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  • AA/BA: Focus Now On European Ruling
    Posted by Adrian Schofield 5:40 AM on Feb 15, 2010

    After the U.S. Transportation Dept. made its long-awaited initial ruling on the Oneworld antitrust immunity application, attention now shifts to a pending decision by the European Commission. The main questions will be how much it differs from the U.S. government’s ruling, and how any differences will be reconciled.

    The timing of the EC decision is uncertain, although it has already indicated that it sees some potential for competitive harm from the Oneworld joint venture proposal. Virgin Group head Richard Branson slammed the DOT for not imposing strict enough conditions on Oneworld, and he has urged the EC to take a harder line.

    The EC sent a statement of objections to the Oneworld airlines in September, indicating concerns the joint venture may violate its competition laws. European regulators are also examining Star and SkyTeam joint ventures that have already been approved by U.S. authorities. In December, the Oneworld applicants sent a set of commitments to the EC intended to alleviate competition concerns, and these are being assessed by the EC.

    The main feature of the DOT’s ruling is the requirement that Oneworld airlines divest four daily slot pairs at London Heathrow airport. However, DOT has only established broad outlines as to how this will occur, and has asked for further industry comments on how its competition remedies should be implemented.

    DOT stressed that “to the extent possible, the administration and implementation [of the DOT slot divestiture plan] should be compatible with any remedy adopted by the European Commission.” Existing U.S.-EU aviation agreements call for both sides to explore compatible approaches to these types of cases.

    So in theory U.S. and EU regulators would compare notes, but it is unclear how much that has happened in the Oneworld case. DOT highlights compatibility concerns in its initial order, and appears to be anxious to protect its emphasis on encouraging new market entrants.

    “In the context of this case, it is possible that incompatible implementation and administration of a slot remedy could potentially place prospective new entrants at a disadvantage, jeopardizing efforts to reduce the competitive harm that

    we have tentatively found in the proposed transaction,” DOT says.

    U.K. newspaper The Times believes the two regulators will be on the same page. In this article, The Times says “Brussels and Washington have been working closely … and it is thought unlikely that the two sides would reach dramatically different conclusions.”

    Tags: tw99, American, British Airways, European Commission, DOT

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