You are on page 1of 7

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
30.7.98 EN Official Journal of the European Communities C 239/11

per week (London-Dallas, London-Miami and London- frequencies so as to allow their competitors to operate up
Chicago), the parties should, if so requested by a to 55Ø% of frequencies on the relevant route, in
competitor, reduce their combined number of weekly accordance with the following calculation:

(4) = (3) 
(1) (2) (3) = (1) + (2) (5) = (1) – (4)
0,45 or 12

Route Number of Number of other Number of
BA/AA airlines’ Total 45Ø% of total weekly
frequencies frequencies frequencies frequencies, frequencies to
weekly weekly weekly minimum 12 be given up
(1997 average) (1997 average) by BA/AA

London-Heathrow-Chicago 33 13 46 21 12

London-Gatwick-Dallas 20 0 20 12 8

London-Miami 21 14 35 16 5

A.2. General principles applicable 3.ÙBetween the date of adoption of the proposal and
the date of commencement of the alliance’s
activities, the alliance should not increase the
number of its weekly frequencies on the three
hub-to-hub routes by more than the observed
1.ÙBA and AA are to give up those frequencies only if growth in the number of passengers on each route.
and to the extent requested by any competitor
wishing to expand its presence or to develop new
services on these routes.

4.ÙThe frequencies abandoned by BA/AA are to be
frequencies at the London airport at which the
alliance operates its own services: Gatwick in the
—ÙThe members of the alliance need not give up case of London-Dallas and London-Miami and
frequencies where that would have the effect of Heathrow in the case of London-Chicago and
placing any single competitor or transatlantic London-Miami.
alliance in a position where it controlled more
frequencies on any one route than BA/AA,

But if the alliance transfers its London-Dallas flight
from Gatwick to Heathrow, the measure calling for
—Ùthe members of the alliance need not give up the reduction of frequencies, and the transfer of slots
frequencies where that would reduce the number which accompanies it, is to apply to Heathrow.
of frequencies operated weekly by the alliance on Airlines that have already obtained frequencies and
a route to fewer than 12, being two frequencies a slots at Gatwick are to be entitled to ask the alliance
day, six days a week. to exchange them for frequencies and slots at
Heathrow. The alliance must accept such an
exchange.

2.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 5.ÙThe alliance should give up, without compensation,
adoption of the decision of the national authority whether financial or not, the same number of slots as
concerned. If a competitor of the alliance requests a it previously used for the frequencies it is giving up.
transfer of frequencies to it, the alliance may not But the alliance need not give up such slots if there
within six months of the date of transfer increase the are slots available to competitors in accordance with
number of its frequencies beyond a ratio of 55:45 the ordinary mechanisms for slot allocation at the
(competitors must be able to hold 55Ø% of the total relevant airport. Wherever necessary the alliance
number of frequencies on the relevant route, or should also give up the airport facilities needed for
50Ø% if there is only one competitor). the operation of the frequencies given up.
C 239/12 EN Official Journal of the European Communities 30.7.98

6.ÙIf airlines that have obtained slots in London the decision of the national authority concerned, the
pursuant to this measure cannot obtain corre- measure regarding the giving up of frequencies will
sponding slots at airports in the United States in cease to have effect. Slots linked to frequencies not
accordance with the usual allocation mechanisms, given up in that period are to become available for
the necessary slots and airport facilities are to be the operation of services between London and
made available by the alliance on the same terms as airports in the United States. This applies only to a
in London. proportion of slots corresponding to the proportion
of non-time-sensitive passengers. This transfer is
justified by the existence of substantial restrictions of
competition also on the market in the transport of
non-time-sensitive passengers. The aim of this
measure is to resolve the problems of competition on
At the end of the period of six months from the first both types of market (time-sensitive and non-time-
day of the IATA season following the adoption of sensitive).

