European Union Competition Law Developments in the Aviation Sector: July to December 2017

Abstract

The second half of 2017 has seen a number of competition law developments relevant to the aviation sector. This article summarizes the main developments over the past six months and provides the reader with greater detail of each of these developments. The European Parliament is considering a new proposal which would enable European Union (EU) airlines to challenge the behaviour of non-EU competitors before the European Commission (Commission). The new proposal would help address the sustained criticisms levied by EU airlines against suspected state subsidies being offered to certain non-EU airlines. Under the new proposal, EU carriers would need to show that the actions of a non-EU carrier have caused, or threaten to cause, injury to at least one EU carrier. In the wake of the UK’s referendum result to leave the EU (‘Brexit’), the UK Government has published a consultation document concerning a possible overhaul of the aviation competition and State Aid rules following Brexit. The consultation is focussing on the so-called ‘grandfather rights’ of slots and whether these rules contribute to the underutilization of airport capacity, as well as whether the rules on state support should be amended to better cater for projects which have wider economic or social benefits. In a similar development, a senior representative of the Civil Aviation Authority (CAA) has emphasized the benefits of the UK retaining the EU rules governing airline ownership and subsidies for airports as a means of ensuring continued access to the European aviation market following Brexit. In addition, the insolvency of Air Berlin has caused a number of developments. For example, Ryanair has lodged a complaint with the German competition authority and the Commission alleging, amongst other things, that Air Berlin’s insolvency has been manufactured in order to allow Lufthansa to acquire Air Berlin free of debts. The Commission has also approved easyJet’s acquisition of certain Air Berlin assets, as well as approved the acquisition by Lufthansa of certain Air Berlin assets (but not all assets it originally intended to acquire) subject to commitments from Lufthansa. During the investigation, the Commission granted derogations to Lufthansa from the obligation to suspend the completion of a merger until clearance, in order to ensure that the business could be acquired as a going concern.