ANTITRUST AUTHORITY OPENS INVESTIGATIONS INTO ADR AND SEA OVER POSSIBLE ABUSE OF DOMINANT POSITION
PRESS RELEASE
PRESS RELEASE
AIRPORTS: ANTITRUST AUTHORITY OPENS INVESTIGATIONS INTO ADR AND SEA OVER POSSIBLE ABUSE OF DOMINANT POSITION
Companies said to have applied non-transparent and excessively burdensome conditions for access to airport infrastructure
The Italian Competition Authority, at its meeting on 14 December 2006, launched two separate investigations regarding AdR (Aeroporti di Roma) and SEA (Società di Esercizi Aeroportuali) over their alleged abuse of dominant positions in the market for management of airport infrastructure. In the case of AdR, the investigation also relates to alleged abuse of a dominant position in freight services.
Both investigations, which must be completed by 31 January 2008, are the result of complaints from IBAR, an association representing approximately 80 airlines operating in Italy, some of which are domestic but most of which are foreign, and from companies in the cargo sector and their associations.
The two companies’ alleged anti-competitive conduct is reported to be a contravention of the competition rules established in Legislative Decree no. 18/99 and the subsequent CIPE ruling no. 86/2000 which were intended to regulate the fees charged by these monopoly operators. Based on that regulation, the operator of the airport must ensure transparent, objective and non- discriminatory conditions for access to airport infrastructure by handling services companies and airlines. The fees for use of such infrastructure must be a function of the cost of managing and developing the particular airport in which the activities are carried out. CIPE’s ruling, in particular, provides airport operators with criteria for keeping separate accounts for monopoly and competitive activities, for setting up an analytical accounting system organized by cost centres and profit centres for each of the services offered, and specifies that this cost accounting must be certified by an auditing firm. It also provides the parameters for calculating fees.
Even though the full approval process for those fees has not been completed, the two companies, based on the principle that a monopoly operator has special responsibilities, should in any case have accepted the new regulatory context for the setting of fees, the more so considering that the new fee structures have already been proposed to the User Committees of the two airports. On the other hand, fees for the use of space and airport infrastructure by handling services continue to be set unilaterally by the airport operators without reference to costs. A study by Assaeroporti shows such fees to be much higher – up to 5-10 times higher – than those found in other European countries.
SUBSTANCE OF THE COMPLAINTS AGAINST THE TWO COMPANIES
The investigations relate to the conduct of the two companies in managing airport infrastructure beginning in 2001, the year in which the operators were supposed to implement CIPE’s ruling no. 86/2000.
AdR was given an exclusive concession for joint operation of Rome’s two airports, Roma-Fiumicino and Roma-Ciampino, until 2044. SEA was given an exclusive licence to operate the Milan airports of Milano-Malpensa and Milano-Linate until 2041. So both companies have a legal monopoly to manage the airports’ infrastructure, operating in a dominant position in this market.
In the Authority’s view, AdR and SEA would appear to have abused that dominant position from 2001 onward by continuing, despite the regulatory provisions to the contrary, to set fees according to unilaterally determined criteria in a non-transparent and unverifiable manner, with the aim of making monopoly profits in excess of the normal covering of costs.
Specifically, the conduct imputed to AdR and SEA from 2001 on relates to the fixing of excessively onerous fees set on the basis of unilaterally determined criteria for:
1. the use of centralized airport infrastructure;
2. the supply of fuel. This is confirmed by the fact that the new royalties agreed with ENAC from September 2006 are 39% lower than those previously applied by SEA and 34% lower than those applied by AdR;
3. access to common-use assets for activities such as catering and security;
4. sub-leasing of office space. In this area, the new fees presented to ENAC by SEA, even though they are not yet in use, are from 30% to 100% lower than the current ones.
ADR’S CONDUCT RELATING TO ACCESS TO CARGO CITY
In opening its investigation into AdR, the Authority has also identified possible anti-competitive behaviour in the application of fees for access to “Cargo City”, a term used to indicate the area and equipment used for the preparation and movement of goods to be exported or imported by air. The fees seem to be structured so as to make it impossible for alternative handlers to compete.
In particular, just for the transit through cargo city of already prepared goods – and this is an unavoidable step because there are no customs facilities other than in this area over which AdR exercises a monopoly until such time as the current bidding procedure leads to the identification of a second handler - AdR charges an amount equal to its own full fee less a lump sum which is in any case lower than the prices charged by the competing handler for preparation of goods.
In this way, AdR makes it economically uninteresting for airlines to choose other freight handlers, even those that are most efficient in the preparation of cargo.
Rome, 19 December 2006