[Federal Register Volume 67, Number 221 (Friday, November 15, 2002)]
[Notices]
[Pages 69297-69298]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29068]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary


Review Under 49 U.S.C. 41720 of Delta/Northwest/Continental 
Agreements

AGENCY: Office of the Secretary, Department of Transportation.

ACTION: Notice of access on restricted basis to unredacted agreements.

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SUMMARY: Delta Air Lines, Northwest Airlines, and Continental Airlines 
have submitted code-sharing and frequent-flyer program reciprocity 
agreements to the Department for review under 49 U.S.C. 41720. That 
statute requires such agreements between major U.S. passenger airlines 
to be submitted to the Department at least 30 days before the 
agreements' proposed effective date. The Department is providing 
outside parties access on a restricted basis to unredacted copies of 
the agreements. Comments by interested persons reflecting their review 
of the unredacted copies may assist the Department in determining 
whether to extend the waiting period or take other action on the 
agreements.

ADDRESSES: Comments must be filed with Randall Bennett, Director, 
Office of Aviation Analysis, Room 6401, U.S. Department of 
Transportation, 400 7th St. SW., Washington, DC 20590. To facilitate 
consideration of comments, each commenter should file three copies of 
its comments.

FOR FURTHER INFORMATION CONTACT: Thomas Ray, Office of the General 
Counsel, 400 Seventh St. SW., Washington, DC 20590, (202) 366-4731.

SUPPLEMENTARY INFORMATION: On August 23, Delta, Northwest, and 
Continental submitted code-sharing and frequent-flyer program 
reciprocity agreements to us for review under 49 U.S.C. 41720. That 
statute requires such joint venture agreements among major U.S. 
passenger airlines to be submitted to us at least thirty days before 
they can be implemented. We may extend the waiting period by 150 days 
with respect to a code-sharing agreement and by 60 days for other types 
of agreements. At the end of the waiting period (either the 30 day 
period or any extended period established by us), the parties are free 
to implement their agreement, unless we have issued an order under 49 
U.S.C. 41712 (formerly section 411 of the Federal Aviation Act) in a 
formal enforcement proceeding determining that the agreement's 
implementation would be an unfair or deceptive practice or unfair 
method of competition that would violate that section.
    As required by 49 U.S.C. 47120, Delta, Continental, and Northwest 
provided us with unredacted copies of their agreements and asked that 
we give the agreements confidential treatment under 49 CFR 7.13 and 
rule 12 of the Department's rules of practice for airline industry 
economic regulatory proceedings, 14 CFR 302.12. Rule 12 sets forth the 
procedures for objections to the public disclosure of information 
submitted pursuant to a statutory requirement.
    We have been reviewing the agreements submitted by Delta, 
Continental, and Northwest under 49 U.S.C. 41720 on an informal basis. 
In our review we are focusing on whether the agreements may constitute 
unfair methods of competition that would violate 49 U.S.C. 41712. 
Airline practices that violate the antitrust laws

[[Page 69298]]