(1) (2)Ø= (1)؍Ø2 (3) (4) = (3)  (2)

Weekly number of
Route % of slots for the
Number of weekly Number of slots to be
frequencies to be given up by BA/AA non-time-sensitive operation of services
given up by BA/AA passengers between London and
the US

London-Chicago 12 24 —Ø(*) 15-19Ø(*)

London-Dallas 8 16 —Ø(*) 10-14Ø(*)

London-Miami 5 10 —Ø(*) 7-11Ø(*)

50 38

(*)ÙBusiness secret.

These slots may be requested from BA/AA in launch a new service or to expand an existing service
accordance with the mechanisms in chapter B. 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 last amended by Regu-
lation (EC) No 1523/96Ø(Ð), the members of the
7.ÙIf a competitor of the alliance which has obtained BA/AA alliance should make slots in London
frequencies and the slots linked to them pursuant to available to it on request so as to allow the alliance’s
this measure withdraws from the relevant route, the competitors to hold up to 55Ø% of the total number
slots given up by the alliance are to be returned to it of slots used by all operators present on a route. In
and will become available to other competitors on this context, account must be taken of slots already
the terms set out in chapter A and B. held by airlines present on the route, in accordance
with the following calculation:

B. Slots and airport facilities (except hub-to-hub)

(Î)ÙOJ L 14, 22.1.1993, p. 1.
8.ÙWhen an airline authorised to provide services (Ï)ÙOJ L 155, 26.6.1993, p. 18.
between London and the United States wishes to (Ð)ÙOJ L 190, 31.7.1996, p. 11.
30.7.98 EN Official Journal of the European Communities C 239/13

(3) =
(1) (2) ((1)/0,45)ØØ (4) (5)Ø=Ø(4)؍Ø(3) (6)Ø=Ø(3)Ø–Ø(5)
0,55Ø–Ø(2)

BA/AA Competitors’
Route slots used slots used on Slots to be % of time- Weekly slots Weekly slots
on the the given up by sensitive usable only on usable on the
route route BA/AA passengers the route UK/US market
(1997 (1997 average)
average)

Heathrow-Boston 66 24 57 15-25Ø(*) 14-18Ø(*) 39-43Ø(*)

Heathrow-Los Angeles 48 52 7 10-25Ø(*) 1 6

Heathrow-New York
(JFK and Newark) 204 162 87 20-30Ø(*) 25-32Ø(*) 55-62Ø(*)

Heathrow-Philadelphia 26 0 32 30-40Ø(*) 10-15Ø(*) 17-22Ø(*)

Heathrow-Seattle 14 0 17 15-25Ø(*) 2-6Ø(*) 11-15Ø(*)

Gatwick-Charlotte 14 0 17 15-25Ø(*) 2-6Ø(*) 11-15Ø(*)

Total 217 69 148

of which Heathrow 200 65 135

of which Gatwick 17 4 13

(*)ÙBusiness secret.

9.ÙThe slots are to be given up by the alliance without brought about by these transfers should be resolved
compensation, whether financial or not, and are to in a non-discriminatory manner.)
be slots at the London airport, Heathrow or
Gatwick, at which it operates its own services. If,
however, the alliance transfers its services from
Gatwick to Heathrow, the measure calling for the
giving up of slots is to apply to Heathrow. Airlines
that have already obtained slots at Gatwick are to be 11.ÙIf airlines that have obtained slots in London
entitled to ask the alliance to exchange them for pursuant to this measure cannot obtain corre-
slots at Heathrow. The alliance must accept such an sponding slots at airports in the United States in
exchange. accordance with the usual allocation mechanisms,
the necessary slots and airport facilities are to be
made available by the alliance on the same terms as
in London.

The precise number of slots to be surrendered in
Heathrow and Gatwick will be determined on the
basis of figures available when the Commission
adopts the proposal within the meaning of Article
12.ÙThe slots given up by BA/AA may be used only to
89(1).
operate services on the markets for which they were
given up, that is to say either on the specified route
only or on the market between the United Kingdom
and the United States by direct or indirect flight.

