Cross-border case study: British Airways joint venture with American Airlines and Iberia

We advised BA on the competition aspects of its proposed transatlantic Joint Business Agreements with AA and Iberia. After a thorough investigation under the EU antitrust rules, the European Commission accepted certain commitments offered by the three carriers to address concerns retained by the Commission. The commitments, once fully implemented, should enable the Commission to conclude its investigation and reject Virgin’s complaint (if it is not withdrawn).

The alliance was subject to the jurisdiction of the European Commission under Article 101 of the Treaty on the Functioning of the European Union (TFEU), and the Commission liaised closely with the US Department of Transportation which also adopted an order in July 2010 granting antitrust immunity. This followed two previous unsuccessful attempts (in 1997 and 2001) to seek approval from the regulatory authorities in respect of a similar transatlantic alliance between BA and AA.

We made initial contact with the Commission case team in July 2008 as the terms of the joint venture were being agreed. The Commission then embarked on an extensive investigation under the EU antitrust rules. This included the adoption of a formal statement of objections in October 2009 in which the Commission outlined its concerns. After responding in writing, the parties also offered commitments to address the Commission’s remaining concerns. These were market-tested by the Commission and on 14 July 2010 the Commission announced its acceptance of final commitments offered by the three carriers. The commitments, which are now legally binding, were found to be sufficient to address the competition concerns retained by the Commission.

We played a key role, in conjunction with the BA in-house legal team, in the successful resolution of this matter by advising on a strategy of engaging with the Commission which resulted in the approval of this alliance. This represented the culmination of efforts over many years to strengthen the transatlantic cooperation between the members of the oneworld alliance and offer improved travel choices to the parties’ passengers.

The alliance enables the three airlines to cooperate commercially, providing a seamless service for passengers on routes between Europe and North America, and putting them in a better position to compete with the Star and SkyTeam alliances.

Over the same period, we advised BA on its merger with Iberia which was notified to the European Commission under the EU Merger Regulation and approved unconditionally, also on 14 July 2010.