become available to other competitors in
accordance with section A.2.
—Ùthe members of the alliance need not give up
frequencies where that would reduce the number
of frequencies operated weekly by the alliance on
a route to fewer than 12, being two frequencies a 9.ÙAirlines in which Lufthansa, SAS or United have
day, six days a week. holdings or with which they have a franchising
agreement on the relevant markets may not receive
frequencies or slots given up by the alliance.
4.ÙFrequencies would have to be given up by the
alliance only during a period of six months from the
first day of the IATA season which follows the
adoption of the decision of the national authority B. Slots and airport facilities (except hub to hub)
concerned. If a competitor of the alliance requests a
transfer of frequencies to it, the alliance may not
within six months of the date of transfer increase the
number of its frequencies beyond a ratio of 55:45 10.ÙWhen an airline authorised to provide services
(competitors must be able to hold 55Ø% of the total between Frankfurt or Copenhagen and the United
number of frequencies on the relevant route, or States wishes to launch a new service or to expand
50Ø% if there is only one competitor). an existing service and cannot obtain the necessary
slots in accordance with the procedure laid down in
Council Regulation (EEC) No 95/93Ø(Î) and
Commission Regulation (EEC) No 1617/93Ø(Ï), as
5.ÙThe alliance should give up, without compensation, last amended by Regulation (EC) No 1523/96Ø(Ð),
whether financial or not, a number of slots corre- the members of the alliance are to make slots in
sponding to the number of frequencies it is giving Frankfurt or Copenhagen available to it on request,
up. But the alliance need not give up such slots if so as to allow the alliance’s competitors to hold up
there are slots available to competitors in accordance to 55Ø% of the total number of slots used by all
with the ordinary mechanisms for slot allocation at operators on the route. Slots already held by the
the relevant airports. Wherever necessary the alliance airlines flying the routes are to be taken into account
should also give up the airport facilities needed for in accordance with the following calculation:
the operation of the frequencies given up.

6.ÙIf airlines that have obtained slots in Frankfurt (Î)ÙOJ L 14, 22.1.1993, p. 1.
pursuant to this measure cannot obtain corre- (Ï)ÙOJ L 155, 26.6.1993, p. 18.
sponding slots at airports in the United States in (Ð)ÙOJ L 190, 31.7.1996, p. 11.
30.7.98 EN Official Journal of the European Communities C 239/7

(1) (2) (3)=((1)/0,45)0,55Ø–Ø(2)

Route LH/SAS/UA slots used Competitors’ slots used on Slots to be given up by


on the route the route LH/SAS/UA only usable
(1997 average) (1997 average) on the route

Frankfurt-San Francisco 14 0 17

Frankfurt-Boston 24 10 19

Frankfurt-Dallas 14 14 3

Frankfurt-Los Angeles 20 10 14

Frankfurt-Miami 16 4 16

Copenhagen-New York 22 12 15

Total 84

of which Frankfurt 69

of which Copenhagen 15

11.ÙThe alliance is to give up the slots without compen- 15.ÙSlots given up must be within a period of 60 minutes
sation, whether financial or not. before or after the time requested by the competitor.

The precise number of slots to be given up would be


determined on the basis of the information available 16.ÙLufthansa, SAS and United need not give up more
when the Commission issues a proposal under than six slots per period of 60 minutes to any one
Article 89(1). competitor at any one airport. The giving-up of slots
must not have the effect of leaving any one
competitor or any one transatlantic alliance with
more than 50Ø% of the total number of slots used on
the route. Nor must it have the effect of preventing
12.ÙThe alliance is to give up the airport facilities needed the alliance from operating a sufficient number of
for the effective use of the slots given up. The flights according to the time of day to make it a
technical aspects of the transfer of slots would be viable competitor on the relevant markets.
discussed with the coordinator and the airport auth-
orities. Any difficulties arising would have to be
resolved without discrimination.

17.ÙA slot made available in accordance with the


procedure for the giving-up of slots by Lufthansa,
SAS and United may be exchanged by the recipient
13.ÙIf airlines that have obtained slots in Frankfurt or
for a slot it uses on another route or for a slot used
Copenhagen pursuant to this measure cannot obtain
by another airline in accordance with Regulation
corresponding slots at airports in the United States
(EEC) No 95/93 and Regulation (EEC) No
in accordance with the usual allocation mechanisms,
1617/93, always subject to point 14.
the necessary slots and airport facilities are to be
made available by the alliance on the same terms as
in Frankfurt or Copenhagen.

