[Federal Register: September 3, 2002 (Volume 67, Number 170)]
[Notices]
[Page 56340-56341]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03se02-99]
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DEPARTMENT OF TRANSPORTATION
Office of the Secretary
Review under 49 U.S.C. 41720 of Delta/Northwest/Continental
Agreements
AGENCY: Office of the Secretary, Department of Transportation.
ACTION: Notice requesting comments.
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SUMMARY: Delta Air Lines, Northwest Airlines, and Continental Airlines
have submitted code-sharing and frequent-flyer program reciprocity
agreements to the Department for review under 49 U.S.C. 41720. That
statute requires such agreements between major U.S. passenger airlines
to be submitted to the Department at least thirty days before the
agreements' proposed effective date but does not require Department
approval for the agreements. The statute authorizes the Department to
extend the waiting period for these agreements at the end of the
thirty-day period. The Department is inviting interested persons to
submit comments that would assist the Department in determining whether
it should extend the waiting period or take other action on the
agreements.
DATES: Any comments should be submitted by September 10, 2002.
ADDRESSES: Comments must be filed with Randall Bennett, Director,
Office of Aviation Analysis, Room 6401, U.S. Department of
Transportation, 400 7th St. SW., Washington, DC 20590. Late filed
comments will be considered to the extent possible. To facilitate
consideration of comments, each commenter should file three copies of
its comments.
FOR FURTHER INFORMATION CONTACT: Thomas Ray, Office of the General
Counsel, 400 Seventh St. SW., Washington, DC 20590, (202) 366-4731.
SUPPLEMENTARY INFORMATION: On August 23, Delta, Northwest, and
Continental submitted code-sharing and frequent-flyer program
reciprocity agreements to us for review under 49 U.S.C. 41720. That
statute requires certain kinds of joint venture agreements among major
U.S. passenger airlines to be submitted to the Department at least
thirty days before they can be implemented. This requirement currently
covers code-sharing agreements, long-term wet leases involving a
substantial number of aircraft, and agreements concerning frequent
flyer programs. By publishing a notice in the Federal Register, we may
extend the waiting period by 150 days with respect to a code-sharing
agreement and by sixty days for other types of agreements. At the end
of the waiting period (either the thirty-day period or any extended
period established by us), the parties are free to implement their
agreement. The statute does not require the parties to obtain our
approval before they implement an agreement. We normally could not
block two airlines from implementing an agreement unless we issued an
order under 49 U.S.C. 41712 (formerly section 411 of the Federal
Aviation Act) in a formal enforcement proceeding that determined that
the agreement's implementation would be an unfair or deceptive practice
or unfair method of competition that would violate that section.
We have informally reviewed all agreements submitted under 49
U.S.C. 41720 in earlier years. In each case, the airline parties to the
agreement filed the agreement directly with the Department staff that
reviews them, and we did not establish a docketed proceeding for any
such agreement. In reviewing each agreement, we focused on whether it
would reduce competition. As noted, we would usually base any
determination that an agreement was unlawful on a finding that the
agreement was unlawful under 49 U.S.C. 41712 as an unfair method of
competition, that is, that the agreement violated the antitrust laws or
antitrust principles. See United Air Lines v. CAB, 766 F.2d 1101 (7th
Cir. 1985). Our review is analogous to the review of major mergers and
acquisitions conducted by the Justice Department and the Federal Trade
Commission under the Hart-Scott-Rodino Act, 15 U.S.C. 18a, since we are
considering whether we should institute a formal proceeding for
determining whether an agreement would violate section 41712.
In our review, we consult the Justice Department, which is
responsible for enforcing the antitrust laws in the airline industry
and may file suit and seek injunctive relief against the parties to an
airline agreement, whether or not the agreement is subject to 49 U.S.C.
41720. We seek to avoid duplicative proceedings by this Department and
the Justice Department.
Delta, Northwest, and Continental submitted their joint venture
agreements one month after United and U.S. Airways submitted code-share
and frequent-flyer program reciprocity agreements for review under 49
U.S.C. 41720. We have been conducting an informal review of the United/
US Airways agreements. However, due to the public interest in the
matter, we gave interested persons an opportunity to submit comments on
the United/US Airways agreements. We thought that the views of outside
parties could assist us in determining whether to extend the waiting
period and whether their agreements present serious issues under
section 41712. 67 FR 50745 (August 5, 2002). The comments are public.
67 FR 52770 (August 13, 2002).
We will follow the same informal review process being used for the
United/US Airways agreements and provide the same opportunity for
public comments. Since the statute requires us to decide within thirty
days of filing whether to extend the waiting period, we request that
any comments be filed by September 10. Delta, Northwest, and
Continental have prepared a redacted copy of their agreements that will
be available for review and copying in room PL-401 of the Nassif
Building, located in the northeast corner on the Plaza level, 400 7th
St. SW., Washington, DC. We are making the copy available there, even
though this case is not docketed, because it is readily accessible to
the public and has a copying machine for public use.
The comments will be most helpful if they focus on the key issue in
our review of the agreements under 49 U.S.C. 41720: whether the three
airlines' implementation of the agreements may result in a significant
reduction of competition in any market and therefore constitute an
unfair method of
[[Page 56341]]
competition that would violate 49 U.S.C. 41712. Code-sharing and
frequent-flyer program reciprocity agreements between major domestic
airlines do not constitute a merger and, in contrast to the immunized
alliances between U.S. and foreign airlines, are not normally intended
to lead to a substantial integration of the partners' operations. Such
agreements, however, would likely reduce competition if their terms or
the resulting relationship among the airline partners would create the
potential for collusion on price and service levels in markets where
the airlines compete, or if the agreements and the airlines'
relationship could otherwise significantly reduce competition, for
example, by unreasonably restricting each airline's ability to set its
own fares and service levels.
Issued in Washington, DC, on August 28, 2002.
Read C. Van de Water,
Assistant Secretary for Aviation and International Affairs.
[FR Doc. 02-22504 Filed 8-30-02; 8:45 am]
BILLING CODE 4910-62-P