10.ÙThe alliance is to give up to the extent necessary the
airport facilities in London and the United States
needed for the effective use of the slots given up.
(The technical aspects of the slot transfers will be
discussed with the airport authorities and the auth- 13.ÙSlots given up must be within a period of 60 minutes
orities responsible for slot allocation. The problems before or after the time requested by the competitor.
C 239/14 EN Official Journal of the European Communities 30.7.98

14.ÙBA and AA need not give up more than six slots per —Ùairline which holds slots in London, allowing it
period of 60 minutes to any one competitor at any to operate a significant number of frequencies
one airport. The giving-up of slots must not have the combining the slots provided by the alliance with
effect of leaving a competitor or transatlantic the slots it holds already,
alliance with more than 50Ø% of the total number of
slots used on any route. Furthermore, the giving-up
of slots by the alliance should not have the effect of
preventing it from operating a sufficient number of —Ùairline which has a hub, alone or in cooperation
slots in an hourly period to allow it to remain an with another airline, at both ends or at one end
effective competitor on the markets in question. of the route it wishes to enter.

15.ÙA slot made available in accordance with the This list is not intended to be exhaustive; interested
procedure for the giving-up of slots by BA/AA may parties are asked to put forward comments or
be exchanged by the recipient for a slot it uses on suggestions regarding these criteria and the order in
another route or for a slot used by another airline in which they should be ranked.
accordance with Regulation (EEC) No 95/93 and
Regulation (EEC) No 1617/93, subject to the
provisions of point 12.
18.ÙThe precise number of slots and frequencies the
alliance may be called on to give up will depend on
the number of frequencies actually operated by it on
16.ÙAirlines in which BA or AA have holdings or with the relevant routes during the period from 1 January
which they have a franchise agreement on the to 31 December 1997.
relevant markets may not receive frequencies or slots
given up by the alliance. The Commission reserves
the possibility of examining to what extent airlines Maximum number of slots to be given up by BA/AA
having links, to members of the alliance, in Number
particular codesharing, could take up frequencies of slots
and slots given up by the alliance.
Hub-to-hub routes 50

Other routes 217

17.ÙSlots are to be allocated to the airlines competing
with the alliance by the authority responsible for slot
allocation at the airport, in cooperation with the If BA and AA withdraw from certain routes on
British Airports Authority, which is responsible for which they operated in 1997 and subsequently
allocating airport facilities. This allocation is to be decide to operate on them again, those routes will be
carried out on the basis of Regulation (EEC) No taken into account in calculating the number of slots
95/93 and of criteria aimed at ensuring the devel- to be given up by the alliance. In that event, such
opment of competition on the relevant markets. The slots will become available to competing airlines.
criteria to be applied in order to determine the
priorities for the allocation of slots might in
particular include the following:

C. Frequent flyer programmes (FFPs)

—Ùairline in a position to develop competition on a
route-by-route basis, without a large network,
19.ÙOne of the two following options might be put to
BA/AA:

—Ùslots linked to reductions in frequencies,
—Ùeither to refrain from pooling their FFPs in
respect of the transport of passengers between
the United Kingdom and the United States, and
—Ùairline already present on the route, on which it from allowing passengers to transfer points
wishes to increase the number of its frequencies, obtained with one airline to the other airline,
30.7.98 EN Official Journal of the European Communities C 239/15

—Ùor to allow airlines without comparable FFPs to F.ÙInterlining
participate in the joint FFP of BA and AA in
respect of the transport services covered by the
alliance, while preserving confidentiality of data
by mechanisms to be defined. 22.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
of the alliance.

D.ÙDisplay in computerised reservation systems (CRSs)

Any airline established in an EEA country or in the
United States operating services on one or more of
20.ÙThe Commission will assess to what extent a display
the relevant routes should be entitled to ask for an
on two lines of flights operated on the relevant
interlining agreement with the members of the
markets under the cooperation agreement between
alliance on the relevant route or routes. The
BA and AA or in association with airlines with which
members of the alliance should conclude such an
BA or AA have links, might result, on routes where
agreement on the terms usual in the industry. The
the number of frequencies is high, in the first screen
agreement should apply at least to ‘fully flexible’
being filled. The Commission will identify those
fares.
flights which should therefore only appear on one
line. The technical aspects of this measure and any
possible difficulties to which it may give rise would
be discussed with representatives of CRSs.
G.ÙUndertakings to be given by the Member State
concerned

