Air Services (Competition) (Amendment and Revocation) (EU Exit) Regulations 2019

Baroness Randerson Excerpts

Monday 7th October 2019 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)]

My Lords, the Government are working to secure a new deal with the EU. However, if we have to leave with no deal, the Government are committed to preparing for this outcome.

With regards to commercial aviation, we have already conducted intensive work to ensure that there is a functioning legislative framework and an effective regulatory regime for this critical part of the UK economy. This new instrument will ensure that the legislative framework and regulatory regime for this sector remain robust. The Government have given very careful consideration to the appropriate procedure for progressing this instrument. For the reasons I will shortly outline, it is important to have this instrument in place by exit day. That is why we have selected the “made affirmative” procedure which, while allowing for parliamentary scrutiny, should ensure that outcome. These draft regulations will be made under the powers conferred by the European Union (Withdrawal) Act 2018, and amend EU regulation 2019/712, which sets out an approach to safeguarding competition in air transport.

Fundamentally, this instrument ensures that, w responding to anti-competitive practices, the UK will have the same powers to protect UK airlines as will be available to the EU to protect EU airlines. Previously, regulation 868/2004 provided for redressive measures to be imposed when subsidisation and unfair pricing practices by third-country airlines caused injury to EU airlines. The previous SI on this subject introduced corrections to that regulation to ensure it would apply when the UK left the EU. However, since the extension to the UK’s departure from the EU, regulation 868/2004 was repealed and replaced with regulation 2019/712. The reasons given were that the previous regulation was judged to be ineffective in respect of its underlying general aim of fair competition. For instance, there was a lack of definition around the initiation and conduct of investigations or the criteria for doing so.

The new EU regulation provides the European Commission with the power to conduct an investigation where there is prima facie evidence of anti-competitive practices causing or threating to cause injury to EU air carriers. Areas where discrimination could occur include the allocation of slots, administrative procedures and the arrangement for selling and distribution of air services. If such evidence is found, redressive measures can be taken to offset any injury. Such redressive measures include financial duties.

The withdrawal Act will retain regulation 2019/712 in UK law in its entirety on exit day. The draft instrument being considered today makes the changes necessary so that this EU regulation continues to function correctly after exit day. The policy content of the retained regulation will remain substantially unchanged. The changes that have been made are primarily technical and necessary to ensure the correct application of these measures after the UK leaves the EU.

As part of these changes, the UK Civil Aviation Authority will assume some of the responsibilities previously placed on the European Commission. For instance, the UK Civil Aviation Authority will examine and investigate any complaint of this nature. The UK CAA will report on these findings to the Department for Transport, where the Secretary of State will take a decision whether to adopt any redressive measures. Such measures will be adopted by statutory instrument, using the affirmative procedure.

In the event of no deal, the EU could apply its regulation to the UK or its airlines if they were engaged in the practices described in the regulation. Therefore, the changes being made by this SI also ensure that EU member states and their airlines will be subject to the UK’s measures. This preserves a level playing field from exit day and is why we have selected the “made affirmative” procedure, which ensures this important measure is in place on 1 November, if required. While we would prefer to leave with a deal, this instrument will ensure that, in any scenario, the UK and UK airlines will have equivalent access to the type of measures EU member states and EU airlines can take against anti-competitive actions. I beg to move.

[Baroness Randerson (LD)]

I thank the Minister for her introduction. I am sure she will be delighted to hear that I have only one substantive question. However, I want to comment in passing that this statutory instrument applies a rule to ensure a level playing field, as the Minister said. It ensures that the CAA will examine complaints in future, rather than the European Commission. The CAA comes in at every possible turn, and I question whether it has the expertise and the resources needed for this. It is used by the Government for a wide variety of activities—everything from repatriating air passengers to space travel—and is therefore extremely broadly stretched. My concern is always that it should be given the resources it needs for this.

The Explanatory Memorandum says that, while the CAA will investigate in future if there is no deal,

“it is possible that the Department for Transport will play a supporting role”.

Exactly what supporting role do the Government envisage the Department for Transport playing? It strikes me that this is an unsatisfactory blurring of the edges. The proposal that the CAA does this follows a well-established principle: you have an independent or arm’s- length body that investigates a situation, makes a recommendation to the Minister and the Minister makes the decision. However, if the Government now envisage some kind of blurring of the situation, with the Department for Transport involved in a supportive role with the CAA and the Secretary of State making the final decision, you have a mixing of roles in a way that is not normal and which could lead to discussion, argument and even court action if a company is accused of anti-competitive practices. Could we have a little more detail on that from the Minister? That is my significant concern on this.