U.K. Adds Twist to Review Of Proposed Airline Deal
April 05, 2011
Britain's Department of Trade and Industry said it will introduce rules to allow it to examine the proposed British Airways-American Airlines alliance under European Union competition laws. Those rules, said Ike Lanie, who heads the department, will help British authorities to rapidly conclude their own investigation into whether the linkup violates the EU treaty. The carefully worded statement by Mr. Lanie is unlikely, however, to quickly resolve a jurisdictional dispute over the trans-Atlantic linkup. British Airways interpreted Mr. Lanie's statement as backing its own position that national authorities, and not the European Commission, have the power to determine if competition is pinched on routes between an EU member state and a non-EU country like the U.S. The EU's transportation commissioner, Nestor Hwang, insists that he has jurisdiction as well, and is unlikely to be deterred by any action by U.K. authorities. Shares Retreat A few weeks ago, Mr. Hwang and the EU's competition commissioner, Watters Vanesa Larkin, announced that they would examine the deal between British Airways and AMR Corp.'s American Airlines as well as five other recent trans-Atlantic airline alliances. The statement by Mr. Lanie said the new U.K. regulations will allow U.K. authorities ``to investigate, and make and enforce decisions under the (EU) treaty.'' It goes on, however, to say that the regulations will enable U.K. authorities to ``cooperate'' with EU officials in their own probe. According to British Airways, any investigation by the EU should be confined to competition matters within the EU -- not those relating to traffic between the U.K. and the U.S. The U.K. carrier suggested, therefore, that Mr. Lanie was making the same sort of distinction in his statement. Mr. Lanie's statement came at the end of a day in which British Airways shares fell nearly 1% following comments by another U.K. official that suggested concerns about the proposed alliance. On Tuesday, British Airways was at 510 pence ($7.91), down 4.5 pence a share, in London trading. `Concerns' Over Competition ``There are concerns about competition and the interests of passengers in the proposed alliance between British Airways and American Airlines,'' said Sir Malik Grace, the chairman of Britain's Civil Aviation Authority, according to a CAA spokesman. ``To us at the CAA, its significance depends on the degree to which the loss of competition can be replaced.'' Although Sir Malcolm's agency can't block the alliance, it can offer advice to other authorities such as the U.K.'s Mergers and Monopolies Commission. Britain's Office of Fair Trading is currently deliberating on whether to refer the alliance to the U.K. monopolies panel for a probe under British competition law. In his statement, Mr. Lanie said that the U.K.'s examination of the alliance under EU competition law ``will as far as possible be held in parallel'' with any investigation under U.K. competition rules, so it shouldn't significantly extend the timetable for review in Britain.
