LEADINGWIERNATIONAL AVIATION TOWARDS GLOBALIZATTON: THE NEWRELATIONSHIP AMONG CARRIERALLIANCES, OPEN SKIES =TLES AND ANTITRUST ][MMUNITY An.Frédeique Pothier Institute of Air and Space Law McGill University, Montréal March, 1997 A Thesis submitted to the Fadty of Graduate Studies and Research in partial fdfihent of the requirements of the degree of Master of Laws. 0 Copyright, Ann Frédêrïque Pothier, 1997 National Library BiMiotheqoe nation* du Canada Acquisitions and Acquisiiions et Bibiiographic Services seMces WTographÎques 395 Wellington SUeet 395. rue WeUingKm Ottawa ON KIA ON4 KlAONI Canada CsMda The author has gianted a non- L'auteur a accordé une Licence non exclusive Licence dowing the exclusive permettant à la National Library of Canada to Bibtiothèque nationale du Canada de reproduce, 10- distniute or seii reproduire, prêter, distribuer ou copies of this thesis in microform, vendre des copies de cette thèse sous paper or electronic formats. la forme de microfiche/nlm, de reproduction sur papier ou sur fonnat électronique. The author retains ownersbip of the L'auteur conserve la propriété du copyright in this thesis. Neither the droit d'auteur qui protège cette thèse. thesis nor substantial extracts fiom it Ni la thèse ni des extraits substantiels may be printed or othenvise de celle-ci ne doivent être imprimés reproduced without the author's ou autrement reproduits sans son permission. autorisation. À WSp~~at~. À Dan M. Fiorita. Deregdation, liberalization, cornpetition and giobaiization are concepts that are cIosely Iinked to today's international air transport. With the aim of adaptïng to thiç new cornpetitive enviroment, carriers have in the past years joined forces and developed international carriers affiances. As a result, antitrust immunïty to carrier alliances was granted by the United States in order for carriers to "merge" th& activities without an actual merger, prohibited under the present regime, or without risking violation of antitrust laws. This thesis wiil discuss the basis of antitrust immunity in the United States, as weil as the different carrier alliances that have received antitrust immunity from the US Department of Transport. The European Union, and certain national authorities, are presentiy reviewing alliances-involving a European carrier-that received antitrust immunity in the US. The different issues raked by such reviews wiIi be examined in the present thesis. Carrier diances, antitrust immunity and open skies treaties are all dosely linked. Although having involved, to date, carriers and agencies from two continents, the effects are king felt around the world. This thesis will tcy to describe this new relation, focusing primarily on antitrust immunity. La dérégulation, la Libéralisation, la compétition et la globaiïsation sont des concepts qui sont maintenant liés au harisport aérien international. Les transporteurs aériens se sont adaptês ces demi&= réalités en forgeant et développant de nouvelles ailiances entre transporteurs aériens de différentes natiodtés- Afin de permettre des alliances plus développées et intégrées, restreintes dans le régime aérien international aduei par des lois sur les fusions et des lois sur la concurrence, les États-unis ont accorde a ces alliances i'immunite de leurs lois sur la concurrence. Cette th- étudiera donc les fondations juridiques permettant cette immunité, de même que les différentes alliances ayant r- i'immunité des lois sur la concurrence américaines. L'Union européenne, de même que certaines autorités nationales, sont présentement en train de revoir les alliances auxquelles les États-unis ont accordé l'immunité. Les différents aspects soulevés par ces examens seront &tudiesau cours de la présente etude. La relation entre les diances entre transporteurs, les traités à ciel ouverts et les immunités des lois sur la concurrence est désamais bien établie. Malgré que cette relation soit présente A ce jour sur deux continents, ses effets se font sentir mondialement, Cette thèse abordera donc l'etude de cette nouvelle relation, discutant principalement de l'immunité maintenant conférée aux transporteurs aériens. First, 1 wish to express my gratitude to my supervisor, Professor Richard Janda, for his helpful suggestions, guidance and patience throughout this thesis. My appreciation also goes to Dr. Midiael Milde, Director of the Institute of Air and Space Law, and to the staff of the Institute, for their encouragement and availabiüty. I wodd Iike to acknowledge the unfailhg support of my parents, of my sister and brother, during all the course of my studies. Furthemiore, 1 wish to express my sincere appreciation for his collaboration and insights to Dieter Bartkowski, Dixector of Air Transport, Gemiany. 