European Union Competition Law Developments in the Aviation Sector: January to June 2019

Abstract

The first half of 2019 has been dominated by the significant number of mergers being decided with no less than 6/7 mergers having been approved by the European Commission (‘Commission ’) in the six-month period. Interestingly, the commitments offered in three previous merger cases have been revisited, and while it would appear novel that the Commission released Air France Koninklijke Luchtvaart Maatschappij N.V. (KLM) from the commitment on one long-haul city pair, the Commission noting that parallel commitments given in the transatlantic joint venture (JV) antitrust case would enable the Commission to review the functioning of the market in the period 2020–2025. The other merger case worth noting is the CityJet/Aer Lingus wet lease arrangement. It was looked at from a merger perspective and where with the UK’s Competition and Markets Authority (‘CMA ’) considering the ‘exiting firm’ strategy and it cleared the transaction on that basis. The first half of 2019 has been dominated by the significant number of mergers being decided with no less than 6/7 mergers having been approved by the European Commission (‘Commission’) in the six-month period. Interestingly, the commitments offered in three previous merger cases have been revisited, and while it would appear novel that the Commission released Air France Koninklijke Luchtvaart Maatschappij N.V. (KLM) from the commitment on one long-haul city pair, the Commission noting that parallel commitments given in the transatlantic joint venture (JV) antitrust case would enable the Commission to review the functioning of the market in the period 2020–2025. The other merger case worth noting is the CityJet/Aer Lingus wet lease arrangement. It was looked at from a merger perspective and where with the UK’s Competition and Markets Authority (‘CMA’) considering the ‘exiting firm’ strategy and it cleared the transaction on that basis. The adoption and entry into force of Regulation 2019/712 on safeguarding competition in the air transport sector is potentially also a milestone. Whether this will be used by EU air carriers and/or the Commission remains to be seen. Litigation also features heavily in the first half of 2019, with Ryanair being on the successful side twice (being successful in the appeal of a Commission decision, but also successfully supported the Commission in defending its decision against an appeal of a Commission decision brought by Lufthansa. Of particular note for private damages actions is the UK litigation involving British Airways before the Court of Appeal where the air cargo cartel damages claimant was unsuccessful at widening the scope of its damages claim to include the period from 2001 to 30 April 2004 (a period not covered by the Commission’s decision but where there was arguably evidence of cartel behaviour) because the Court of Appeal did not have jurisdiction to hear a claim unless and until the Commission or a national competition authority had taken a decision. The dearth of new State aid investigations in the aviation sector might be the result of the Commission’s modernisation regime having a positive effect. We will wait and see if this trend continues.