CELEX: 62021CJ0127
Appeal
Regulation (EC) No 139/2004
Concentrations between undertakings
Air transport market
Concentration declared compatible with the internal market
Commitments entered into by the parties to the concentration
Decision granting grandfathering rights
Concept of ‘appropriate use’

By its appeal, American Airlines Inc. asks the Court of Justice to set aside the judgment of the General Court of the European Union of 16 December 2020, American Airlines v Commission (
T‑430/18
,
EU:T:2020:603
; ‘the judgment under appeal’), by which the General Court dismissed its action for annulment of Commission Decision C(2018) 2788 final of 30 April 2018 granting Grandfathering rights to Delta Air Lines (Case M.6607 – US Airways/American Airlines) (‘the decision at issue’).
Legal context
Article 10 of Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for the allocation of slots at Community airports (
OJ 1993 L 14, p. 1
), as amended by Regulation (EC) No 793/2004 of the European Parliament and of the Council of 21 April 2004 (
OJ 2004 L 138, p. 50
) (‘the Airport Slots Regulation’), entitled ‘Slot pool’, provides, in paragraphs 2 and 3 thereof:
‘2.   A series of slots that has been allocated to an air carrier for the operation of a scheduled or a programmed non-scheduled air service shall not entitle that air carrier to the same series of slots in the next equivalent scheduling period if the air carrier cannot demonstrate to the satisfaction of the coordinator that they have been operated, as cleared by the coordinator, by that air carrier for at least 80% of the time during the scheduling period for which they have been allocated.
3.   Slots allocated to an air carrier before 31 January for the following summer season, or before 31 August for the following winter season, but which are returned to the coordinator for reallocation before those dates shall not be taken into account for the purposes of the usage calculation.’
Recital 30 of Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (
OJ 2004 L 24, p. 1
; ‘the Merger Regulation’) is worded as follows:
‘Where the undertakings concerned modify a notified concentration, in particular by offering commitments with a view to rendering the concentration compatible with the common market, the Commission should be able to declare the concentration, as modified, compatible with the common market. Such commitments should be proportionate to the competition problem and entirely eliminate it. It is also appropriate to accept commitments before the initiation of proceedings where the competition problem is readily identifiable and can easily be remedied. It should be expressly provided that the Commission may attach to its decision conditions and obligations in order to ensure that the undertakings concerned comply with their commitments in a timely and effective manner so as to render the concentration compatible with the common market. Transparency and effective consultation of Member States as well as of interested third parties should be ensured throughout the procedure.’
Under Article 20(1a) of Commission Regulation (EC) No 802/2004 of 21 April 2004 implementing Regulation No 139/2004 (
OJ 2004 L 133, p. 1
, and corrigendum
OJ 2004 L 172, p. 9
), as amended by Commission Implementing Regulation (EU) No 1269/2013 of 5 December 2013 (
OJ 2013 L 336, p. 1
) (‘the Implementing Regulation’):
‘In addition to the requirements set out in paragraph 1, the undertakings concerned shall, at the same time as offering commitments pursuant to Article 6(2) or Article 8(2) of [the Merger Regulation], submit one original of the information and documents prescribed by the Form RM relating to remedies (Form RM) as set out in Annex IV to this Regulation as well as the number of copies specified by the Commission from time to time in the
Official Journal of the European Union
. The information submitted shall be correct and complete.’
Paragraphs 5, 7 and 9 of the Commission notice on remedies acceptable under Regulation No 139/2004 and under Regulation No 802/2004 (
OJ 2008 C 267, p. 1
; ‘the Commission notice on remedies’) are worded as follows:
‘5. Where a concentration raises competition concerns in that it could significantly impede effective competition, in particular as a result of the creation or strengthening of a dominant position, the parties may seek to modify the concentration in order to resolve the competition concerns and thereby gain clearance of their merger. Such modifications may be fully implemented in advance of a clearance decision. However, it is more common that the parties submit commitments with a view to rendering the concentration compatible with the common market and that those commitments are implemented following clearance.
