JUSTIN WASTNAGE / LONDON
EC sends strong signal to alliances after collusion between SAS and Maersk is exposed
The European Commission has fined SAS Scandinavian Airlines and Maersk Air more than €52 million ($44 million) for anti-competitive behaviour.
The code-share partners breached European competition rules and colluded to create a cartel on several routes, significantly Copenhagen to Stockholm, says the EC.
SAS describes its €39.375 million share of the fine as "politically motivated" and the company's chief executive Jørgen Lindegaard says: "We accept we have to be punished, but this sum is totally disproportionate and is designed to warn alliances from doing similar deals across Europe."
Mario Monti, the EC's competition commissioner, says in a statement: "The Commission is determined to ensure that the liberalisation achieved in European air transport in the last decade is not undermined by anti-competitive agreements. I trust that the fines imposed on SAS and Maersk will serve as a deterrent."
The fines are the largest ever levied by the EC against airlines and are only matched by a penalty given to a two-decade shipping cartel, which the EC found had effectively doubled costs on the routes it controlled.
SAS is likely to appeal against the censure after next month's board meeting. The airline's vice president government affairs Hans Ollongren says that the size of the fine is dislocated from any possible market advantage that the collusion could have given the airlines. "This is a very strong signal that the EC will not tolerate this kind of collusion," he adds.
The EC found that the two airlines had secretly agreed to carve up select pieces of their market, separate from an official code-sharing and frequent flyer collaboration plan submitted to the Commission. This illegal market-sharing led to Maersk's withdrawal from the route between the Danish and Swedish capitals in March 1999, leaving the Star Alliance with almost 100% of the capacity on this lucrative service.
The EC judged this "very damaging for Scandinavian passengers" and likely to lead to price rises. SAS says that fares did not rise on the route and prices actually fell on some other routes, due to operational savings.
The EC raided both airlines' offices in April to recover documents outlining the secret deal, concluded in October 1998, which saw Maersk receiving SAS's Copenhagen to Venice route as a reward for pulling off the service. The route between Denmark's second airport, Billund and Norway's capital Oslo was also affected, with SAS pulling off the route with its own aircraft, leaving Maersk to operate the service.
It was their tactics on this route that led to the original complaint, brought by British Airways' Danish franchise partner, Sun-Air of Scandinavia, which competes on the route using BA livery.
Sun-Air's founder and chief executive Niels Sundberg says that "SAS has used its monopolistic position to force smaller airlines off various routes across Scandinavia".
Sun-Air is to launch a Stockholm to Copenhagen route next year, using a 70-seat regional jet, and says that it is now the standard bearer for independent airlines in a region "totally lacking competition". BA says that the decision could lead to it advancing its brand in Scandinavia.
Source: Flight International
