Order 2002-1-6 - SkyTeam Antitrust

Order 2002-1-6 - SkyTeam Antitrust - Final Order

Delta Air Lines, Inc., Societe Air France, Alitalia-Linee Aeree Italiane S.p.A., and Czech Airlines

Order 2002-1-6 OST-2001-10429	Issued January 18, 2002 Served January 18, 2002	Final Order	Approval of and Antitrust Immunity for Alliance Agreements
		Appendix: Conditions Governing Antitrust Immunity

By Order 2001-12-18, we tentatively found that the proposed arrangement should be approved and granted antitrust immunity. We carefully examined the impact of the proposed business arrangement on competition in all relevant markets. The U.S.-Czech Republic, U.S.-France, and U.S.-Italy markets are the subjects of open-skies agreements that have eliminated, or in the case of France will eliminate, all regulatory barriers to entry. We tentatively found that these agreements should promote increased service by L? S. airlines. We also noted that nothing in the record indicated other doing-business problems, such as the unavailability of airport facilities at Milan, Paris, Prague, or Rome. We tentatively determined that a substantial amount of competitive nonstop or code-share service exists in the U.S.-France/Italy markets, and that the proposed alliance will not eliminate any nonstop competition in the U.S.-Czech Republic market. We tentatively found, considering the open-entry nature of the U.S.-Czech Republic/France/ Italy markets in open-skies regimes, that the likelihood of competitive discipline afforded by potential competing hubs and existing competition from nonstop, one-stop, and connecting services should provide competitive discipline for each of these transatlantic markets, if the partners should charge supra-competitive fares or lower service below competitive levels, except as to certain time-sensitive passengers in the Atlanta/Cincinnati-Paris markets. The opposing parties have contested none of our tentative findings, and we therefore adopt each of them here.

We are unwilling to grant ASTA's request that travel agencies be granted immunity so that they can jointly respond to the alliance partners' efforts to develop a joint marketing program when that injures travel agencies. We are granting antitrust immunity to the alliance because we have found that the alliance, subject to the conditions imposed by this order, will not substantially reduce competition in any market. ASTA has not attempted to show that we erred in making this finding. The alliance partners, like the partners in any joint venture, may well wish to develop joint marketing strategies to further their common venture. ASTA has not attempted to show that any of the alliances approved by us have led to joint decisions on matters such as travel agency commission rates that would violate the antitrust laws. In these circumstances, we see no basis for granting the relief sought by ASTA.

We are also not granting the requests of the ACAA that we take action in this proceeding to promote competition in domestic airline markets. This proceeding concerns the applicants' request for approval and antitrust immunity for an alliance agreement that will enable them to coordinate their services in international markets. Neither LaGuardia nor Washington Reagan National is a gateway for intercontinental service, and none of the Czech Republic, French, and Italian airlines that are forming the alliance with Delta serve either airport.

We have been investigating the complaints of anti-competitive behavior submitted by ACAA members, and no action need be taken in this proceeding on that issue. Finally, we are aware of the low-fare airlines' requests for changes to our rules on airline computer reservations systems (CRSs). We are working to complete our pending CRS rulemaking and are considering ACAA's proposals in that rulemaking.

Neither party has provided sufficient bases for the Department to delay finalizing its tentative decisions in these matters. In these circumstances, we make final our tentative findings in Order 2001-12-18, and we grant approval and antitrust immunity to the proposed Alliance Agreements, subject to the limits and conditions imposed below and specified in Appendix A to this Order.

By: Read Van de Water

Order 2002-1-6
OST-2001-10429

Issued January 22, 2002
Served January 22, 2002

Final Order
*Erratum

Approval of and Antitrust Immunity for Alliance Agreements

* In Order 2002-1-6, on page 6, ordering paragraph 1 is amended to read:

1. We approve and grant antitrust immunity to the Alliance Agreements between and among Delta Air Lines, Inc., Societe Air France, Alitalia-Linee Aeree Italiane-S.p.A., and Czech Airlines, and their wholly-owned affiliates (with respect to Societe Air France and its whollyowned affiliates, effective upon signature of the open-skies provisions of the agreement between France and the United States), in so far as the Alliance Agreements relate to foreign air transportation, and subject to the provisions that the antitrust immunity will not cover any activities of the Joint Applicants as owners or marketers of Amadeus, Galileo, and Worldspan computer reservation systems businesses, and subject to the limits and conditions imposed in the Atlanta/Cincinnati-Paris markets as indicated in Appendix A;

By: Read Van de Water