EC EXPRESSES CONCERNS ABOUT AUSTRIAN AIRLINES/STAR ALLIANCE LINKUP

EC EXPRESSES CONCERNS ABOUT AUSTRIAN AIRLINES/STAR ALLIANCE LINKUP    The European Commission said that it has contacted Austrian Airlines and Star Alliance partners Lufthansa and SAS to express its “serious concerns” about their recently concluded cooperation agreements.
   “As they currently stand, the agreements would eliminate competition on a large number of routes between Austria and Germany and raise similar concerns on the Austrian-Nordic aviation market,” a spokesman for the EC said.
   In December 1999, Austrian and Lufthansa, on the one hand, and Austrian and SAS, on the other hand, notified two cooperation agreements to the EC, requesting an exemption under European competition rules.
   “From Austrian Airlines’ perspective, the purpose of these cooperation agreements is to join the Star alliance,” the EC spokesman said. “The parties envisage to build a lasting alliance by creating an integrated air traffic system based on a close cooperation of their commercial, marketing and operational activities.”
   The Brussels competition regulator said that “at this stage it cannot grant an exemption under the European Union competition rules.” The EC cited the companies’ 100-percent joint market share in air passenger traffic between Austria and Germany.
   The EC added that the notification of serious concerns about the proposed cooperation is the first formal step in an investigation that could lead to a prohibition decision unless the companies address its concerns.