On 10 May 2019, the EU regulation on safeguarding fair competition in international air transport was published in the Official Journal of the EU (Regulation (EU) 2019/712 of the European Parliament and of the Council of 17 April 2019). The Regulation aims at ensuring fair competition between EU and non-EU air carriers.
The importance of enabling fair competition between EU and non-EU carriers and the importance of guaranteeing a level playing field has been recognised by various EU institutions. In particular, on 7 December 2015, the European Commission (Commission) published a comprehensive strategy outlining policy proposals for the EU aviation sector (Aviation Strategy). The latter indicated that for the EU aviation industry to remain competitive, it is essential that market access is based on a regulatory framework promoting EU values and standards, enabling reciprocal opportunities and which prevents the distortion of competition.
EU Commissioner for Transport, Violeta Bulc, previously emphasized the importance of competition in the aviation industry.
"European aviation is facing a number of challenges and today's Strategy sets out a comprehensive and ambitious action-plan to keep the sector ahead of the curve. It will keep European companies competitive, through new investment and business opportunities, allowing them to grow in a sustainable manner. European citizens will also benefit from more choice, cheaper prices and the highest levels of safety and security."
The Regulation will enter into force on the twentieth day after its publication in the Official Journal of the EU, i.e. 31 May 2019.
The Regulation outlines the investigative powers of the Commission and the redressive measures it may impose relating to practices which distort competition between EU and non-EU air carriers, and which cause, or threaten to cause, injury to EU air carriers. Prior to Regulation (EU) 2019/712, no international legal framework was in place addressing possible unfair commercial practices in international aviation. However, the Aviation Strategy indicated that although Regulation (EC) 868/2004 on the protection against subsidisation and unfair pricing practices partly covers this issue, it is considered - as it currently stands - ineffective among stakeholders.
The Regulation provides the Commission with investigative powers and allows them to take redressive measures. In particular, the Commission shall, among others:
- Only launch an investigation following a written complain submitted by an EU Member States (EU MS), EU air carrier or association of EU air carriers or on the Commission's own initiative, if there is prima facie evidence of (i) practice distorting competition, (ii) injury or threat of injury to EU air carriers, and (iii) a causal link between the practice and the alleged injury or threat of injury
- Seek all the information it considers to be necessary in order to conduct the investigation. Moreover, the Commission may carry out investigations in the territory of a third country, provided that the third-country entity concerned has given its consent and the government of the third country has been officially notified and has not raised any objection
- Disclose to the third country, the third-country entity and the third-country air carrier concerned, as well as the complainant, the interested parties, the EU MS and the EU air carriers concerned the essential facts and considerations on the basis of which it intends to adopt redressive measures, or to terminate proceedings without adopting redressive measures
- Shall adopt redressive measures on the non-EU air carrier benefiting from the practice distorting competition an may either take the form of (i) financial duties, or (ii) any operational measure of equivalent or lesser value, such as the suspension of concessions, of services owed or of other rights of the third-country air carrier. Priority shall be given to reciprocal operational measures, provided that they are not contrary to the Union interest, or incompatible with Union law or with international obligations
The new Regulation will help to bring enforcement of EU competition law to the international air transport industry. With competition specialists across the EU and beyond, many of whom have served with NCAs, DLA Piper's International Competition Group is uniquely positioned to advise and assist at any stage of on-going or potential investigations. Should you have any questions in relation to this client alert, please contact one of the authors listed below or the DLA Piper lawyer with whom you normally consult.