EU Opens Antitrust Probe Into Airline Venture

Date : 01/27/2012 @ 4:59PM
Source : Dow Jones News
Stock : Delta Air Lines, Inc. (DAL)
Quote : 45.53  -0.4 (-0.87%) @ 7:59PM

EU Opens Antitrust Probe Into Airline Venture

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European regulators have opened a new probe into the trans-Atlantic joint venture involving Air France-KLM SA (AF.FR, AFLYY), Delta Air Lines Inc. (DAL) and Alitalia SpA. Members of the three marketing pacts that dominate the global airline industry have in recent years been allowed by EU and U.S. regulators to coordinate fares, flights and sales, despite misgivings from some lawmakers and consumer groups.

The pact between involving Delta and its partners in the SkyTeam grouping is seen as the deepest in the industry, and the European Commission said it wanted to take another look at the competitive impact.

Aviation lawyers don't expect Brussels to unwind the cooperation, but said they could require some more concessions and also turn their attention to the deal involving members of the Star alliance, which includes United Continental Holdings Inc. (UAL) and Deutsche Lufthansa AG (LHA.XE, DLAKY).

"The Commission will investigate whether the [SkyTeam] partnership may harm passengers on certain EU-U.S. routes where, in the absence of the joint venture, the parties would be providing competing services," the European regulators said in a statement.

Members of SkyTeam and Star made limited concessions to win their original approvals. But in 2010 the Commission and the U.S. transportation department required British Airways, its Spanish merger partner Iberia and the American Airlines unit of AMR Corp. (AAMRQ) to divest valuable slots at London's congested Heathrow airport to secure backing for their own enhanced cooperation within the Oneworld alliance.

Delta said the new probe focused only on a small number of routes and said it was confident any concerns expressed by the Commission could be resolved. "The four airlines will cooperate fully with the Commission in this matter," said Air France-KLM.

The Commission continues to monitor the pact involving Star members. United declined comment.

U.S. regulators have in recent years given members of all three alliances antitrust immunity to intensify cooperation. European and U.S. transportation officials included more scrutiny of competition matters in the landmark open skies aviation pact agreed in 2007.

The latest EU probe will be closely watched as more airlines, including those outside the three big alliance groups, seek antitrust immunity for closer cooperation.

The outcome could also affect the fate of American, which is being courted by potential partners from inside and outside its own Oneworld partnership as it restructures under bankruptcy court protection. The EU also announced that it would close formal antitrust proceedings on eight airlines in the SkyTeam alliance: Aeromexico, Air France, Alitalia, Continental Airlines, Czech Airlines JSC, Delta Air Lines, KLM and Korean Air Lines Co. (003490.SE).

-By Matina Stevis and Doug Cameron, Dow Jones Newswires; +32 (0)2 741 1 483; matina.stevis@dowjones.com




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