Examination of Witnesses (Questions 310
- 319)
WEDNESDAY 8 JULY 1998
MR BERNARD
VAN HOUTTE
and MR HUMBERT
DRABBE
Chairman
310. Thank you very much, Mr van Houtte,
for sitting in on the last session and being prepared to answer
questions now. Can you maybe, first of all, explain something
which we started off discussing with Mr van Miert which was this
question of slot allocation? It is obviously a DGVII matter rather
than a DGIV one, but there is a new draft Regulation, is there
not?
(Mr van Houtte) Not quite actually.
311. Planned?
(Mr van Houtte) There is one planned. There is
a Regulation in force at present for which a revision was scheduled
for 1 July 1997. As things turned out, it was not quite clear
in what way we should deal with what they call "secondary
trading", the sale of slots or an auctioning procedure and
things like that, and, therefore, the revision has been held up
for a time. We still plan some time later this year to make a
proposal for a new Regulation, but there is nothing quite ready
yet, so there are still a number of options open.
Chairman] So you cannot
help us with any thinking?
Lord Methuen
312. Is this an existing Regulation, Regulation
95?
(Mr van Houtte) It is Regulation 95/93, and the
main principle of the existing Regulation is that the co-ordinator
at the airport is responsible for the allocation of the slots.
It also says, as Commissioner van Miert repeated, that airlines
should not engage in the monetary trading of slots, but that Regulation
will have to be revised some time later with the proposal that
we will have to make later this year.
Chairman
313. So you have not got any views at the
moment as to any changes that you might wish to make?
(Mr van Houtte) No, I think it is still fairly
complex. What we would like to achieve is more flexibility to
make sure that the airlines can engage in the most efficient slot-allocation
mechanism possible, but how exactly that is to be achieved, what
role you give to an auctioning process and things like that, is
a very technical matter and frankly we do not fully see clearly
on that at the present point, so we need to wait a little.
314. And how do you incorporate statements
like Mr van Miert has put out today about changes in the number
of slots a particular airline might have because that is all part
of the mechanism, is it not?
(Mr van Houtte) Changes in the number of slots?
315. Well, the proposal is that American
Airlines and BA have to give up up to 267 slots, do they not?
(Mr van Houtte) Yes, but it is actually quite
a separate matter. We take the view that the competition rules
make it possible for the authority to impose certain constraints
on slots, and those constraints operate, notwithstanding the slots
Regulation, so in legal terms this is primary Community law and
it has precedence over Regulations like the slots Regulation.
Lord Thomas of Macclesfield
316. Is there anything that you heard earlier
on that you would like to elaborate on or help us on? You know
the purpose of our enquiry.
(Mr van Houtte) There is just maybe one point,
and I was discussing this with Humbert Drabbe from DGIV where
there might be a little bit of confusion, I think, subsequent
to the question you asked Mr van Miert about the proper way in
which to authorise air services agreements. What I would like
to say, and I hope Mr Drabbe will intervene if I say anything
wrong, is that the proposal which we are making, the 3975/87 provision,
is actually intended to duplicate the procedure which we now have
for air transport within the Community and that mechanism provides,
first of all, for block exemptions which set out the main principles
of competition which airlines have to apply and, on top of that,
it provides for a procedure under which airlines can ask the Commission
to approve certain agreements, but that does not have to happen
before they implement the agreements. So, in other words, they
can look at the block exemptions, make sure they comply with them
and then they are safe and they do not have a problem. If they
deviate from the block exemptions, the airlines can take the risk
and implement the agreement, but the Commission can intervene
if there is a problem under the competition rules. If the airlines
want more legal certainty, they can notify the agreement to the
Commission and ask for formal approval, so I think that was the
point of your question.
317. Thank you for that because that is
most clear now, but, in answering that question, you have thrown
up another new issue in my mind because you used the English term
"block exemptions" and clearly that means something
entirely different to you, because block exemptions would mean
to us a list of existing contracts which were exempt from the
law. You are not saying that. You are saying that block exemptions
are the parameters within which they must operate in a competitive
way.
(Mr van Houtte) Block exemptions are sometimes
called "blanket exemptions", so the idea is that it
is a set of conditions———
318. We are separated by the use of the
same language!
(Mr Drabbe) Block exemptions are there to provide
more legal security, in this case to airlines, to the industry
in general. So you have a block exemption in which you enumerate
a number of contract clauses, for instance, or specific activities
where you say, "If you do this, this and this, then you know
you can be sure that you are exempt from the competition rules".
It means that they would not have to notify, but they would know
in advance, "Okay, this is what I can do", so it provides
legal clarity and security.
319. That is what I was asking for and I
was asking for it because I was using the term "block exemptions"
to mean that those people had a dispensation and they did not
have to worry about the rules, like the anti-trust exemptions
in the United States.
(Mr Drabbe) I think that would be difficult under
the competition rules because if you have an agreement, a corporation
agreement, for instance, which would infringe Article 85(1) of
the Treaty, then, according to Article 85(2), it is not a valid
agreement and you would then have to ask the Commission, by notifying
the agreement to the Commission, to exempt it under Article 85(3)
where you make up the balance between the advantages and disadvantages.
Lord Thomas of Macclesfield] Now
you are using the term in a different sense of course. It is the
same term, but now you are using it in the sense of disregarding
it or agreeing to disregard it which is different, but now I understand
that, and thank you for that. We are separated by the different
use of those words.
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