Commission opens a probe into transatlantic joint venture / Industry News / Eva International

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Commission opens a probe into transatlantic joint venture

Jan 27, 2012
Airlines

The European Commission has opened an investigation to assess whether a transatlantic joint venture between Air France-KLM, Alitalia and Delta, all members of the SkyTeam airline alliance, breaches EU antitrust rules. The goal is to ensure that this tie-up does not harm passengers on EU-US routes. An opening of proceedings means that the Commission will deal with the case as a matter of priority, it does not prejudge the outcome. Simultaneously, the Commission has closed formal antitrust proceedings in relation to cooperation agreements between eight members of SkyTeam: Aeromexico, Air France, Alitalia, Continental Airlines, Czech Airlines, Delta, KLM and Korean Air Lines.

In 2009 and 2010, several members of the SkyTeam airline alliance, Air France-KLM, Alitalia and Delta, signed agreements establishing a transatlantic joint venture focusing on the routes between Europe and North America. Pursuant to these agreements, the parties fully coordinate their transatlantic operations with respect to capacity, schedules, pricing and revenue management. The parties also share profits and losses of their transatlantic flights.

This partnership represents the deepest form of cooperation within SkyTeam and aims at the alignment of the parties' commercial incentives. The Commission will investigate whether the partnership may harm passengers on certain EU-US routes where, in the absence of the joint venture, the parties would be providing competing services. This could be in breach of Article 101 of the Treaty on the Functioning of the EU (TFEU) that prohibits anticompetitive agreements. The new investigation is coherent with the Commission's recent enforcement action in relation to the transatlantic joint ventures of the two other airline alliances, Oneworld and Star.

At the same time the Commission has decided to close its initial investigation against the eight SkyTeam members. This decision was taken as part of the priority-setting process in light of significant changes in the circumstances on the relevant markets. The closure of proceedings does not however relieve the SkyTeam members from assessing their behaviour and ensuring that they comply with EU competition law.

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