The European Commission is proposing changes to competition laws to give it power to rule over international airline alliances as part of a wider air transport policy.

The EC says that air transport alliances involving a non-EU carrier is an area where it is able only to issue recommendations. "Ironic-ally, if a US airline and an EU airline were to merge, then we would have full power to investigate," says the EC's directorate general for competition (DGComp). Where commercial agreements stop short of an equity swap, however, only the national competition authorities have investigative power. DGComp's commissioner, Mario Monti, says "putting an end to this anomaly is all the more urgent in view of the recent European court open skies ruling which recognises EC competence in air transport relations with third parties and is expected to lead to more consolidation in the sector". DGComp hopes to have the new powers when new antitrust regulations come into force in May 2004.

The EC's package, subject to approval by transport ministers this month, proposes a three-stage approach to a combined EU air transport bilateral policy. First, member states should "respect the principles deriving from the court's judgment" by ending the practice of favouring flag carriers in bilateral negotiations. This is followed by a call for a general negotiating mandate to the EC, enabling it to open up EU markets to any EU carrier by including a standard clause in any bilateral barring discrimination on the owner's nationality. Lastly, the EC is calling for compulsory information exchange between government departments handling bilateral negotiations, to ensure that all EU airlines have equal access to traffic rights.

Source: Flight International