The Italian Competition Authority proposes to increase the capacity of the Milan airport of Linate

In the space of a month this is the second time the Italian Competition Authority or ICA deals with the status of congested airport of the Milan airport of Linate (LIN) and recommends to raise the cap on hourly movements at this airport. (AGCM, opinion A522, Determinazione della capacità operativa massima dell’aeroporto di Milano Linate). The first time the ICA dwelled on this issue, although incidentally, it was with the opinion it gave on the new regime for public service obligations regarding the air links between Sardinia and Continental Italy (AGCM AS 509, see post of 16 April 2009). This time the ICA head-on tackles the issue of the dearth of slots at LIN. The Italian authorities have arbitrarily decided to limit the hourly capacity of LIN to 18 flights. This figure is by far lower than the potential capacity of LIN and many slot applications remain unsatisfied, thereby frustrating the plans of many carriers to operate new routes to/from LIN. Such limitation is indeed a very serious entry barrier for new operators.

This limitation when introduced was justified with the need to allocate flights between LIN and the then new airport of Milano Malpensa (MXP) with the view to favouring the development of MXP as a hub. However, since then on many things have been changes and limiting capacity at LIN does not appear any long necessary. First, MXP is now suffering a severe reduction in traffic as Alitalia has quitted it. Second, the carrier emerging from the Alitalia/Air-One merger has a monopoly position of a number of routes to/from LIN. Considering the unavailability of slots at LIN hardly its monopoly is challengeable by competitors. Third, the new EC Regulation for the allocation slots entitle carries to retain until the IATA 2010 summer season the slots they have not used.

In light of these factors, for the ICA it is desirable to rise the cap on hourly capacity at LIN from 18 to 32 flights. That should enable more carriers to operate at the airport by providing more links in the consumer welfare. It may be argued that in this way the ICA tries to promote the adoption of measures counteracting the market power of the new Alitalia it was unable to impose when it was notified the transaction for having been deprived of any power to impose structural remedies on the parties. The idea to increase the hourly capacity at LIN should limit the monopoly Alitalia enjoys on the links connecting LIN by favouring the entry of new operators. Will the ICA proposal eventually be approved by the competent authority? Our feelings are not so optimistic…

Comments

Post a Comment

Popular posts from this blog

Aspen: The Italian Competition Authority fines a generic manufacturer of drugs for excessive pricing

By the decision made on 29 September 2016 in Aspen [i] , the Italian Competition Authority (ICA) has imposed a fine of more than EUR 5 million on the Aspen group (Aspen), a South African manufacturer of generic drugs. Aspen violated Article 102 TFEU by imposing excessive prices for the supply of the so-called ‘Cosmos drugs’. These drugs included Leukeran, Alkeran, Purinethol and Tioguanine, which included the active principles of chlorambucil, melphalan, mercaptopurine and tioguanine, respectively. All these drugs were used to treat cancer pathologies and included in a wider package of pharmaceutical products, whose marketing rights had been purchased by Aspen from the originator GlaxoSmithKline (GSK) in 2009. Aspen had a dominant position in the relevant product markets for the commercialization of anti-cancer drugs manufactured using the active principles of alkeran, leukeran, purinethol and tioguanine. It had the only one market authorization for the sale of drugs and potential ...
Read more

Geographical allocation of turnover in aviation mergers: What the European Commission recently hold

The European Merger Control Regulation (ECMR) stipulates that only concentrations with a European dimension fall within the regulatory jurisdiction of the European Commission to review. A concentration is presumed to have such a dimension when it meets the financial threshold in Article 1 of the ECMR. To this end, it is necessary to calculate the turnover generated by the merging parties within the Community or in one or more member states. However, the geographical allocation of the turnover required by Article 1 for the purpose to establish the Commission’s jurisdiction can be a tricky issue in case of mergers between undertakings with a cross-border activity such airliners. In fact, the activities of airlines span several countries as they typically operate flights and sell tickets in many national markets. Recently, the Commission has dealt with the issue at length in the Ryanair/Aer Lingus case. It identified three possible methodologies for geographical allocation of turnover: -...
Read more

The European Commission unconditionally clears the Facebook/WhatsApp merger

By a Phase I decision the Commission unconditionally approved the Facebook $ 19 billion acquisition of WhatsApp ( Case No COMP/M.7217,Facebook/WhatsApp) . The Commission was required by the parties to review the transaction by means of a reasoned submission filed on the basis of Article 4(5) of the EU Merger Regulation. Indeed, the merger was not a concentration with EU dimension within the meaning of Article 1 EUMR falling within the Commission jurisdiction, since the EU turnover of WhatsApp in 2013 failed to met the financial thresholds in that provision. The Commission identified three relevant product markets affected by the concentration. It restrained the first relevant market, the market for consumer communication services, to the communication apps for smartphones, because WhatsApp was available only for this device. Following its approach in Microsoft/Skype (Case M.6281), upheld by the General Court in the case T-79/12, Cisco Systems and Messagenet v Commission, the Com...
Read more