Formal proceedings against Star and oneworld
The European Commission today (April 20) announced it was opening "formal anti-trust proceedings" against airlines in Star Alliance and oneworld.
It said its first investigation would be into "both existing and planned co-operation" between Star members Air Canada, Continental Airlines, Lufthansa and United Airlines.
The second probe will be into the planned co-operation of oneworld members British Airways, American Airlines and Iberia.
The EC said it would "assess the compatibility of each of these airlines' cooperation with European rules on restrictive business practices."
The EC said that the agreements between the Star and oneworld members allow the co-ordination of the airlines' commercial, marketing and operational activities on transatlantic routes, principally routes between the EU and North America.
It added: "The level of cooperation in question appears far more extensive than the general co-operation between these airlines and other airlines which are part of the Star and oneworld alliances.
"In particular, the parties to each agreement intend to jointly manage schedules, capacity, pricing and revenue management on transatlantic routes, as well as share revenues and sell tickets on these routes without preference between these carriers."
The EC said it would assess whether these "joint activities" might "lead to restriction of competition on certain transatlantic routes."
It stressed that the probes did not mean that it had "conclusive proof of an infringement" but merely signified it will deal with the cases as a matter of priority.
However the EC said there was no "strict deadline" by which it had to complete its probe.
The investigation will cover the existing agreement between Lufthansa, Air Canada and United and the proposed one between these three carriers and Continental which has just joined the Star Alliance.
The US Department of Transportation (DoT) to which anti-trust applications are made, gave a "tentative go ahead" for the four strong anti-trust application earlier this month.
Continental and United are also currently discussing a possible merger.
At the time of giving tentative approval, the DoT said the co-operation would increase service in international markets, give consumers more options and shorter trip times and cut fares.
The three oneworld airlines are expecting a response to their application for anti-trust immunity from the DoT later this year.
US democratic congressman James Oberstar is also trying to launch an investigation into airline alliances in America.
He said the three main alliances, Star, oneworld and SkyTeam amounted to monopolistic mergers which are unfair to the public.
Kevin Mitchell, chairman of the Business Travel Coalition (BTC), said the anti-trust immunity being granted by the DoT was "too broad."
He said he planned to send a letter next week to Ray LaHood, the US transport secretary and Ms Neelie Kroes, the EC competition commissioner.
www.dot.gov www.oneworld.com www.staralliance.com www.skyteam.com http://ec.europa.eu