With more and more mergers between airline companies, even as some fail, The European Union said it will launch an anti-trust probe into cooperation deals between members of the Star Alliance and Oneworld airline groups such as British Airways, Iberia and United, officials in Brussels announced. “The opening of an anti-trust case is not a routine matter ... we think there may be breaches of (EU) anti-trust rules because of the very extensive levels of cooperation on trans- Atlantic routes between these airlines,” European Commission competition spokesman Jonathan Todd told journalists in Brussels. The Commission said fears that two sets of deals between certain members of the two alliances could potentially reduce competition on hotlycontested trans-Atlantic routes. “What we’re looking at here is ... the concertation that takes place between the airlines on prices,” Todd said.

One investigation targets a deal between Star Alliance members Air Canada, Continental, Lufthansa and United. The other concerns a cooperation programme between Oneworld members American Airlines, British Airways and Iberia. Both agreements include a plan to jointly manage schedules, capacity and pricing on transatlantic routes.

That is of concern to the Commission, which oversees the EU’s strict competition laws, because it could potentially open the way to illegal price-fixing between them, Todd said. “Any kind of price-fixing is potentially in breach of the (EU’s) rules on restrictive business practices unless there are clear benefits to consumers, so we’ll be looking in particular at whether there are benefits to consumers from this,” he said. If the Commission decides that the airlines have broken EU rules, it can force them to change their practices and can, in the last resort, fine them up to 10 percent of their global turnover.

Looking for wrongdoing

But the spokesman stressed that the fact that the Commission has launched the probes does not mean that there is necessarily anything wrong with the cooperation agreements. “The opening of an investigation does not mean that there is any evidence of a breach of the rules, it simply means that we are dealing with these cases as a matter of priority,” Todd said. “When you have cooperation between airlines in such areas as pricing, schedules and capacity, we have to make sure that the consumer actually benefits,” he said. A Commission statement said the level of cooperation under the arrangements in question appeared far more extensive than that generally extended between those airlines and others in the Star and Oneworld alliances. The Commission said it would assess whether these joint activities may restrict competition but that it had no dispute over the formation of airline alliances as such.
The agreements provide for the coordination of the airlines’ commercial, marketing and operational activities principally on routes between the EU and North America. “This is a normal part of the process of examining anti-trust immunity for the proposed alliance. We are relaxed about the commission’s decision,” a spokesman for Spanish carrier Iberia said in a statement. Last year, the EU launched an investigation into a planned tie-up between Iberia, British Airways and American Airlines after the trio said they had agreed to a transatlantic tie-up, to take advantage of the US/EU Open Skies agreement. American, British Airways and Iberia intend to cooperate commercially on flights between the United States, Mexico and Canada and the European Union, Norway and Switzerland.
A spokesman for Lufthansa said the German carrier had been informed of the probe ahead of time and it was delivering information to the Commission. United’s UAL Corp said the probe was a standard step which it had anticipated. United Airlines parent UAL Corp. and Continental Airlines Inc. said they still plan to launch a trans-Atlantic alliance next year despite the new probe by European regulators into airline-industry cooperation, although the primary targets were the Star Alliance, led by United and Lufthansa.
Members of both alliances are seeking antitrust immunity from US regulators to coordinate flying and marketingon international routes. Analysts said the Commission is unlikely to disband the alliances or fine members, according to people briefed on its plans, but may curb some of their existing and planned cooperation on routes, fares and marketing. The Brussels-based commission said it had no “conclusive proof” that either alliance had breached competition rules but would examine the costs and benefits to consumers. It has been looking at the rival SkyTeam pact, led by Delta Air Lines Inc. and Air France-KLM for three years