International Air Transport Association Tariff Conference Proceeding

Order 2006-7-3
OST-2006-25307

Issued and Served July 5, 2006

Order to Show Cause - Bookmarked | As Published in Federal Register July 11, 2006

We have now determined that we should reexamine our approval and grant of antitrust immunity for the IATA by-laws insofar as they establish tariff conferences that discuss fares and rates between the United States and Europe and Australia. Developments in the airline business have eliminated much of the need for tariff conferences to establish interlineable fares, assuming that the availability of interlining in international markets ever depended on such fares. In addition, the European Union and the Commonwealth of Australia have tentatively determined to reduce or terminate the IATA agreement's immunity from their own competition laws, as described below. The European Union has already eliminated the immunity held by the IATA tariff conference agreement for cargo rates for markets within the European Union.

We are therefore proposing to withdraw our approval for the IATA tariff conference agreement insofar as the agreement authorizes passenger and cargo fare and rate discussions and agreements for the transatlantic and U.S.-Australia markets. We are tentatively reaffirming our earlier findings that the IATA tariff conference regime substantially reduces competition. We tentatively find that foreign policy concerns no longer require the continuation of antitrust immunity for tariff conference proceedings in those markets and, more importantly, that the agreement does not provide public benefits that are otherwise unobtainable by means that are materially less anti-competitive. The IATA by-laws' tariff conference provisions allow airline competitors to discuss and agree upon fares and rates, which reduces competition. If we disapprove the agreement under section 41309, that would automatically terminate its antitrust immunity under section 41308.

We are giving interested persons forty-five days to file comments on this order and thirty days to file replies to the comments submitted by others. After we review the comments, we will decide whether to finalize our tentative findings. We currently plan to complete this proceeding by the end of this year, if possible.

This order focuses on the IATA passenger tariff conferences, but the arrangements established by the IATA by‑laws for tariff conferences on cargo rates are substantially the same as the arrangements for tariff conferences on passenger fares. We believe that there are no significant differences between the passenger and cargo tariff conference provisions for purposes of our section 41309 analysis. Our tentative findings therefore are the same for both the passenger fare and cargo rate arrangements.

By: Michael Reynolds