Brussels, 11 February 2011
Antitrust: Commission probes certain co-operation agreements between Lufthansa and Turkish Airlines and between Brussels Airlines and TAP Air Portugal
The European Commission has opened two own initiative investigations, to verify whether code-share agreements - a particular form of co-operation on ticket sales, implemented, in one case, between Deutsche Lufthansa (Germany) and Turkish Airlines (Turkey) and, in the second case, between TAP Portugal (Portugal) and Brussels Airlines (Belgium), is in breach of EU rules on anti-competitive agreements (Article 101 of the Treaty on the Functioning of the European Union). While code-share agreements can provide substantial benefits to passengers, some types of such agreements may also produce anti-competitive effects. These investigations focus on a particular type of code sharing arrangement where these airlines have agreed to sell seats on each others' flights on the Germany-Turkey routes and on the Belgium-Portugal routes, where both companies already operate their own flights between their own hubs ("parallel hub-to-hub code-sharing") and should, in principle, be competing with each other. An initiation of proceedings does not imply that the Commission has conclusive proof of an infringement. It means that the Commission will investigate the case as a matter of priority.
The Commission has started formal antitrust investigations into code-sharing agreements between, on the one hand, Lufthansa and Turkish Airlines and, on the other hand, Brussels Airlines and TAP Air Portugal. The agreements allow the carriers concerned to sell as many seats on their partner's flights as they want (free-flow), as long as there are seats available, on routes connecting their hubs (parallel hub to hub). This is different from another common form of code-sharing whereby a company sells seats on a partner's flights on routes it does not operate itself in order to extend the reach of services and broaden the choice for customers.
This form of free-flow, parallel, hub-to-hub code share agreements may distort competition leading to higher prices and less service quality for customers on routes between Germany and Turkey and between Belgium and Portugal, respectively. The routes being the subject of the investigation are Munich-Istanbul and Frankfurt-Istanbul, on which Lufthansa and Turkish Airlines are the major operators and, in the other case, Brussels-Lisbon on which Brussels Airlines and TAP Air Portugal are the only operators.
The two investigations are separate.
There is no legal deadline to complete inquiries into anticompetitive conduct. Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate with the Commission and the exercise of the rights of defence.
What is the legal base for the decision?
Article 101 of the Treaty on the Functioning of the EU prohibits agreements and concerted practices which may affect trade and prevent or restrict competition. The implementation of this provision is defined in the Antitrust Regulation (Council Regulation No 1/2003) which can be applied by the Commission and by the national competition authorities of EU Member States.
Article 11(6) of the Antitrust Regulation provides that the initiation of proceedings by the Commission relieves the competition authorities of the Member States of their authority to apply Articles 101 and 102 (ban on abuse of dominant market positions) to the practices concerned. Article 16(1) provides that national courts refrain from giving decisions, which could conflict with a decision contemplated by the Commission in proceedings that it has initiated.
The Commission has informed the parties and the competition authorities of the Member States, that it has opened proceedings in this case.