Precise information on the existence of codesharing
arrangements should be given to passengers when
they book their ticket. 23.ÙIn view of the existence of regulatory barriers and
following discussions with the US authorities, the
Commission takes the view that the following under-
takings would substantially increase the scope for
competition on the relevant markets by extending
E.ÙRelations with travel agencies and large customers the traffic rights, within the meaning of Council
Regulation (EEC) No 2408/92Ø(Î), as amended by
the Act of Accession of Austria, Finland and
21.ÙThe joint policy of BA and AA towards travel agents Sweden, the application of which has been extended
established or providing services in the United to the EEA, of Community airlines other than those
Kingdom should not include a system of remun- owned or controlled by nationals of the United
eration that has the object or effect of securing the Kingdom. This is necessary in order to ensure a
loyalty of travel agents to the members of the sufficient degree of potential competition.
alliance on the relevant markets. The remuneration
given by the alliance to travel agents should in
particular exclude any remuneration based on a sales
threshold system. 24.ÙThe United Kingdom must permit any Community
carrier established in the EEA to operate direct and
indirect services between any airport in its territory
and the United States, setting its fares freely.
The terms of fares offered to large customers estab-
lished or buying transport services in the United
Kingdom should be linked to annual turnover on the
relevant markets, without a system of thresholds or a Within three months from the publication of this
system which directly or indirectly rewards loyalty. notice, the Commission will assess, on the basis of
The terms of fares, and especially prices, may never- the position adopted by the US authorities, whether
theless be negotiated between airlines and large those authorities will authorise the operation of such
customers, and may differ, provided Article 86 is services to an extent sufficient to ensure that the
complied with. alliance does not have the possibility of eliminating
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 the interested parties, particularly the represen-
tatives of travel agents. (Î)ÙOJ L 240, 24.8.1992, p. 8.
C 239/16 EN Official Journal of the European Communities 30.7.98

H.ÙDuration and implementation of the measures to end publish a further notice in the Official Journal of the
the infringement European Communities if there is any substantial change
in its analysis or in the draft measures.
25.ÙIn view of the rapidity of change in the workings of
markets, the Commission envisages reexamining the The Commission asks Member States and interested
Agreement after the measures to end the parties to send their observations, to reach the
infringement have been applied for five years. Commission within 30 days of the date of publication of
this notice, quoting reference IV/36.089, to the
following address
Conclusion
European Commission,
The Commission is communicating its draft proposal DG IV/D/2,
under Article 89(1) to the parties to enable them to Rue de la Loi/Wetstraat 200,
comment on its preliminary analysis and the draft B-1049 Brussels.
measures. Before adopting its proposal, the Commission
wishes to receive the comments of third parties on the To enable them to prepare their observations in full
draft measures. This notice is consequently without knowledge of the facts, persons showing a legitimate
prejudice to the final position of the Commission on the interest may, within the same 30-day period, obtain on
question whether there is any infringement of the request from the Commission a non-confidential version
competition rules in the Treaty. The Commission may of the draft proposal under Article 89(1).

Non-opposition to a notified concentration
(Case No IV/M.1140 — Halliburton/Dresser)

(98/C 239/06)

(Text with EEA relevance)

On 6 July 1998, the Commission decided not to oppose the above notified concentration and
to declare it compatible with the common market. This decision is based on Article 6(1)(b) of
Council Regulation (EEC) No 4064/89. The full text of the decision is only available in
English and will be made public after it is cleared of any business secrets it may contain. It will
be available:

—Ùas a paper version through the sales offices of the Office for Official Publications of the
European Communities (see list on the last page),

—Ùin electronic form in the ‘CEN’ version of the CELEX database, under document number
398M1140. CELEX is the computerised documentation system of European Community
law; for more information concerning subscriptions please contact:

EUR-OP,
Information, Marketing and Public Relations (OP/4B),
2, rue Mercier,
L-2985 Luxembourg.
Tel. (352) 29Ø29-42455, fax (352) 29Ø29-42763.