The European Commission have expressed concern over the possible anti-competitive effect of a codeshare cooperation established by Brussels Airlines (soon to be wholly owned subsidiary of Lufthansa) and TAP Portugal in 2009 on passengers services between Brussels and Lisbon.
On 27 October 2016, the Commission informed the two airlines that their cooperation restricted competition in breach of EU antitrust rules. The EU Competition Directorate (DG Comp) stated in a Statement of Objections that the cooperation between the Belgian and Portuguese national companies would restrict competition and harm passengers interests in breach of the European rules.
Code-share agreements come in different shapes and sizes. Code sharing is often used by partners as part of a global alliance. When the code-sharing involves airlines companies which are not both present on a given route, it allows them to expand their network coverage and improve connections for passengers; such complementary codeshare is beneficial to consumers and does not raise competition concerns.
However, when airlines sell seats on the other party’s flights on the same route, this can reduce competition and lead to higher prices and a lower quality of service for consumers.
The Commission’s focus in the Statement of Objections relates to "the first three years of the agreement". Under the agreement, the two Star Alliance members granted each other the right to sell an unlimited number of seats of almost all categories (Business, Economy) on their mutual flights between Brussels Zaventem airport and Lisbon-Humberto Delgado. Before the agreement, Brussels Airlines and TAP Portugal competed on this route "and were, in fact, the only two airlines flying this route" (the low cost Ryanair has since joined).
At this stage of the investigation (which was first opened in 2011), the Commission is concerned that the two companies have pursued an anti-competitive strategy on this route:
- firstly, by discussing a capacity reduction (number of seats) and an alignment of their pricing policy on the route;
- secondly, by granting each other the unlimited right to sell seats on their flights on the route (on which they were previously in competition); and
- thirdly, by implementing these agreements by actually reducing capacity, fully aligning their tariff structures and the price of their tickets on the route.
According to the Commission this combination of practices clearly infringed Article 101 of the Treaty on the Functioning of the EU which prohibits anticompetitive agreements between undertakings. They eliminated competition on prices and capacity between the two airlines on the Brussels-Lisbon route and led to higher prices and reduced choice for consumers.
The issue of a Statement of Objections does not prejudge the outcome of the Commission’s investigation; and the two companies as subjects of the investigation have the right of reply to the Commission’s allegations.