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Code-Sharing Agreements and Competition Protection in the European Union

The reason for writing this paper is the recent announcement of the European Commission, published in a press release on the web pages of the European Commission, dated October 27th, 2016, in case AT.39860. In the so-called Statement of Objections the Commission determined that two airline companies – Brussels Airlines and TAP Air Portugal – breached the provisions of Article 101 of the Treaty on Functioning of the European Union by concluding a “code-sharing” agreement. At the same time, the European Commission announced the end of another investigation in case AT.39794, also concerning two airline companies which also concluded code-sharing agreements – Turkish Airlines and Lufthansa. Given the fact that the forms of cooperation in these two cases are seemingly identical, it is necessary to distinguish them and identify the criteria which would help undertakings involved in similar forms of cooperation to detect whether their arrangements could be contrary to competition rules. As explained further in the text, this proved a difficult task due to the scarcity of information released by the European Commission and available practice. The authors of the paper primarily tried to identify certain key criteria for assessing anticompetitive effects of code- sharing agreements. The Commission’s recent Statement of Objections has also raised certain questions – will the mentioned criteria be sufficiently clear and stable to become a direction for assessment of similar agreements in future, or will the practice in this sense change and will these criteria “withstand” the assessment of the Court of Justice of the European Union, in case the undertakings oppose the Statement of Objections and request the Court’s intervention (provided that the European Commission assumes the same stance in its final decision). Having in mind the relatively low number of decisions issued in the air transport sector relating to market competition (especially having in mind that the analysed decisions represent the first significant step towards an analysis of code-sharing agreements and their impact on the air transport sector), it is highly likely that the authorities tasked with the protection of market competition will intervene more and more often in that sector as well, and they will use more sophisticated methods of analysis. Despite the mentioned, it remains unclear what exactly constitutes a breach of competition law in the case of code- sharing agreements, and the paper is aimed at identifying several key factors marked as the most important for competition law analysis related to code- sharing agreements. Therefore, due to the widespread use of code-sharing agreements, the authors recommend that clear criteria for the assessment of such agreements be set, and they tried to provide certain guidelines to undertakings, on the basis of the existing information, in order to reduce the risk of distortion of competition.

code-sharing, horizontal agreements, airlines, competition law, market barriers, pricing, European Commission, European Union

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