Wednesday, 2 November 2016

BELIGIUM: Brussels Airlines-TAP Portugal Codeshare Under Investigation By European Union

European Union (EU) regulators have formally raised antitrust concerns over a codeshare between Brussels Airlines and TAP Portugal, but have dropped a similar probe against Lufthansa and Turkish Airlines.

The EU inquiry into the Brussels Airlines and TAP Portugal codeshare on flights between Brussels and Lisbon was started in February 2011. On Oct. 27, the European Commission said it has issued a statement of objections to the airlines.

“We are concerned that in this particular case Brussels Airlines and TAP Portugal may have used their codeshare to restrict competition and harm passengers’ interests,” EU Commissioner in charge of competition policy Margrethe Vestager said.

The probe relates to the first three years of a codeshare signed in 2009, under which Brussels Airlines and TAP Portugal sold unlimited seats on one another’s flights between Brussels and Lisbon.

Prior to the 2009 agreement, the two airlines were the only competitors on the route. The European Commission said that, under the codeshare, Brussels Airlines and TAP Portugal discussed and implemented a capacity reduction and aligned prices on the route.

“The Commission takes the preliminary view that this combination of practices breaches EU rules that prohibit anti-competitive agreements. The Commission’s preliminary conclusion is that these practices eliminated competition on prices and capacity between the two airlines on the Brussels-Lisbon route and led to higher prices and less choice for consumers,” the Commission said.

The statement of objections is a preliminary view and not a final ruling. The airlines will now be given the opportunity to respond.

“TAP has always fully cooperated with the European Commission, providing all documentation and information requested. The statement of objections now submitted constitutes a mere procedural step through which the European Commission communicates the concerns identified to TAP,” the Portuguese carrier said. “TAP will have now a two-month period to present its position to the Commission, which may choose to file the process or to proceed with it. TAP will prepare its response and will continue to fully cooperate with the European Commission.”

Brussels Airlines issued a similar statement, saying it too has been fully cooperating with the European Commission. “We will put all efforts into place to demonstrate that the codeshare agreement with TAP Portugal is fully in line with industry practice and competition law. No further information can be provided at this time as investigations are ongoing.”

At the same time as announcing the TAP ruling, the Commission dismissed a separate codeshare antitrust probe involving Lufthansa and Turkish Airlines. “The Commission's investigation found that Lufthansa and Turkish Airlines did not have full marketing rights to each other's seat inventory and that they applied differing pricing strategies. Furthermore, the codeshare accounted for only a marginal share of the parties' sales on the routes of concern,” the Commission said.
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