PRESS RELEASE No 89/02
5 November 2002
Judgments in Cases C-466/98, C-467/98, C-468/98, C-469/98, C-471/98, C-472/98,
C-475/98 and C-476/98
Commission v United Kingdom, Denmark, Sweden, Finland, Belgium,
Luxembourg, Austria, Germany
THE COURT OF JUSTICE EXPLAINS, BY THESE JUDGMENTS, THE DISTRIBUTION
OF COMPETENCE AS REGARDS THE CONCLUSION OF INTERNATIONAL AIR TRANSPORT AGREEMENTS
Certain aspects of the establishment of fares and rates on intra-Community
routes, applicable to non-Community carriers, and the commitments as regards
computerised reservation systems fall within the exclusive external competence
of the Community.
In those respects, the "open skies" agreements concluded by certain
Member States with the United States of America are contrary to Community
law.
The EC Treaty contains special transport provisions conferring on the Community
specific powers which allowed it to adopt three "packages" of regulations
(in 1987, 1990 and 1992) designed to ensure freedom to provide Community air
transport services and free competition within the Community. The package adopted
in 1992 comprises three regulations concerning:
- the granting of operating licences by Member States
in relation to air carriers established in the Community;
- access for Community air carriers to intra-Community
air routes; and
- the establishment of fares and rates on intra-Community
routes.
That package is supplemented, in particular, by two other regulations of 1989
and 1993 concerning:
- computerised reservation systems (CRSs)
- the allocation of airport slots.
Since the beginning of the 1990s, the Commission has sought to obtain from the
Council a mandate to negotiate an air transport agreement with the United States
of America in order to replace the bilateral agreements previously concluded
with certain European countries which, at the time, were not members of the
Community. It has obtained a limited mandate to negotiate with the United States
of America, which has not yet led to an agreement between the Community and
that country.
However, from 1995, the United States entered into "open skies" type
bilateral agreements with a number of Member States in order to facilitate,
in particular, free access to all routes, the granting of unlimited route and
traffic rights, the fixing of prices in accordance with a system of "mutual
disapproval" and the possibility of sharing codes.
The Commission brought actions against seven Member States (Denmark, Sweden,
Finland, Belgium, Luxembourg, Austria and Germany) which are signatories to
"open skies" agreements as well as an action against the United Kingdom.
1 The Commission alleges, in particular, that, by concluding those
agreements, they have:
(i) infringed the external competence of the Community
since only the Community has competence to conclude such an agreement (N.B.
this complaint has not been raised against the United Kingdom) and
(ii) infringed the provisions of the Treaty concerning
the right of establishment by permitting the United States to refuse traffic
rights in its airspace to air carriers designated by the Member State which
is party to the agreement, if a substantial part of the ownership and effective
control of that carrier are not vested in that Member State or in its nationals
(clause on the ownership and control of airlines).
The infringement of the external competence of the Community
In relation to air transport, the Treaty provides for a power for the Community
to take action which is dependent on there being a prior decision of the Council.
That provision does not, in itself, establish an external Community competence
in the field of air transport which allows the Community institutions to conclude
international agreements binding the Community. There is therefore no express
external Community competence in that regard.
However, the Court notes that the Community's competence to conclude international
agreements may result by implication from the Treaty. That is the case where
the conferment on the Community of external competence is necessary for the
effective exercise of its (not yet exercised) internal competence.
The Court finds that these cases do not disclose a situation in which internal
competence could be exercised only at the same time as external competence since
the Council was able to adopt the "third package" without its being
necessary to conclude an air transport agreement with the United States of America.
The Court then points out, in accordance with its case-law, that, where the
Community lays down common rules, the Member States are no longer competent
to enter into obligations towards non- member countries if those obligations
affect the common rules and that the Community alone is entitled to assume such
obligations. That is the case where the international commitments fall within
the scope of the common rules or, in any event, within an area which is already
largely covered by such rules or where the Community has included in its internal
legislative acts provisions relating to nationals, in this case air carriers,
of non-member countries.
The Court then goes on to examine the scope of the regulations cited on a
case-by-case basis.
First of all, the Court examines the scope of the regulations relating
to the granting by the Member States of operating licences in relation to air
carriers established in the Community and the access of Community air carriers
to intra-Community routes and finds that the bilateral agreements do
not fall within an area already covered by those regulations sincethey contain
rules directed to American air carriers. Consequently, those regulations cannot
establish an external competence of the Community.
On the other hand, the Court finds that some of the provisions relating
to the establishment of fares and rates on intra-Community routes and those
relating to computerised reservation systems and the allocation of airport
slots contained in the other regulations referred to apply to air carriers
of non-member countries. The Community therefore has exclusive external
competence in that case. However, the Court holds that the Commission has
not established that the bilateral agreements in question include commitments
relating to airport slots.
Accordingly, the Court declares that Denmark, Sweden, Finland, Belgium,
Luxembourg, Austria and Germany have infringed the Community's external competence
as regards the Community rules on the establishment of air fares and rates on
intra-community routes and on computerised reservations systems (CRSs).
The infringement of the right of establishment
The Court finds that, according to the clause on the ownership and control
of airlines, the United States is, in principle, under an obligation to
grant the rights provided for in the agreements to carriers controlled by the
Member State with which it has concluded the agreement and is entitled to refuse
those rights to carriers controlled by other Member States which are established
in that Member State. That is a case of discrimination excluding air carriers
of other Member States from the benefit of national treatment in the host Member
State, which is forbidden by the Community rules on the right of establishment.
Furthermore, that clause cannot be justified on the grounds of public order
and public safety since there is no direct link between any threat and the generalised
discrimination against Community airlines.
Accordingly, the clause on the ownership and control of airlines incorporated
in the bilateral agreements concluded between the United States
and the United Kingdom, Denmark, Sweden, Finland, Belgium, Luxembourg, Austria
and Germany is contrary to the rules on the right of establishment.
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1 With respect to the United Kingdom, the situation is slightly different. The Commission contests the bilateral agreement concluded in 1977 (Bermuda II) between the United Kingdom and the United States of America, in which, it claims, there are provisions contrary to Community law as regards the right of establishment.