Germany: Federal Cartel Office fines German airline Condor for price fixing

01 September 2010

Dr Jörg Witting, Fabian von Busse

The Federal Cartel Office (“FCO”) imposed a fine of EUR 1.2 million on German airline Condor for its involvement in a price fixing agreement for flights between Germany and Turkey. SunExpress, the other participant in the agreement, was spared as it had triggered the proceedings by a leniency application.

According to the FCO’s investigations, in 2008 the two airlines, which by that time were part of the same group of companies, concluded a distribution agreement according to which Condor sold SunExpress flights. The prices demanded by Condor for such flights were agreed between the two parties. After Condor and SunExpress had dissolved their corporate integration in spring 2009, the distribution agreement remained in force.

In summer 2009, both airlines agreed that SunExpress would not offer flights from Germany to Turkey for less than EUR 99. In total, the price for a single SunExpress air ticket should not undercut Condor’s prices by more than EUR 10, according to the Federal Cartel Office’s public statements. Only routes served by both airlines were covered by the agreement. After SunExpress discovered the competition law infringement in an internal revision, the agreement was ended in November 2009.

The FCO noted that Condor agreed to terminate the case by entering into a settlement with the competition authority.

The decision of the FCO sheds light on the importance of a review of existing contracts when it comes to dissolving a corporate integration. The Office’s public statements indicate that it focused on the fact that an initially intra-group kind of agreement was not terminated when the companies demerged, from which time onwards SunExpress and Condor had to be regarded as independent competitors.

Source: http://www.bundeskartellamt.de