Documents considered by the Committee on 16 January 2019 Contents

6Safeguarding competition in air transport

Committee’s assessment

Politically important

Committee’s decision

Cleared from scrutiny

Document details

Proposal for a Regulation of the European Parliament and of the Council on safeguarding competition in air transport, repealing Regulation (EC) No 868/2004

Legal base

Article 100(2) TFEU, ordinary legislative procedure, QMV

Department

Transport

Document Number

(38826), 10146/17 + ADDs 1–2, COM(17) 289

Summary and Committee’s conclusions

6.1Trilogue negotiations have concluded regarding the European Commission’s proposal for a Regulation safeguarding the aviation sector against subsidisation and unfair pricing practices in the supply of air services from third countries.

6.2The proposed Regulation, adopted by the Commission in June 2017, would replace Regulation (EC) 868/2004, which has not been used to date due to its narrow scope, the fact that it lacks a specific complaint mechanism, and because it does not permit individual carriers and Member States to make complaints in their own right. In addition to enabling carriers and Member States to make complaints, the proposal would introduce investigation procedures covering both the violation of applicable international obligations and practices adopted by a third country or third-country entity affecting competition and causing either injury or threat of injury to Union air carriers.

6.3In the Government’s initial response to the proposal, the Minister (Lord Callanan) raised questions over whether the proposed Regulation would enable the Commission to impose redressive measures which might impact international air services covered by Member States’ own bilateral air services agreements with third countries.68 The Committee sought further reassurance on this, and other competence-related points, in its first report.69

6.4In two subsequent updates,70 the Minister’s successor (Baroness Sugg) informed the Committee that the text of the proposal had become more aligned with UK objectives, in that it (i) recognised that fair competition between air carriers should preferably be addressed in the context of air transport or air services agreements with third countries, rather than through the proposed Regulation, (ii) contained provisions enabling an investigation to be suspended if the Member States involved intend to address the practice being investigated under an applicable agreement they have concluded with the third country concerned, (iii) excluded the suspension or limitation of traffic rights granted by a Member State to a third country from being imposed as redressive measures, and (iv) clarified that harm to consumers should be specifically considered in investigations and the impact of redressive measures on them taken account of when imposing such measures. The Minister also noted that a concern had arisen in that some Member States were lobbying for text regarding “threat of Injury”—which would lower the threshold under which the procedure could be invoked, and which had previously been deleted—to be reinstated. On this basis the Committee granted the Government a waiver to support a General Approach at Transport Council on 7 June 2018.71

6.5On 11 December 2018 the Minister wrote to the Committee to inform it that trilogue negotiations with the European Parliament, which commenced following the agreement of the Council’s General Approach, had reached a provisional agreement which continued, in her assessment, to be aligned with UK objectives.

6.6The Minister states that the provisional agreement achieves UK objectives on the following outcomes:

6.7The Minister concludes that she regards the text as striking a balance “between allowing the aviation market between the EU and third countries to continue to grow and innovate, while ensuring that growth takes place within an environment that promotes fair competition”. She also adds that no further changes are expected before the proposed textis put to the European Parliament and the Council of Ministers for final adoption, and requests that the Committee clear the proposal from scrutiny.

6.8Trilogue negotiations on the proposal for a regulation safeguarding the aviation sector against subsidisation and unfair pricing practices in the supply of air services from third countries have resulted in the provisional agreement of a compromise text which, in the Minister’s assessment, “continues to be aligned with UK objectives” and strikes a balance between promoting fair competition and growth.

6.9The Committee’s specific concerns regarding competence have been thoroughly addressed: the Minister confirms that the text provides that fair competition between air carriers should preferably be addressed in the context of air transport or air services agreements with third countries, that it retains the provisions enabling an investigation to be suspended if the Member States involved intend to address the practice being investigated under an applicable agreement they have concluded with the third country concerned, and that it precludes the use of traffic rights as redressive measures.

6.10The concept of ‘Threat of Injury’, to which the Government had objected, has been reinstated, however the Minister observes that the concept has been clarified so that it now relates to more definite circumstances and that any redressive measures proposed in response will not enter into force before the threat of injury has developed into actual injury—an outcome which is acceptable to the Government. Regarding the process for imposing redressive measures, the Minister states that the Commission will have to adopt implementing acts through comitology in accordance with the examination procedure, meaning that a qualified majority will be needed to impose measures, in line with UK preferences.

6.11The regulation is of relevance to the UK, which is expected to become a third country with respect to the Single Market in aviation when it leaves the European Union, meaning that UK stakeholders could in principle be subject to its provisions if there were any concerns regarding fair competition between EU carriers and UK aviation stakeholders.

Full details of the documents:

Proposal for a Regulation of the European Parliament and of the Council on safeguarding competition in air transport, repealing Regulation (EC) No 868/2004: (38826), 10146/17 + ADDs 1–2, COM(17) 289.

Previous Committee Reports

Thirtieth Report HC 301–xxix (2017–19), chapter 11 (6 June 2018); First Report HC 301–i (2017–19), chapter 14 (13 November 2017).


68 Explanatory Memorandum from the Minister, DfT, to the Chair of the European Scrutiny Committee (22 June 2017).

69 First Report HC 301–i (2017–19), chapter 14 (13 November 2017).

70 Letter from the Minister to the Chair of the European Scrutiny Committee (17 April 2018); Letter from the Minister to the Chair of the European Scrutiny Committee (8 May 2018).

71 Thirtieth Report HC 301–xxix (2017–19), chapter 11 (6 June 2018).




Published: 22 January 2019