XIIth Annual Conference

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XIIth Annual Conference

• 29th 30th October 2003
• Crown Plaza, St James
• London

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Mr Oliver Dugardyn

• Associate Delporte,
• Dugardyn, de Thier and Lefebvre

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IATA - What Value ?GEBTAs complaint to
the European Competition AuthoritiesOlivier
DUGARDYNDelporte Dugardyn de Thier Lefebvre
BrusselsLondon, 30 October 2003
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1. Introduction

• Distribution of airline tickets has changed
  dramatically
• Today airlines act as
• Suppliers of air transportation
• Competitors to the travel agents
• Regulators of the travel agents business
• The Passenger Agency programme (PAP) is not
• adapted to this new distribution environment

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• 2. What brought GEBTA to lodge a complaint?
• July 1991
• The PAP is granted an individual exemption
  from article 81 EC
• Treaty until March 20 1998
• December 1997
• A new application is filed by IATA in December
  1997
• the Commission requests IATA to go and
  negotiate first with
• travel agents

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• 1999/2002
• Discussions between IATA and GEBTA do not lead to
  any significant result.
• But parties identify some fundamental problems
  with the PAP
• The PAP is extremely unbalanced travel
  agents have lots of
• obligations, almost no rights
• The PAP prevents travel agents from operating
  freely on the
• European market
• Travel agents claim a fair remuneration
• June 2002
• The PaConf is a failure. GEBTA suspends its
  discussions with
• IATA.

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• 3. Main elements of the complaint
• The complaint is lodged before DG Competition
  in Brussels on
• 18 October 2002.
• Two main parts
• Infringement of article 81 EC Treaty
• (cartels)
• Infringement of article 82 EC Treaty
• (abuse of dominant position)

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• Infringement of article 81
• The PAP restricts competition even more than
  in 1991,
• especially between airlines and travel
  agents
• The PAP leads to partitioning of the European
  market
• The PAP does not improve distribution and
  does not
• benefit the consumer
• Infringement of article 82
• IATA abuses its dominant position by
• imposing an unbalanced contract upon travel
  agents
• suppressing remuneration, imposing fares and
  developing
• direct sales, sometimes at non accessible
  conditions for
• travel agents
• partitioning the market

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• IATAs first reaction
• The complaint is merely motivated by the travel
  agents frustration with the reduction in
  remuneration level and an attempt to obtain the
  Commissions support for a guarantee of
  remuneration levels.

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• 4. The European Commissions Position
• A major breakthrough and a fair success for
  GEBTA
• the European Commission raises major
  competition concerns with
• regard to the PAP
• concerns about the accreditation of travel agents
• the national variations in the financial standing
  and professional requirements are not justified
• more fundamentally the IATA rules themselves are
  disproportionate to the way travel agency
  business is nowadays conducted.
• concerns about the BSP
• the BSP is probably used to restrict freedom of
  travel agents to sell outside their home market

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• concerns about the STP Resolutions
• the STP resolutions impose illegal territorial
  restriction
• concerns about access to fares
• travel agents in different countries have no
  access to the
• same fares for the same journeys
• The European Commission recommends IATA to
  review the
• accreditation rules with the travel
  agents

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• 5. IATAs reaction
• Amendement of Resolution 814pp on ECSTP (European
  Union Satellite Ticket Printer Locations)
• Feasability study on a Eurozone BSP
• PaConf decides to set up a separate committee for
  the review
• and harmonization of the accreditation rules

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• 6. The current status
• The review committee has not started its
  activities yet.
• The terms of reference are not agreed upon.
• There are still two major problems to be
  solved
• Election of a chairman
• The binding nature of the review committees
  conclusions
• An additional cause of worry for IATA the
  new Council
• Regulation 01/2003.

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• 7. Conclusion
• For the first time, IATA is under pressure to
  listen to the travel
• agents
• For GEBTA, the PAP can constitute a useful
  distribution system
• BUT the PAP should be economically and legally
  balanced and
• allow fair competition
• The review committee can achieve this but, are
  all these efforts
• worthwhile?

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• ARTICLE 81
• Article 81 prohibits all agreements between
  undertakings, decisions by associations of
  undertakings and concerted practices which may
  affect trade between Member States and which have
  as their object or effect the prevention,
  restriction or distortion of competition within
  the common market, and in particular those which
• a/ directly or indirectly fix purchase or
  selling prices or any other trading conditions
• b/ limit or control production, markets,
  technical development, or investment
• c/ share market or sources of supply
• d/ apply dissimilar conditions to equivalent
  transactions with other trading parties, thereby
  placing them at a competitive disadvantage
• e/ make the conclusion of contracts subject to
  acceptance by the other parties of supplementary
  obligations which, by their nature or according
  to commercial usage, have no connection with the
  subject of such contracts.

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• ARTICLE 82
• Article 82 prohibits any abuse by one or
  more undertakings of a dominant position within
  the common market or in a substantial part of it,
  insofar as it may affect trade between Member
  States.

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Morning Business Sessioncourtesy of