…
7. The Commission has to assess whether the proposed remedies, once implemented, would eliminate the competition concerns identified. Only the parties have all the relevant information necessary for such an assessment, in particular as to the feasibility of the commitments proposed and the viability and competitiveness of the assets proposed for divestiture. It is therefore the responsibility of the parties to provide all such information available that is necessary for the Commission’s assessment of the remedies proposal. To this end, the Implementing Regulation obliges the notifying parties to provide, with the commitments, detailed information on the content of the commitments offered, the conditions for their implementation and showing their suitability to remove any significant impediment of effective competition, as set out in the annex to the Implementing Regulation (“Form RM”). For commitments consisting in the divestiture of a business, parties have to describe in detail in particular how the business to be divested is currently operated. This information will enable the Commission to assess the viability, competitiveness and marketability of the business by comparing its current operation to its proposed scope under the commitments. The Commission can adapt the precise requirements to the information necessary in the individual case at hand and will be available to discuss the scope of the information required with the parties in advance of submission of Form RM.
…
9. Under the Merger Regulation, the Commission only has power to accept commitments that are deemed capable of rendering the concentration compatible with the common market so that they will prevent a significant impediment of effective competition. The commitments have to eliminate the competition concerns entirely … and have to be comprehensive and effective from all points of view … Furthermore, commitments must be capable of being implemented effectively within a short period of time as the conditions of competition on the market will not be maintained until the commitments have been fulfilled.’
Background to the dispute and the decision at issue
The background to the dispute is set out in paragraphs 1 to 69 of the judgment under appeal and, for the purposes of the present proceedings, may be summarised as follows.
The Clearance Decision
The administrative procedure leading to the Clearance Decision
On 18 June 2013, the European Commission received a notification of a proposed concentration pursuant to which US Airways Group Inc. would enter into a merger with AMR Corporation (together, ‘the parties to the merger’), the latter being the parent company of American Airlines.
The Commission considered that that transaction would give rise to serious doubts as to its compatibility with the internal market as regards the route between London Heathrow airport (United Kingdom) (‘LHR’) and Philadelphia International Airport (United States) (‘PHL’) (together, ‘the airport pair’).
In order to address the serious doubts expressed by the Commission concerning that transaction, the parties to the merger proposed certain commitments on 10 and 14 July 2013. On 12 and 15 July 2013, those two sets of draft commitments were rejected by the Commission, which insisted that grandfathering rights ‘based on’ those in Case COMP/M.6447 – IAG/bmi (‘the IAG/bmi Case’) had to be included in those commitments in order to remove all serious doubts regarding the transaction. On 16 July 2013, the parties to the merger submitted a third set of draft commitments notably introducing grandfathering rights.
After several exchanges concerning, inter alia, grandfathering rights, on 25 July 2013, the parties to the merger submitted to the Commission their draft final slot commitments (‘the final commitments’). Clauses 1.9 to 1.11 of the final commitments were worded in identical terms to Clauses 1.9 to 1.11 of the draft commitments of 16 July 2013.
On 30 July 2013, the parties to the merger provided the Commission with the Form RM relating to the final commitments. In such a form, the content of which is set out in Annex IV to the Implementing Regulation, undertakings are expected to specify the information and documents which they submit when offering commitments pursuant to Article 6(2) of the Merger Regulation.
In that regard, in point 1.1(i) of Section 1 of the Form RM relating to the final commitments, the parties to the merger stated the following:
‘The Slot Commitment is primarily based on the Commission practice in the most recent cases involving airlines mergers such as [the] IAG/bmi [Case]. In particular, to increase the attractiveness of the remedy, the Proposed Commitments include provisions on “grandfathering” of the slots released by the [parties to the merger] once the new entrant has operated a non-stop service on the Airport Pair for [six] consecutive seasons.’
In Section 3 of that form, under the heading ‘Deviation from Model Texts’, the parties to the merger were expected to draw attention to any discrepancies between the proposed commitments and the standard-form commitments published by the Commission’s services, as revised periodically, and to explain the reasons underlying those discrepancies. The parties to the merger stated the following:
‘The commitments offered by the [parties to the merger] diverge from the Model Commitments texts published by Commission services to the extent necessary to deal with specific requirements of a structural remedy in the specific context of air transport.
As noted in the previous discussions, the Proposed Commitments are based on the commitments accepted by the Commission in other airline merger cases. In particular, for the most part they are based on the commitments offered in [the] IAG/bmi [Case].
In order to assist in the assessment of the Proposed Commitments, the [parties to the merger] identify below the points where the Proposed Commitment diverge from the commitments accepted in [the] IAG/bmi [Case]. These do not include minor linguistic changes and clarifications required by the specific circumstances of this case, particularly in the section on definitions.’