1 wodd ais0 iike to than.Thomas Sdimidt of Harbottle and Lewis, Nicolas Slovoda, Kathy Duggan, and Arlene of the ICA0 Legal Bureau, for their heip in their various capaaties. Moreover, 1 am thanldul to Rainer Becker for his support, understanding and academic stimulation. Finally, for their constant generosity, collaboration and encouragement, 1 am grateful to Dan Fiorita and Jocelyne Lavoie Fiorita, without whom the completion of this thesis wodd have been a much harde.experience. CHUTER I OPEN SKIES TREATIES ............................................................................................................................ 7 1.1. CONSEQUENCESOF THE OPEN SKIES REGiME .................... .. ............................................................... 7 12 . PROPERN AND OWNERSHIP CUUSES IN THE OPEN SKIES REG ME... ...................... ........................... 9 1.4. THE RnnTION BEnlEENIMMLMTY AND OPEN SKIES TREATIES .......................... ........................ 13 CHAPTER 2 AIRLINES ALLIANCES AND ANTITRUST CMMUNITY IN THE UNITED STATES............... .... .............................................................................................. 17 2.1. THE ~momINCHARGE OF AVIATION ANTI~UST...................................................................... 18 2.2.1. The Unites States Corde .............................................................................................................. 21 2.2.3. Co& of F&af Regulatio~..................................................................................................... 23 2.2.4. The CIayton Ac! ......................~.................................................................................................. 26 2.3. ïHE CONSLDERED IN THE GRWTING OF SUCH hMüNlW........................................... 27 2.3.21. Public IntaeJt -..-.............. ... ...-......................... ...-. - ............................. .......................................... 31 C'R3 AIRLINES ALLIANCES AND ANTlTRUST ïMlMUWW IN THE EUROPEAN UNION.................................................................................................................... 36 3.1. THECOMPETENCE OF THE COMM~SSION..................... ... .................................................................... 38 3.1. I . Ariicies 85, 86, and89 of the EC Treaty..............,... ................. ,.... .......................................... 39 3.1.1.1. Exemptions ............................ .-...................................................................................................... 40 3.2. THE REVIEW BY THE COMMISSION.................................................................................................... 42 3.2.1. Obstacles for the Commission ............................................................................................................... 44 3.2.2. The Conscqumces of the Rcvicw ...................., ................................................................................. 45 3.3. REVIEW BY NAT~ONALALmfOlUTIES ................................................................................................. 47 C'R4 THE APPLICA'NOF ANTlTRUST lMMUNlTY TO CARRIERS ALLMCES ....................................... .................................................................................... 49 4- 1.1. The KLMf NortbtAlfiolcce ............. ....-................................................................... ....... 50 4.1.1.1. Limitations to the Immunity ............................................................. -............................................... 53 4.1.1.2. The Bencfits of the Al[iacc -.................................................................................... ................ 55 4.1.1.2.1 Obstacles to Ruiewal of the Alliance ...................... ................................................................... 56 4- 1.2. rie UnirdL@iuuUu Alliance ............................................................................ 59 4.121 . The US DOT Examination of the Alliance ........................................................................................ 60 4.1.21.1. Limitations to Immunity - -- .....--..........-.. 62 4.12.12. MhctAnaIysis ...................,.............................d-..-.............., ............................................... 63 4.1.2.2. The Rcview by the Bundakartellamt ....-......-.................................... ......................... ........- ....--.. 65 4.1.23. The Bmefits of the tufthansa-United Alliana .S...-................................. ........ 67 4.2 OTHERAULANCES GRANTEDANTiïRUST blMJMW ...................................................................... -67 42.1. The Delia/[email protected]/SobellLJSwUsaV allicmce .............................................................