Air Transport World

Transatlantic zigging and zagging. (U.S. and European Community antitrust laws) (EC '93)

The European Community won't implement airline liberalization fully until 1997 at least, and has yet to adopt procedural rules to deal with non-EC carriers. Also, the Europeans still are wrangling over the apportionment of power between Brussels and national governments, the socalled "subsidiarity" issue. These factors preclude excessive speculation on conflicts between the EC and U.S. over application of their respective antitrust policies to each other's airlines. Few doubt that conflicts are on the way.

Earlier this year, the EC Commission and the U.S. Justice Department agreed to exchange documents and information on their respective policies. But information is only the first step. Bert Rein, a former State Department official and now a Washington lawyer, notes: "Article 85 [of the Treaty of Rome, which deals with collusion] looks like Section 1 of the Sherman Act and Article 86 [dealing with abuse of a dominant position] is roughly Section 2. But the EC and U.S. really are divergent in philosophy. The EC believes in a more interventionist policy, one of creating a competitive environment." The U.S. believes in intervention "when something dire is about to happen."

Moreover, the EC, like the U.S., believes in extra territoriality. According to John Temple Lang, director for restrictive practices of the ECC's competition directorate, "there is a judgment from Luxembourg [where the European Court presides] on a case involving wood pulp. The court said that when there is an agreement among companies-for example, price fixing that was acted upon or implemented within the EC, the fact that the parties have headquarters outside the EC and the agreement was made outside the EC doesn't matter. EC law applies."

Ever since British Airways went off the dole and became a publicly traded company, it has campaigned vigorously against other European airlines' subsidy, called state aid in Europe. The campaign has borne little fruit. Earlier this year, BA rafted against several French banks' infusion of Ffr3.8 billion into Air France. Of that amount, equal to an 8.8% share, government-owned Banque Nationale de Paris contributed Ffr 1.25 billion and comes on top of a direct investment last year of Ffr2 billion by the French government. The ECC approved the whole package.

A BA official declares without hesitation that subsidy will be the No. 1 area of conflict between the EC and the U.S. competition authorities. …

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