As regards the grandfathering provisions, no departure from the commitments accepted in the IAG/bmi Case was identified in the Form RM relating to the final commitments.
The Clearance Decision
By Decision C(2013) 5232 final of 5 August 2013 (Case COMP/M.6607 – US Airways/American Airlines) (
OJ 2013 C 279, p. 6
; ‘the Clearance Decision’), adopted pursuant to Article 6(1)(b) of the Merger Regulation, read in conjunction with Article 6(2) of that regulation, the Commission declared the merger compatible with the internal market, subject to certain conditions and commitments.
In paragraph 160 of the Clearance Decision, the terms of the final commitments relating to grandfathering rights were summarised as follows:
‘As a general rule, the Slots obtained by a prospective entrant under the final Commitments must be used to provide a non-stop scheduled passenger air transport service operated on the [LHR-PHL] airport pair and cannot be used on another city pair unless the prospective entrant has operated such service during the Utilisation Period (six consecutive [International Air Transport Association (IATA)] seasons). Once the Utilisation Period has elapsed, the prospective entrant will be entitled to use the Slots on any city pair (“grandfathering”). However, grandfathering is subject to approval of the Commission, advised by the Monitoring Trustee.’
In paragraphs 176, 178 to 181, 186 and 197 to 199 of the Clearance Decision, in its analysis of the final commitments, the Commission made the following findings:
‘(176) According to the European Union Courts’ case-law, commitments must be likely to eliminate competition concerns identified and ensure competitive market structures. In particular, contrary to those entered into during the Phase II procedure, commitments offered in Phase I are intended not to prevent a significant impediment on effective competition but rather to clearly dispel all serious doubts in that regard. The Commission enjoys a broad discretion in assessing whether these remedies constitute a direct and sufficient response capable of dispelling any such doubts.
…
(178) The Commission’s assessment has concluded that the final Commitments address all serious doubts identified in the course of the procedure. As such, the Commission comes to the conclusion that the final Commitments … are sufficient to eliminate the serious doubts as to the compatibility of the Transaction with the internal market.
(179) In airline cases, slot release commitments are acceptable to the Commission where it is sufficiently clear that actual entry by new competitors would occur that would eliminate any significant impediment to effective competition. …
(180) The Slot Commitment is based on the fact that slot availability at [LHR] is the main entry barrier on the [LHR-PHL] route where serious doubts have been identified. Therefore, it is designed to remove (or at least reduce significantly) this barrier and foster sufficient, timely, and likely entry on the [LHR-PHL] route.
(181) It is important to note also that [LHR] slots have in themselves a very significant value therefore rendering the Slot Commitment very appealing for prospective entrants. This intrinsic attractiveness of the slots is enhanced in the Commitment package by the prospect of acquiring grandfathering rights after six IATA seasons.
…
(186) In light of the above and of the other available evidence, in particular considering the interest and indications for a likely and timely entry received during the market test, the Commission concludes that the Slot Commitment is a key element in the timely and likely entry on the [LHR-PHL] route. The scope of entry on this route will suffice to resolve the serious doubts identified on this market (on all possible passenger segments).
…
(197) Under the first sentence of the second subparagraph of Article 6(2) of the Merger Regulation, the Commission may attach to its decision conditions and obligations intended to ensure that the undertakings concerned comply with the commitments they have entered into vis-à-vis the Commission with a view to rendering the concentration compatible with the internal market.
(198) … Where a condition is not fulfilled, the Commission’s decision … no longer stands. Where the undertakings concerned commit a breach of an obligation, the Commission may revoke the clearance decision [in question] in accordance with Article 8(6) of the Merger Regulation. …
(199) … the [Clearance Decision] is conditioned on the full compliance with the requirements set out in Sections 1, 2, 3 and 4 of the final Commitments (conditions), whereas the other sections of the final Commitments constitute obligations on the Parties.’
In paragraph 200 of the Clearance Decision, it was added that the final commitments were annexed to that decision and formed an integral part of the decision. Lastly, in paragraph 201 of the Clearance Decision, the Commission decided to declare the notified transaction, as amended by the final commitments, compatible with the internal market ‘subject to full compliance with the conditions and obligations laid down in the final Commitments annexed to the present decision’.
