The European Commission has adopted a Block Exemption Regulation revising the exemption IATA passenger tariff conferences have enjoyed from the EC Treaty’s ban on restrictive business practices (Article 81). For routes within the EU, tariff conferences will no longer be exempted as of 1 January 2007. The Regulation exempts tariff conferences on routes between the EU and the US or Australia until 30 June 2007 and routes between the EU and other non-EU countries until 31 October 2007.
The new Block Exemption Regulation was adopted after extensive consultations with industry, trade and consumer organizations, and national authorities. These consultations showed that interlining benefits consumers, but that the importance of IATA interlining as part of overall interlining in the EU is relatively small and several alternative forms of interlining are possible. As a result, for routes within the EU there is insufficient assurance that the benefits for consumers will continue to outweigh the risks of the restriction of competition arising from the price agreements reached within the IATA conferences. A continuation of the block exemption is therefore not justified. However, the consultations showed that on routes between the EU and third countries interlining is more important and so are the potential benefits of IATA interlining for consumers.
The American and Australian authorities are reviewing IATA’s exemptions for tariff conferences under their respective competition rules and should have taken first decisions by June 2007. It is therefore appropriate that the Commission reviews the situation within the same timeframe. On routes to other non-EU countries a 12 months transition (until October 2007) is appropriate for passenger tariff conferences.
IATA and its member airlines appear to be actively working towards the development of an alternative system to replace tariff conferences. The Commission welcomes this initiative provided that it helps preserve the benefits of IATA interlining for consumers whilst addressing the Commission’s competition concerns.