18.ÙAirlines in which Lufthansa, SAS or United have


holdings or with which they have a franchising
14.ÙThe slots given up by Lufthansa, SAS and United agreement on the relevant markets may not receive
may be used only to operate services on the markets slots given up by the alliance. The Commission
for which they were given up, that is to say on the reserves the possibility of examining to what extent
specified route only. airlines linked to members of the alliance, in
C 239/8 EN Official Journal of the European Communities 30.7.98

particular by codesharing agreements, could take up the relevant routes in the period from 1 January to
frequencies and slots given up by the alliance. 31 December 1997.

Maximum number of slots to be given up by


19.ÙSlots are to be allocated to the airlines competing Lufthansa, SAS and United
with the alliance by the authority responsible for slot
allocation at the airport, in cooperation with the Number of slots
managers responsible for allocating airport facilities
in Frankfurt and Copenhagen airports. This allo- Hub-to-hub routes 24
cation is to be carried out on the basis of Regulation
(EEC) No 95/93 and of criteria aimed at ensuring
Other routes 84
the development of competition on the relevant
markets. The criteria to be applied in determining
priorities in the allocation of slots might in particular that is a total of 108 slot
include the following:

22.ÙThis figure of 108 slots may rise to 125 if Oslo


Gardemoen airport does not open on schedule (see
—Ùairline in a position to develop competition on a point 20).
route-by-route basis, without a large network,

C. Links with other alliances


—Ùslot is linked to a reduction in frequencies,

23.ÙLufthansa should put an end to its codesharing


agreement with Lauda Air on the Vienna-
—Ùairline already present on the route on which it Munich-Miami route within three months of the
wishes to increase the number of its frequencies, date of putting into effect the measures to end the
infringement.

—Ùairline which holds slots in Frankfurt or


Copenhagen, allowing it to operate a significant
D.ÙFrequent flyer programmes (FFPs)
number of frequencies, adding the slots provided
by the alliance to the slots it holds already,
24.ÙOne of the two following options might be put to
Lufthansa/SAS/UA:
—Ùairline which has a hub, alone or in cooperation
with another airline, at both ends or at one end —Ùeither to refrain from pooling their FFPs in
of the route it wishes to enter. respect of the transport of passengers between
Germany and Scandinavia on the one hand and
the United States on the other, and from
allowing passengers to transfer points obtained in
This list is not intended to be exhaustive; interested the FFP of one member of the alliance to
parties are asked to put forward comments or another member’s FFP,
suggestions regarding these criteria and the order in
which they should be ranked.
—Ùor to allow airlines without comparable FFPs to
participate in the joint FFP of Lufthansa, SAS
and United in respect of the transport services
20.ÙIf the new Oslo Gardemoen airport fails to open on covered by the alliance, while preserving confi-
schedule, so that slots have to be requested at Oslo dentiality of transferred data by mechanisms to
Fornebu airport, or if the capacity available at Oslo be defined.
Gardemoen proves insufficient at the date of putting
into effect of the measures to end the infringement,
the alliance should if necessary abandon up to 17
slots on the Oslo-New York route. E.ÙDisplay in computerised reservation systems (CRSs)

25.ÙThe Commission will consider to what extent


displaying flights operated on the relevant markets
21.ÙThe precise number of slots and frequencies the under the cooperation agreement between
alliance may be called on to give up will depend on Lufthansa, SAS or United, or in association with
the number of frequencies actually operated by it on airlines with which Lufthansa, SAS or United have
30.7.98 EN Official Journal of the European Communities C 239/9

links, on two lines may result, on routes where the agreement should apply at least to ‘fully flexible’
number of frequencies is high, in the first screen fares.
being filled. The Commission will identify such
flights, which should accordingly appear only on one
line. The technical aspects of this measure and any
possible difficulties to which it may give rise would H. Undertakings to be given by the Member States
be discussed with representatives of CRSs. concerned and by Norway