The final commitments
In the first paragraph of the preamble of the final commitments, the parties to the merger state that they provided those commitments in order to enable the Commission to declare the merger compatible with the internal market.
In the third paragraph of that preamble, it is specified as follows:
‘This text shall be interpreted in the light of the [Clearance] Decision to the extent that the Commitments are attached as conditions and obligations, in the general framework of [EU] law, in particular in the light of the Merger Regulation, and by reference to the Commission Notice on remedies …’
In the ‘Definitions’ section of the final commitments, a number of terms are defined as follows:
–
‘Grandfathering’ is defined by reference to Clause 1.10;
–
‘Misuse’ is defined by reference to Clause 1.13;
–
‘Utilisation Period’ is defined by reference to Clause 1.9, it being specified that that period should be six consecutive IATA seasons.
Clauses 1.9 to 1.11 of the final commitments provide as follows:
‘1.9 As a general rule, the Slots obtained by the Prospective Entrant as a result of the Slot Release Procedure shall be used only to provide a Competitive Air Service on the Airport Pair. The Slots cannot be used on another city pair unless the Prospective Entrant has operated a non-stop service on the Airport Pair in accordance with the bid submitted pursuant to Clause 1.24 for a number of full consecutive IATA Seasons (“Utilisation Period”).
1.10 The Prospective Entrant will be deemed to have grandfathering rights for the Slots once appropriate use of the Slots has been made on the Airport Pair for the Utilisation Period. In this regard, once the Utilisation Period has elapsed, the Prospective Entrant will be entitled to use the Slots obtained on the basis of these Commitments on any city pair (“Grandfathering”).
1.11 Grandfathering is subject to approval of the Commission, advised by the Monitoring Trustee at the end of the Utilisation Period. …’
Clause 1.13 of the final commitments provides as follows:
‘During the Utilisation Period, Misuse shall be deemed to arise where a Prospective Entrant which has obtained Slots released by the Parties [to the merger] decides:
…
(b)
to operate fewer weekly Frequencies than those to which it committed in the bid in accordance with Clause 1.24 or to cease operating on the Airport Pair unless such a decision is consistent with the “use it or lose it” principle in Article 10(2) of [the Airport Slots Regulation] (or any suspension thereof);
…’
Clause 1.24 of the final commitments concerns the number of frequencies that the entrant has decided to operate, while Clauses 1.26 and 1.27 thereof relate to the criteria for assessing the entrant’s bid.
The Commission decision on the allocation of slots to Delta
On 9 October 2014, Delta Air Lines Inc. (‘Delta’) submitted a formal bid for slots pursuant to Clause 1.24 of the final commitments. According to its application, Delta intended to operate on the route between LHR and PHL (‘the LHR-PHL route’) with one daily frequency over six consecutive IATA seasons as of summer 2015.
Delta was the only airline that submitted a bid for slots under the final commitments.
By decision of 6 November 2014, after assessing the viability of Delta and evaluating its formal bid pursuant to Clauses 1.21 and 1.26 of the final commitments, the Commission declared that Delta was, first, independent of and unconnected with the parties to the merger and had exhausted its own slot portfolio at LHR within the meaning of Clause 1.21 of the final commitments and, second, a viable potential competitor of the parties to the merger on the airport pair for which it had requested slots under the final commitments, with the ability, resources and commitment to operate services on the LHR-PHL route in the long term as a viable and active competitive force.
On 17 December 2014, American Airlines and Delta submitted to the Commission the Slot Release Agreement to be concluded between the two companies for the purposes of granting Delta the slots it requested on the LHR-PHL route under the final commitments.
By decision of 19 December 2014, the Commission, in line with the Monitoring Trustee’s report of 17 December 2014, approved that slot release agreement. That decision provided that Delta was under an obligation to use the slots previously operated by US Airways Group to operate a non-stop scheduled air service on the LHR-PHL route. That decision further stipulated that, once appropriate use of those slots had been made for the utilisation period, Delta would be deemed to have grandfathering rights subject to the approval of the Commission and that, once the Commission approved of grandfathering rights, Delta would retain the released slots and would be entitled to use them on any city pair.
Delta started operating on the LHR-PHL route at the beginning of the summer 2015 IATA schedule season.
