Friday , February 26 2021

FNE goes to the top by agreement with Latam airlines

The prosecution said the reduction measures were "inefficient, insufficient, sensitive to interpretation, difficult to monitor and could even create distortions in the affected markets."

The FNE has decided to appeal to the Supreme Court to overturn the decision of the Free Competition Tribunal (TDLC), which was approved for the merger of Netivei Haneviot with the American Airlines and IAG.

The agency is based on this determination in determining the hard conditions of the nine points set by TDLC to give the green light to this action, indicating yesterday that they are "inefficient, insufficient, sensitive interpretation, difficult to monitor and even can create distortions in affected markets."

On October 31, the Tribunal for the Defense of Competition (TDLC) approved the Joint Business Agreements (JBA) signed by Latam Airlines with American Airlines and IAG Group (British Airways and Ivria) in January 2016. Terms of use such as revenue sharing formula and implicit price non- Negative and indirect routes that Santiago and Santiago Santiago Madrid flights as a cargo section.

In this context, the prosecution criticized the TDLC's work and noted that although it recognized the decision that "the risks arising from the above-mentioned agreements exceed its advantages," it was finally decided to approve the merger of the tracks by determining the easements that would "have a central purpose" to the extent possible Conditions of competition before the realization of JBA Consult.

On the contrary, the prosecution argued that this operation constitutes agreement between competitors who "may agree on issues such as schedules, tariffs, selling strategies and ability, among others." "The parties would cease to act as independent economic agents on the same routes in which JBA has their influence, with equivalent consequences to those of a merger, although without the efficiency and cost savings expected from the merger," FNE explained. .

Therefore, the prosecutor's office asked the Supreme Court "to cancel the appeal decision and to prohibit the realization of the JBA, as they contravene the rules governing free competition and are not efficient, adequate or appropriate measures."

Question points

Among its foundations, the prosecutor's office recalled that TDLC said on the implementation of JBAs that the risks arising from consult agreements exceed their benefits. Therefore the decision to approve the merging of routes anyway, the agency argued that "we do not share the TDLC standard with regard to the purpose of the measures, since the mitigation measures should effectively eliminate the problem identified, in order to re-establish the entire competition in the relevant market."

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Airlines will not appeal the ruling by integrating the route

Tam Airlines announced yesterday that it is not appealing to the ruling of the TDCC, which approved the JBA agreement with American Airlines and the International Airlines Group (IAG), the holding company of British Airways and Ivria respectively . "Our priority is to have the opportunity to offer the benefits that this type of agreement will bring to passengers as soon as possible," said Enrique Coato, who added that "JBAs exist all over the world, approved by various authorities, and there is evidence of the benefits The real they offer in terms of more flight options, non-stop destinations, better connections and more affordable prices. "
The company claims that such agreements are made worldwide, with 35% of long-distance flights operating under JBA and presence in 20 countries. The flights operated under this regime "represent almost 60% of international passenger traffic, and in Latin America there is already a JBA between the same country and Mexico, while the major airlines in the region are working on such agreements."
But not only did Latam Airlines make the decision not to go to the top, since American Airlines suggests that they will not appeal to any case of appeal and accept the verdict.

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