Safeguarding competition in air transport

SUMMARY OF:

Regulation (EU) 2019/712 — on safeguarding competition in air transport

WHAT IS THE AIM OF THE REGULATION?

• It aims to ensure fair competition between EU air carriers and air carriers located in non-EU countries by providing the European Commission with powers to investigate and take measures against non-EU air carriers engaged in unfair commercial practices.
• It repeals Regulation (EC) No 868/2004 whilst strengthening the rules that regulation had set out.

KEY POINTS

Scope

The regulation provides for rules relating to practices distorting competition between EU air carriers and non-EU air carriers and causing, or threatening to cause, injury* to EU air carriers.

Launching an investigation

Following a written complaint by an EU country or an association of EU air carriers or on its own initiative, the Commission will carry an investigation if there is clear (prima facie) evidence of the following circumstances:

• 1.

  a practice distorting competition, adopted by a non-EU country or a non-EU entity;

• 2.

  injury or threat of injury to one or more EU air carriers; and

• 3.

  a causal link between the alleged practice and the alleged injury or threat of injury.

The investigation

• If necessary, the Commission may investigate in the territory of a non-EU country.
• The investigation can be suspended if it appears more appropriate to address the unfair practice distorting competition under the dispute settlement procedures established by an applicable air transport or air services agreement;
  • the investigation can be resumed if corrective action has not been promptly taken or
  • the practice distorting competition has not been eliminated within 12 months from the date the investigation was suspended.
• The Commission must inform the non-EU country, entity or air carrier concerned as well as the complainant, the interested parties, the EU countries and the EU air carriers concerned of its reasons for taking or not taking measures to redress the issue raised.
• The investigation must be concluded within 12 months and the proceedings within 20 months of its launch. Both can be prolonged in justified cases.

Injury or risk of injury

The investigation of injury is based on evidence and takes into account the following factors:

• the situation of the EU air carriers concerned, notably in terms of aspects such as frequency of services, utilisation of capacity, network effect, sales, market share, profits, return on capital, investment and employment;
• the general situation on the affected air-transport services markets, notably in terms of level of fares or rates, capacity and frequency of air-transport services or use of the network.

A determination of a threat of injury is based on clear evidence and not merely on allegation, conjecture or remote possibility.

Redressive measures

If the investigation determines that a practice distorting competition adopted by a non-EU country or entity has caused injury to an EU air carrier, the Commission can impose redressive measures through implementing acts. These measures can be either:

• financial duties;
• any operational measure of equivalent or lesser value, such as the suspension of concessions*, of services owed or of other rights of the non-EU air carrier.

The Commission will not impose redressive measures if:

• any of the 3 initial conditions is not fulfilled;
• it is against the EU interest;
• the non-EU country or entity has eliminated either the practice distorting competition or the injury or threat of injury to EU air carriers.

EU interest

• A determination of the EU interest is made by the Commission on the basis of an appreciation of all the various interests, which are relevant to the situation;
  • priority is given to protecting consumer interests and maintaining a high level of connectivity for passengers and for the EU;
  • the need to eliminate the practice distorting competition, to restore effective and fair competition, and to avoid any distortion to the internal market is also taken into account.
• The EU interest is determined on the basis of an economic analysis by the Commission.

FROM WHEN DOES THE REGULATION APPLY?

It has applied since 30 May 2019.

BACKGROUND

• Air transport (European Commission).

KEY TERMS

MAIN DOCUMENT

Regulation (EU) 2019/712 of the European Parliament and of the Council of 17 April 2019 on safeguarding competition in air transport, and repealing Regulation (EC) No 868/2004 (OJ L 123, 10.5.2019, pp. 4-17)

last update 31.10.2019