On 28 September 2015, American Airlines sent a letter to the Monitoring Trustee in which it submitted that Delta’s failure to operate the remedy slots in accordance with its bid meant that Delta had not made ‘appropriate use’ of those slots during the 2015 summer and 2015/2016 winter seasons and as such those seasons could not count for the acquisition of grandfathering rights.
Subsequently, several exchanges took place, in particular between American Airlines and the Commission, in which American Airlines stated that Delta was continuing in its failure to comply with the terms of its bid and could not therefore claim to have acquired grandfathering rights.
The decision at issue
On 30 April 2018, the Commission adopted the decision at issue, by which it found that Delta had made appropriate use of the slots during the utilisation period and approved the granting of grandfathering rights to Delta pursuant to Clause 1.10 of the final commitments.
On the basis of an interpretation of the wording, the context and the purpose of the final commitments, the Commission concluded in the decision at issue that the term ‘appropriate use’ could not be understood as ‘use in accordance with the bid’, but that it should be interpreted as the ‘absence of misuse’ of slots for the purposes of Clause 1.13 of the final commitments.
In particular, after finding, first of all, that the term ‘appropriate use’ was not defined in the final commitments, the Commission stated, in the decision at issue, that it was appropriate to interpret that term ‘in the light of the object and context of the [final] Commitments’.
As regards the object of the final commitments, the Commission considered that the final commitments aimed to remedy serious doubts as to the compatibility of the merger with the internal market and that the purpose of Clause 1.9 of those commitments was to restore competition on the LHR-PHL route by establishing a competitive air service.
As regards the context of the final commitments, the Commission reiterated that grandfathering rights constituted an incentive for a prospective entrant to operate the LHR-PHL route. To entice entry by a competitor, a prospective entrant needed clear and verifiable criteria which are not subject to arbitrary considerations.
Given that, in ordinary language, ‘misuse’ may be regarded as ‘inappropriate’ use and that in the final commitments the term ‘misuse’ was defined while the term ‘appropriate use’ was not, the Commission concluded that, in order to give a prospective entrant clear and verifiable guidance, the term ‘appropriate use’ should be interpreted as equivalent to the ‘absence of misuse’ for the purposes of Clause 1.13 of the final commitments.
Next, in the decision at issue, the Commission refuted the view that the term ‘appropriate use’ should be interpreted as meaning ‘use in accordance with the bid’.
In that regard, according to the decision at issue, first, equating ‘appropriate use’ with ‘use in accordance with the bid’ would lead to an almost impossible requirement for any airline.
Second, the Commission considered that the argument that only ‘cancellations for extraordinary operational reasons’ would be consistent with ‘use in accordance with the bid’ was not convincing. Such a criterion was too vague to ensure legal certainty for a prospective new entrant. Moreover, there was no support for such a criterion in the wording of the final commitments.
Third, interpreting the term ‘appropriate use’ as meaning ‘use in accordance with the bid’ would make the final commitments much less attractive to a prospective entrant.
Fourth, since Article 10(2) of the Airport Slots Regulation establishes the ‘use it or lose it’ principle, which provides that, for an air carrier to be able to operate the slots allocated during the next period, it must demonstrate that it has operated those slots for at least 80% of the time during the scheduling period for which those slots have been allocated (‘the 80/20 rule’), and a level of 80% slot utilisation is, accordingly, the de facto rule in the aviation sector, it would be unreasonable to require a prospective new entrant to have a 100% slot utilisation rate.
Fifth, according to the Commission, it is clear from the Form RM relating to the final commitments that, as far as concerns grandfathering rights, those commitments were, aside from some ‘minor linguistic changes and clarifications’, largely similar to those at issue in the IAG/bmi Case. In the commitments at issue in that case, ‘use in accordance with the bid’ was not a condition for acquiring grandfathering rights. It follows that the formulation ‘in accordance with the bid’ in the final commitments only constitutes a ‘minor linguistic change’ as compared to the commitments at issue in the IAG/bmi Case.
Sixth, it would be contrary to the scheme of the provisions in question to interpret the term ‘appropriate use’ in Clause 1.10 of the final commitments in the light of Clause 1.9 of those commitments, since Clause 1.9 is intended to identify the purpose of the agreement, namely to provide a competitive air service on the route, whereas grandfathering rights are defined in Clause 1.10 of the final commitments.