Precise information on the existence of codesharing 28. In view of the existence of regulatory barriers, and
arrangements should be given to passengers when following discussion with the US authorities, the
they book their ticket. Commission takes the view that the following under-
takings would substantially increase the scope for
competition on the relevant markets by extending
the traffic rights within the meaning of Council
Regulation (EEC) No 2408/92Ø(Î) as amended by
F.ÙRelations with travel agencies and large customers the Act of accession of Austria, Sweden and Finland,
the application of which has been extended to the
EEA, of Community airlines other than those owned
26.ÙThe joint policy of Lufthansa, SAS and United
or controlled by nationals of Germany, Denmark,
toward travel agents established or providing services
Sweden or Norway. This is necessary in order to
in Germany should not include a system of remun-
ensure a sufficient degree of potential competition.
eration that has the object or effect of securing the
loyalty of travel agents to the members of the
alliance on the relevant markets. The remuneration
given by the alliance to travel agents should in 29.ÙThe Member States concerned and Norway must
particular exclude any remuneration based on a sales authorise any Community carrier established in the
threshold system. EEA to operate direct and indirect services between
any airport in their territory and the United States,
setting its fares freely.
The terms of fares offered to large customers estab-
lished or buying transport services in Germany
should be linked to annual turnover on the relevant 30.ÙWithin three months from the publication of this
markets, without a system of thresholds or a system notice, the Commission will assess, on the basis of
which directly or indirectly rewards loyalty. The the position adopted by the US authorities, whether
terms of fares, and especially prices, may never- those authorities will authorise the operation of such
theless be negotiated freely between airlines and flights to an extent sufficient to ensure that the
large customers provided that Article 86 is complied alliance does not have the possibility of eliminating
with. competition in respect of a substantial part of the
relevant markets.

Before adopting its final proposal under Article


89(1), the Commission will discuss these matters
with interested parties, particularly representatives of I.ÙDuration and implementation of the measures to end
travel agencies. the infringement

31.ÙIn view of the rapidity of change in the workings of


markets, the Commission envisages re-examining the
G.ÙInterlining agreement in question after the measures to end the
infringement have been applied for five years.
27.ÙIf a new entrant is to penetrate the relevant markets
effectively, it is important that it should be able to
conclude an interlining agreement with the members
Conclusion
of the alliance.

The Commission is communicating its draft proposal


Any airline established in an EEA country or in the under Article 89(1) to the parties to enable them to
United States operating services on one or more of comment on its preliminary analysis and the draft
the relevant routes should be entitled to ask for an measures. Before finally adopting its proposal, the
interlining agreement with the members of the Commission wishes to receive the comments of third
alliance on the relevant route or routes. The
members of the alliance should conclude such an
agreement on the terms usual in the industry. The (Î)ÙOJ L 240, 24.8.1992, p. 8.
C 239/10 EN Official Journal of the European Communities 30.7.98

parties on the draft measures. This notice is consequently this notice, quoting reference IV/36.201, to the
without prejudice to the Commission’s final position on following address:
the question whether there is any infringement of the
competition rules in the Treaty. The Commission may European Commission,
publish a further notice in the Official Journal of the DG IV/D/2,
European Communities if there is any substantial change Rue de la Loi/Wetstraat 200,
in its analysis or in the draft measures. B-1049 Brussels.

To enable them to prepare their observations in full


knowledge of the facts, persons showing a legitimate
The Commission asks Member States and interested interest may within the same 30-day period, obtain on
parties to send their observations, to reach the request from the Commission a non-confidential version
Commission within 30 days of the date of publication of of the draft proposal under Article 89(1).

Commission notice concerning the alliance between British Airways and American Airlines

(98/C 239/05)

(Text with EEA relevance)

On 11 June 1996 British Airways plc (BA) and American The preliminary opinion of the Commission is that the
Airlines Inc. (AA) concluded an agreement (the Agreement in its entirety infringes Articles 85 and, as far
Agreement) aimed at establishing a worldwide alliance. as the hub-to-hub routes are concerned, Article 86 if
On 3 July 1996 the Commission decided to initiate implemented without the measures envisaged by the
proceedings under Article 89 of the Treaty in respect of Commission.
the Agreement in so far as it related to air transport
services between Europe and the United States.

The Commission has analysed the Agreement only with The Commission could then make a proposal under
respect to the transport of passengers, and its analysis Article 89(1) of the Treaty, outlining its analysis and
here is without prejudice to any position it may adopt setting out appropriate measures to bring the
with respect to the transport of goods. infringements to an end. The measures might be as
follows:

The current analysis does not prejudge the position of


the Commission as regards possible implications on the
transatlantic services of new agreements announced
between US airlines, and new alliances between A.ÙØÙReduction in frequencies
European airlines.

On 2 October 1996 the Commission published a A.1. Relevant routes and maximum number of frequencies
summary of the Agreement in the Official Journal of the to be given up
European Communities (Î), asking Member States and
other interested parties to submit observations.

On the three hub-to-hub routes on which total annual


traffic is greater than or equal to 120Ø000 passengers and
(Î)ÙOJ C 289, 2.10.1996, p. 4. on which the alliance operates more than 12 frequencies