NEW DISTRIBUTION CAPABILITY (NDC) 609 3. SECOND THEORY: RESTRICTION OF PRICE COMPETITION OVER AIRFARES One school of thoughts against NDC is that, regardless of how the relevant market (within which NDC is to be examined under Article 101 TFEU) is defined, it would eventually lead to consumers suffering from an increase of airfares, for two reasons: (i) NDC softens price competition on airfares; and (ii) NDC is conducive to collusion between competing airlines. The underlying argument is this: unlike in the legacy GDS world, where an offer presented to an agent is made by GDS based on the fare and schedule provided by third party databases, in the NDC world the offer is made by airlines. Therefore, full-service carrier airlines can, by providing rich content and ancillary options on top of air tickets, un-bundle all their existing services offer and re-bundle them with whatever service(s) that an individual passenger opts for, while charging an individualised “bundle” price without showing a la carte prices. As a result, the lack of transparency allows the airline to raise prices. Further, under such a plague of airfare prices, it becomes easier for competing airlines to form anti-competitive collusion to not compete on price. It is trite that, when one examines the potential effect of an agreement or cooperation to see if it is so likely to have negative effects on price (i.e. a by-object restriction), regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms a part18. The main problem with this anti-competitive theory lies, inter alia, in the ignorance of the specific context of the airline industry. First, while the EU has no specific fare-filing requirement19, the Common Rules for the operation of air services in the Community requires that “optional price supplements shall be communicated in a clear, transparent and unambiguous way at the start of any booking process and their acceptance by the customer shall be on an ‘opt-in’ basis”20. Therefore, unless an airline has constructed a sophisticated pricing formula, a consumer, whether purchasing via a brick and mortar agent or an online travel agent, must be able to tell (at least to a reasonable extent) what are the individual price of each of the add-ons and ancillary services21. 18 Case C-67/13 P Groupement des Cartes Bancaires v European Commission, paras 51-53. 19 But subject to requirements imposed by the individual member state. 20 Regulation (EC) No. 1008/2008, 31.10.2008, OJ L293/3, Article 23(1). 21 Even for dynamic pricing, which is only made possible under NDC when airlines have real-time control over price and offer.
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