On December 4, 2024, the French Competition Authority (the “FCA”) sanctioned two airlines, Air Antilles and Air Caraïbes, and one specialised consultant for having implemented a strategy to increase prices and coordinate offers and conditions in the Caribbean inter-island aviation transport sector (the “Decision”).[1] The FCA imposed total fines of €14.57 million, concluding a five-year old investigation.[2]
Background
On November 4, 2019, the FCA opened an ex officio investigation concerning practices implemented in the Caribbean inter-island passenger air transport sector, leading to inspections and seizures at Air Antilles’ premises in 2018 and 2021.[3] The investigation was prompted by a significant and simultaneous increase in Air Antilles’ and Air Caraïbes’ tickets’ prices in the autumn of 2017 on the Fort-de-France / Pointe-à-Pitre route (Fort-de-France and Pointe-à-Pitre being both located in the French overseas territories).[4] In March 2023, the FCA’s investigation services sent a statement of objections to the two airlines and the consulting firm Miles Plus, commercially active under the name Aérogestion.[5] In July 2023, Air Caraïbes and Aérogestion agreed not to contest the FCA’s objections to benefit from the settlement procedure.[6]
The FCA’s findings
The anticompetitive agreements. The FCA investigation concerned seven flight routes across the Caribbean islands, between Pointe-à-Pitre and Fort-de-France, and from these two airports to Saint-Martin, Saint-Lucia and Saint-Domingue.[7] Each route constitutes a distinct relevant market, where Air Caraïbes and Air Antilles were operating in a quasi-duopoly (holding together approx. 92% of market share in terms of turnover).[8]
The FCA found that first in 2015 and again in 2016, Air Antilles and Air Caraïbes (i) exchanged on future prices and pricing conditions, and (ii) agreed (inter alia) to reintroduce week-end pricing and a mechanism of price increase for tickets purchased closer to the flight date. This led to price increases ranging from €28 to €58, depending on the fare category at stake.[9]
The FCA’s investigation also shed light on a non-aggression agreement implemented by the two airlines between 2017 and 2019, with the support of Miles Plus, resulting in a reduction in the offer and in the allocation of flight slots through a joint flight schedule.[10] Air Antilles and Air Caraïbes indeed agreed to reduce their capacity through a joint fleet pooling programme, followed by a reduction in the number of flight hours, available seats and frequencies.[11] This allowed the airlines to increase the aircraft’s passenger load, and to close down the most economical classes as flights were filled.[12] A passenger exchange quota mechanism enabled the airlines to transfer passengers from an empty or cancelled flight, at a very low cost.[13] The airlines also agreed on fare conditions and price levels for tickets during the 2017-2019 period.[14]
Several exchanges took place under the cover of a recruitment process. Air Antilles used anonymous email accounts[15] to send fake applications with the flight and pricing grids attached as CVs.[16] Air Caraïbes et Aérogestion’s responses came as feedback on the application. To preserve the secrecy, the companies also used code names, referring to Air Caraïbes as “company 1” and Air Antilles as “company 2”.[17]
The fines. The FCA found that the three companies had engaged in horizontal price fixing and market sharing, two by-object infringements under article 101 of the Treaty on the Functioning of the European Union (“TFEU”) and article L. 420-1 of the French Commercial Code.[18] When determining the fine amounts, the FCA considered the airlines’ “perfect knowledge of the illegal nature of the practices” and of “the absence of a serious competitor that could jeopardise their plan”.[19] The FCA noted that the practices concerned an essential means of transport, harming passengers who are captive and economically vulnerable.[20] According to the FCA, the very serious nature of the infringements also resulted from the fact that they took place at the time of Hurricane Irma, when Air Caraïbes and Air Antilles had implemented an agreed “compassion price” for humanitarian repatriation and rescue groups.[21] The reduction in offer and increase in prices also reduced the attractiveness of the region in terms of tourism and economic development.[22]
Taking into account Air Antilles’ ongoing liquidation proceedings and its parent company’s inability to pay, the FCA decided not to impose any fine on them.[23] The FCA imposed a €1.5 million fine on Air Antilles’ ultimate parent company, K Finance, based on the principle of joint liability.[24] The FCA noted that this amount does not jeopardise K Finance’s debt capacity needed to ensure the good functioning of its operations.[25] Air Caraïbes and Aérogestion, who benefited from the transaction procedure, were fined €13 million and €70,000 respectively,[26] representing c. 99% and 49% of their 2019[27] net profit.
Takeaways
The Decision tackled the most serious anticompetitive horizontal agreements, including agreements to fix and raise prices, restrict offer and share markets. The ex officio initiative of the investigation and the amount of fines confirm the FCA’s strong commitment to prevent and fight cartels. With a total of €1.4 billion, 2024 is the second-highest year in terms of fines imposed by the FCA for anticompetitive practices.[28]
The Decision follows the FCA’s 2019 Opinion on the functioning of competition in France’s overseas territories, which observed important price differentials between these regions and mainland France in certain sectors, including transport.[29] In 2022, the FCA imposed another fine in the aviation sector, sanctioning a company active in air freight transport of animals to French Polynesia for abuse of dominant position.[30] The FCA has historically paid close attention to anticompetitive practices in France’s overseas territories, imposing fines totalling more than 161 million euros between 2009 and 2019.[31]
[1] FCA Decision No. 24-D-10 of December 4, 2024 concerning practices implemented in the inter-island passenger air transport sector, available here.
[2] Decision, Article 6.
[3] Decision, paras. 2-5.
[4] Decision, para. 1.
[5] See FCA Press Release of March 21, 2023, “The Autority’s General Rapporteur sends statement of objections to three companies in the intra-Caribbean regional air transport sector, available here. See also Decision, para. 6.
[6] Decision, paras. 8 and 148.
[7] Decision, para. 162.
[8] Decision, paras. 165 and 417.
[9] Decision, para. 67.
[10] Decision, paras. 88 and 90.
[11] Decision, paras. 193-194.
[12] Decision, para. 92.
[13] Decision, para. 195.
[14] Decision, para. 249.
[15] Decision, paras. 37-41. Several emails were also sent to or from the email address pauline.durantel@gmail.com.
[16] Decision, paras. 42-43.
[17] Decision, para. 45.
[18] Decision, paras. 187-189, 205, 227, 246, and 261. Article 101 TFEU applied in view of the appreciable effect on trade between Member States, in particular the cross-border flight connections between territories belonging to different Member States (Decision, para. 155).
[19] Decision, para. 423.
[20] Decision, para. 420. The FCA found the airlines’ consumers were “economically vulnerable” as the insularity of the Antilles caused a surge in prices and thus a higher cost of life than on the mainland.
[21] Decision, paras. 82 and 422.
[22] Decision, para. 421.
[23] Decision, paras. 35, 466 and 468.
[24] Decision, para. 471.
[25] Ibid.
[26] Decision, para. 481.
[27] Based on publicly available information, Air Caraïbes’ 2019 net profit is €13 million (available here) and Aerogestion’s 2019 net profit is €143,947 (available here).
[28] FCA Press Release of January 15, 2025, “2024, a historic year for the Autorité de la concurrence: €1.4 billion in fines imposed and a record 295 mergers examined,” available here. The record year is 2020 when the FCA imposed a total of €1.8 billion of fines.
[29] FCA Opinion No. 19-A-12 of July 4, 2019 regarding the functioning of competition overseas (“FCA Opinion”), available here, page 3.
[30] FCA Decision No. 22-D-05 of February 15, 2022 concerning practices in the air freight transport of live animals sector, available here.
[31] FCA Opinion, para. 101.