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Commission approves partnership between British Airways and SN Brussels Airlines

The European Commission has approved for a period of six years a co-operation agreement between British Airways and SN Brussels Airlines

The European Commission has approved for a period of six years a co-operation agreement between British Airways and SN Brussels Airlines. The agreement will be beneficial for consumers by, in particular, giving SN`s passengers access to BA`s long-haul network. On the only route where the alliance would have eliminated competition, i.e. Brussels-Manchester, the airlines have submitted undertakings that safeguard consumer choice.



On 25 July 2002, British Airways (BA) and SN Brussels Airlines (SN) notified to the Commission a number of co-operation agreements requesting an exemption under Article 81 (3) of the Treaty. Airline alliances generally present benefits for the consumer but regulators must ensure that they do not result in the elimination of competition on certain routes. The BA-SN agreement will enable the parties to co-operate across their respective networks in terms of pricing, scheduling and capacity.



The Commission`s analysis has shown that the parties` networks are largely complementary and that their network co-operation will bring benefits for consumers. In particular, the agreement will allow SN`s passengers to have access to a long-haul network, while BA`s passengers will benefit from an easier access to SN`s African destinations.



Overlap routes



The Commission looked closely at the impact of the alliance on travel between Brussels and London, on the one hand, and Brussels-Manchester, on the other hand, where both BA and SN have operations.



As far as Brussels-London is concerned, although the alliance will have an appreciable impact on this route, it will not eliminate competition as BA and SN will continue facing bmi and Eurostar, two powerful competitors. Bmi operates seven daily frequencies from London Heathrow and is member of the STAR alliance. Eurostar operates eight daily frequencies between Brussels and London Waterloo and is a competitive alternative for both business and leisure passengers. The Commission also considered that the five daily frequencies on weekdays operated by VLM – in codeshare with Virgin Express as from 30 March 2003 – between Brussels-National and London-City are also likely to exercise a competitive constraint on the parties.



The examination of the alliance revealed that Brussels-Manchester is the route where it will have the most restrictive effect as the parties` cumulated market share is close to 100%. Furthermore, there are capacity constraints at Brussels National airport at peak-time periods, which could prejudice a new entrant`s ability to enter this market.



In order to remedy the concerns raised by the Commission during the initial review, the carriers undertook to release enough landing and take-off slots at Brussels National for a new entrant to operate three daily services to Manchester, in case these slots would not be available through the normal slot allocation procedure. Together the parties operate seven daily services on the route and the Commission has considered that the three daily services provided by a competitor should exercise sufficient constraint on their behaviour.



Background



On 10 December 2002, the Commission published a summary of the agreement in the Official Journal of the European Union.



The agreement was notified under regulation 3975/87, which foresees that if the Commission does not object within 90 days of publication in the Official Journal, the deal is automatically exempted for a maximum period of six years. The 90-day period expired on 10 March 2003 without the Commission having raised serious doubts.

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