or antitrust principles would be unfair methods of competition. See 
United Air Lines v. CAB, 766 F.2d 1101 (7th Cir. 1985). Our role under 
49 U.S.C. 41720 is analogous to the review of major mergers and 
acquisitions conducted by the Justice Department and the Federal Trade 
Commission under the Hart-Scott-Rodino Act, 15 U.S.C. 18a, in that we 
consider whether we should institute a formal proceeding for 
determining whether an agreement would violate section 41712.
    Although our review has been informal, due to the public interest 
in the matter, we gave interested persons an opportunity to submit 
comments on the Delta/Continental/Northwest agreements. To assist 
outside parties in preparing their comments, we required the three 
airlines to submit redacted copies of the agreements that could be 
reviewed by other parties. 67 FR 56340 (September 3, 2002). We took 
similar action during our review of the code-share and frequent flyer 
reciprocity agreements filed earlier by United and US Airways. 67 FR 
50745 (August 5, 2002). In the course of our review of the Delta/
Northwest/Continental agreements, we have thus far extended the waiting 
periods for a total of 60 days. 67 FR 59328 (September 20, 2002); 67 FR 
64960 (October 22, 2002).
    Several of the outside parties that wish to comment on the 
agreements among Delta, Continental, and Northwest have alleged that 
their lack of access to unredacted copies of the agreements has 
substantially handicapped their ability to comment on the agreements' 
potential competitive effects. See, e.g., Joint Motion of Air Tran et 
al. (October 15, 2002).
    After considering these comments and the nature of the agreements 
at issue, we have determined that, as contemplated by rule 12, we 
should allow other parties to see unredacted copies of the agreements 
on a restricted basis and that doing so should facilitate our 
consideration of the issues presented by the agreements. For example, 
the incentives of Delta, Continental, and Northwest to compete with 
each other will depend in large part on the applicable financial terms 
when one airline sells seats under its code on a flight operated by one 
of the other two airlines. That kind of information has been redacted 
in the copies of the agreements submitted by Delta, Continental, and 
Northwest for public review, precluding outside parties from fully 
analyzing the likely competitive impact of the agreements.
    As noted, Delta, Continental, and Northwest have requested 
confidential treatment of the agreements under rule 12. The rule states 
that we can make confidential information available to other parties on 
a restricted basis notwithstanding a request for confidential 
treatment. Subparagraph (d)(3) of rule 12 thus provides, ``During the 
pendency of such motion, the ruling official may, by notice or order, 
allow limited disclosure to parties' representatives, for purposes of 
participating in the proceeding, upon submission by them of affidavits 
swearing to protect the confidentiality of the documents at issue.'' 
Allowing outside parties to review unredacted copies of the Delta/
Continental/Northwest agreements under our standard restrictions thus 
will be consistent with the rule.
    Providing this kind of restricted access will also be consistent 
with our practice in docketed proceedings involving applications for 
approval and antitrust immunity for international alliance agreements. 
See, e.g., Joint Application of American Airlines and British Airways, 
Docket OST-2001-10387, notice of August 16, 2001. While we are not 
conducting a formal review of the Delta/Continental/Northwest 
agreements and have not established a docketed proceeding, we have 
determined that we should provide comparable access to the agreements 
in order to give parties an adequate opportunity to comment.
    We will follow our established procedures for providing access on a 
restricted basis. Only counsel and outside experts may review the 
unredacted agreements, and they may do so only after submitting 
affidavits representing that they will maintain confidentiality. Each 
such affidavit must state, at a minimum, that (i) the affiant is 
counsel for an interested party or an outside expert providing services 
to such a party; (ii) the affiant will use the information only for the 
purpose of participating in the submission of comments on the 
agreements; (iii) the affiant will disclose such information only to 
other persons who have filed a valid affidavit respecting the 
confidentiality of the agreements; and (iv) the affiant will destroy or 
return all copies of the agreements when the Department has concluded 
its review. Affiants and interested parties must understand and agree 
that any filing that includes or discusses information obtained through 
the review of the unredacted agreements must itself be accompanied by a 
rule 12 motion requesting confidential treatment. Affidavits must be 
filed with the Department of Transportation, Room PL-401, 400 Seventh 
Street, SW., Washington, DC 20590, and must be served on Delta, 
Continental, and Northwest. Affiants who have filed affidavits may 
examine the documents at Room PL-401, if they present a stamped copy of 
the affidavit filed with the Department before examination of the 
documents.
    We will allow persons submitting affidavits to copy the agreements, 
subject to their representation in the affidavits that they will 
destroy or return all such copies to Delta, Continental, or Northwest 
within one week after we have determined that we will or will not 
institute a formal investigation under 49 U.S.C. 41712 of the 
agreements. Cf. Joint Application of American Airlines and British 
Airways, Order 2001-9-12 (September 17, 2001) at 4.
    We are not setting a deadline for submission of any supplemental 
comments based on the review of the unredacted agreements. However, any 
party that wishes to submit such comments should do so promptly, since 
the three airlines have asked us to decide expeditiously whether to 
allow them to implement the agreements. We will also be considering 
whether any additional extension of the waiting period for the code-
share agreement would be appropriate.
    This notice will be effective at 3 p.m. on November 12. We are 
serving Delta, Continental, and Northwest with a copy of this notice by 
FAX.

    Issued in Washington, DC on November 8, 2002.
Read C. Van de Water,
Assistant Secretary for Aviation and International Affairs.
[FR Doc. 02-29068 Filed 11-14-02; 8:45 am]
BILLING CODE 4910-62-P