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Global Airline Alliances and EC-Competition Policy
Linköping University, Department of Management and Economics.
2001 (English)Independent thesis Advanced level (degree of Magister)Student thesis
Abstract [en]

Problem: An analysis of the compatibility of global airline alliances with EC- competition policy including merger policy and EC-competition law. Is the Commission’s current approach to prohibit certain restrictive global alliances the optimal solution to the problem of certain alliances’ anti-competitive effects? Can other conclusions be drawn by taking an approach based on efficiency arguments that recommend a trade-off between the efficiency gains and the inevitable anti-competitive effects of the alliances? Will the results of the latter approach be in the public interest and does it conform to EC- competitionpolicy including merger policy and EC-competition law?

Purpose: There are three aims of this paper; two intermediate aims, which are to introduce the complex nature of global airline alliances to legal practitioners, in particular the alliances’ impact on competition in the EU aviation market, and to illustrate the Commission’s assessment of the relevant market and its proposed measures to deal with the restriction of competition. Then my intention is to develop an alternative approach – “the efficiency policy” – and investigate its conformity to EC-competition policy including merger policy and legislation.

Limitation: The question on what effects global airline alliances have on competition is naturally a global question, which is dealt with by competition authorities in many countries. In this paper no attempt is made to compare the opinions of and the measures taken by authorities throughout the world; instead the intention is to analyse the current EC-competition policy and merger policy on the subject.

Method: In the descriptive part I will take a strictly positive approach and conduct an ordinary empirical research, i.e., to collect and present relevant legal and economic material that explain the legal as well as the economic aspects of global airline alliances. In the analytical part my intention is to analyze the Commission’s current approach towards Global airline alliances and to show how this has effected its decisions. I will then discuss the pros and cons of this approach with respect to the different interests that are to be protected by EC-competition law. Finally, I will develop an alternative approach"the efficiency policy"and discuss whether it conforms to EC- competition policy including merger policy and EC-competition law.

Results: Global airline alliances bring efficiency gains, which can be distributed to consumers, communities and other parts of society. Nevertheless, the formation of global airline alliances will distort competition in some of the relevantmarkets. The Commission, which appears to have assessed the relevant market correctly, will not allow competition to be distorted. However, the remedies of the Commission seem to be inadequate. The reason appears to be a conflict between the goal of upholding"workable competition"and facilitating the efficiency gains that global airline alliances bring to society. This problem may be solved by applying another competition policy based on efficiency, which would allow airlines to defend decreased competition in terms of efficiency. However, due to the structure of Article 81 of the EC- Treaty, an"efficiency defence"cannot be allowed under that Article. Nevertheless, there is a possibility that it can be allowed under the Merger Regulation.

Place, publisher, year, edition, pages
Ekonomiska institutionen , 2001. , 77 p.
Master Thesis in Business Administration (Magisteruppsats från Ekonomprogrammet), 2002:01
Keyword [en]
Law, competition, alliances, aviation, efficiency, mergers, relevant market
Keyword [sv]
National Category
URN: urn:nbn:se:liu:diva-1064OAI: diva2:17350
Available from: 2002-02-08 Created: 2002-02-08

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