Brexit spurs British regulator to reassess trans-Atlantic air deal

Bloomberg

The UK’s antitrust regulator will reassess an alliance that lets British Airways and American Airlines operate as a single business on North Atlantic routes, in a sign of the greater workload the British watchdog can expect ahead of a planned Brexit next year.
The Competition and Markets Authority said it has begun an investigation into the 2008 agreement that features revenue sharing, price coordination and joint scheduling and also includes Finnair Oyj and BA’s Spanish sister company Iberia.
The probe will examine whether commitments expiring in 2020 that address competition concerns on routes from London to New York, Chicago, Boston, Miami and Dallas and from Madrid to Miami should be extended. The deal, brokered by the European Commission following its own investigation in 2009 and 2010, includes the surrender of operating slots to rivals at London’s Heathrow and Gatwick hubs.
“As five of the six routes subject to commitments are from the UK, and to prepare for the time when the European Commission may no longer have responsibility for competition in the UK, the CMA has decided to review afresh the competitive impact of the agreement,” the regulator said.
The use of the word “may” in reference to European Commission jurisdiction underscores the uncertainty surrounding the Brexit process.
While the CMA would take over the EU’s antitrust-oversight role for deals involving the UK after Brexit, the need to negotiate a transition agreement on the split means it’s not yet clear when that might happen. Some factions in Britain are pushing for a second referendum over the departure from the EU that’s scheduled for next March. The comments on the airline pact provide one of the earliest insights into the preparations underway.
British Airways and American took more than a decade to win approval for their alliance, which remains a key profit driver in the world’s busiest premium air-travel market. International Consolidated Airlines Group SA, BA and Iberia’s parent company, said that it’s noted the CMA’s announcement and will respond to the review.
Shares of IAG were down 2.2 percent at 578.20 pence at 9:57 a.m. in London among a general decline across all sectors. The CMA stressed in its statement that the case “is at an early stage and no assumption should be made that the Atlantic Joint Business Agreement infringes competition law.”