Documents considered by the Committee on 6 June 2018 Contents

11Safeguarding competition in air transport

Committee’s assessment

Politically important

Committee’s decision

(a) Cleared from scrutiny; (b) Waiver granted; updates requested

Document details

(a) Commission Communication about competition in air transport; (b) Proposed Regulation about competition in air transport

Legal base

(a)—; (b) Article 100(2) TFEU, ordinary legislative procedure, QMV

Department

Transport

Document Numbers

(a) (38823), 9744/17 + ADD 1, COM(17) 286; (b) (38826), 10146/17 + ADDs 1–2, COM(17) 289

Summary and Committee’s conclusions

11.1On 8 June 2017 the Commission presented its Open and Connected Europe package, which included a legislative proposal intended to safeguard competition in aviation. The proposed Regulation would replace Regulation (EC) 868/2004, which has not been used due to its narrow scope: it only covers unfair pricing practices or subsidisation, lacks a specific complaint mechanism and does not permit individual carriers and Member States to make complaints in their own right.

11.2The Commission’s proposal would enable individual carriers and Member States to make complaints in their own right, introduce investigation procedures which can cover both the violation of applicable international obligations and practices adopted by a third country or third country entity affecting competition and causing injury to Union air carriers, and widen the range of unfair practices covered to include practices such as discrimination in airport access and slot distribution.

11.3In its initial response to the proposal, the Government identified a range of areas in which it felt that further information was necessary. In its first report, the Committee asked for updates on a number of these issues, including the extent to which the Regulation would cut across EU-negotiated multilateral Air Transport Agreements with third countries (some of which also contain provisions on fair competition) and Member States’ bilateral air services agreements with third countries.

11.4In a response to the Committee on 17 April 2018, the Secretary of State for Transport (Chris Grayling) provided an update from the Transport Council in December 2017 and subsequent working groups. The Transport Secretary said that a number of Member States in the Aviation Working Group had pushed for “a clear distinction between air services covered by bilateral agreements and those covered by EU-level agreements when it comes to the Commission’s decision to open an investigation or adopting redressive measures”, but that the Member States remained divided on key issues including whether the Regulation should include the concept of a “threat of injury”, how decisions to open investigations and impose redressive measures should be taken, and how dispute mechanisms within Member state’s bilateral arrangements should interact with action by the Commission.

11.5In a subsequent update on 8 May 2018, the Parliamentary Under Secretary of State at the Department for Transport (Baroness Sugg) indicated that the Bulgarian Presidency was likely to seek a General Approach at the 7 June Transport Council. She noted that the text of the proposal was now “more aligned with UK objectives” than the original proposal in the following respects:

11.6The Minister notes that two additional issues are unresolved but of lesser concern to the UK. First, provisions regarding the concept of a “Threat of Injury” have been deleted from the text—a change supported by the Government, as it provides a greater level of certainty regarding the application of the Regulation. However, the Minister notes that a number of Member States want to see this text reinserted. Second, there is a discussion about the proposed procedure to be adopted for the imposition of redressive measures: a hybrid system is proposed, with some decisions being taken through comitology (examination procedure) and others by Council Decision.

11.7In conclusion, the Minister considers that the proposed General Approach is satisfactory provided that a balanced outcome is achieved on these two points. As some of these issues are finely balanced, however, she does not seek clearance of the proposal and instead requests that the Committee grant a scrutiny waiver so that the Government can participate at Council.

11.8On Brexit, the Secretary of State for Transport also responded to a number of the Committee’s queries in his earlier letter on 17 April 2018, in which he observed that:

11.9We thank the Minister for her detailed update on progress regarding the draft Regulation safeguarding competition in air transport in advance of the 7 June Transport Council, at which the Bulgarian Presidency will seek a General Approach. We have taken note that the Government considers the latest compromise text to be more aligned with UK objectives than the original Commission proposal in many respects, as outlined above. The only remaining points of fluidity within the Council are the possible reinstatement of the concept of the “threat of injury” and the procedure that is to be used for the adoption of redressive measures. The Minister indicates that the proposed text is satisfactory provided that a balanced outcome is achieved on these two points.

11.10Regarding the EU exit implications of the proposal, we note the Minister’s assessment that, once the UK becomes a third country with respect to the EU’s aviation acquis (i.e. following the conclusion of any implementation period, providing one is agreed, or in the event of a non-negotiated exit) UK stakeholders could be subject to the Regulation if there were any concerns regarding fair competition between EU carriers and UK aviation stakeholders. We do not consider this to be a cause for concern, given that the UK has a highly liberalised, aviation sector, which is compliant with EU rules. Given the preference expressed in the latest compromise text for resolving these issues through air transport or air services agreements with third countries, as well as the Commission’s focus in Brexit negotiations on ensuring a “level playing field”, it seems probable that the Commission will seek to negotiate the inclusion of provisions relating to fair competition in relation to aviation specifically as part of EU exit negotiations. A bilateral arrangement of this kind which would also give the UK and UK stakeholders certain rights vis-à-vis the EU, is likely to be preferable to being unilaterally subject to the proposed Regulation.

11.11We grant the Government a waiver to participate at Transport Council on 7 June, in line with the positions set out in the Minister’s letter. We request an update on the outcome of the Transport Council, to be followed in due course by a further update on the outcome of trilogue negotiations and a request for clearance. In the meantime, we retain the proposed Regulation under scrutiny.

11.12We now clear the Communication on an Open and Connected Europe from scrutiny.

Full details of the documents

(a) Commission Communication about competition in air transport: (38823), 9744/17 + ADD 1, COM(17) 286; (b) Proposed Regulation about competition in air transport: (38826), 10146/17 + ADDs 1–2, COM(17) 289.

Previous Committee Reports

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


47 We note a Reuters report which states that easyjet intends to increase its EU shareholder base above 50 percent prior to Brexit to ensure its future EU-ownership base.




Published: 12 June 2018