Lastly, the Commission examined, in the decision at issue, whether Delta had misused the slots for the purposes of Clause 1.13 of the final commitments in order to determine whether it should be granted grandfathering rights. In that regard, the Commission took the view that the use of those slots, despite being under-operated, had been in line with the 80/20 rule. Having found that Delta had not misused the slots for the purposes of Clause 1.13 of the final commitments, the Commission concluded that, in accordance with the written recommendation of the Monitoring Trustee, Delta had made appropriate use of the slots during the utilisation period and approved the granting of grandfathering rights to Delta pursuant to Clause 1.10 of the final commitments.
The procedure before the General Court and the judgment under appeal
By application lodged at the Registry of the General Court on 10 July 2018, American Airlines brought an action for annulment of the decision at issue, relying on two pleas in law. The first plea in law alleged errors of law made by the Commission in interpreting the term ‘appropriate use’ in the final commitments. By its second plea in law, American Airlines claimed that the Commission had not taken into account all the relevant factors for the grant of grandfathering rights to Delta.
By the judgment under appeal, the General Court dismissed the action brought by American Airlines in its entirety and ordered American Airlines to bear its own costs and pay those incurred by the Commission.
As regards the first plea in law, concerning, in the first place, the literal interpretation of the concept of ‘appropriate use’, the General Court held, in paragraphs 103 and 104 of the judgment under appeal, that equating ‘appropriate use’ with the ‘absence of misuse’ could be reconciled with the wording of the provisions concerned. However, the General Court found, in paragraphs 105 and 106 of the judgment under appeal, that the interpretation supported by American Airlines, according to which ‘appropriate use’ referred to ‘use in accordance with the bid’, while allowing the Commission a certain discretion in that regard, could also be reconciled with a literal interpretation of the concept of ‘appropriate use’. The General Court therefore concluded, in paragraph 107 of the judgment under appeal, that an interpretation of the latter concept on the basis of the wording of the final commitments alone was not decisive.
The General Court set out, in paragraphs 109 to 125 of the judgment under appeal, the principles to be applied for the purposes of interpreting the concept of ‘appropriate use’ and the expression ‘in accordance with the bid’, within the meaning of the final commitments. The General Court first of all noted that it was necessary to consider not only the wording of the final commitments but also the context in which they occur and the objectives pursued by the rules of which they form part. Next, it recalled that account should also be taken of the specific rules of interpretation set out in the final commitments themselves, which refer to the Clearance Decision, the general framework of EU law, in particular the Merger Regulation and the Commission notice on remedies. Furthermore, according to the General Court, the final commitments had to be interpreted also in the light of the Form RM relating to the final commitments, since such a form contains the information and documents necessary to enable the Commission to examine whether the commitments submitted by the parties to a merger are such as to render the concentration compatible with the internal market. Lastly, the General Court considered that, since the Airport Slots Regulation forms part of the ‘general framework of EU law’, it must be taken into account for the purposes of interpreting the concept of ‘appropriate use’.
In the second place, as regards the systemic interpretation of the term ‘appropriate use’ in Clause 1.10 of the final commitments, the General Court held, in paragraphs 201 to 249 of the judgment under appeal, that that concept could be construed as corresponding to the absence of ‘misuse’ within the meaning of Clause 1.13 of those commitments.
In that regard, the General Court noted, in paragraph 209 of the judgment under appeal, that, in so far as the parties to the merger were expected to introduce grandfathering rights ‘based on’ those in the IAG/bmi Case, in accordance with the way in which those commitments were ordered, the clauses on ‘misuse’ were relevant for the granting of grandfathering rights. Furthermore, the General Court held, in paragraph 220 of that judgment, that the addition of the wording ‘in accordance with the bid’, understood as a ‘de facto’ definition of grandfathering by American Airlines, departed in wording significantly from the scheme of the corresponding clauses of the commitments at issue in the IAG/bmi Case. The General Court inferred therefrom, in paragraphs 232 and 233 of the judgment under appeal, that it was clear from an examination of the relevance of the indications in the Form RM relating to the final commitments that the wording ‘in accordance with the bid’ constituted only a ‘minor linguistic change’ and that, therefore, American Airlines’ approach whereby that wording constituted a material condition for the grant of grandfathering rights could not be accepted.
In the third place, as regards the interpretation of the term ‘appropriate use’ in Clause 1.10 of the final commitments in the light of the context of that clause and the objectives pursued by the rules of which it is part, the General Court confirmed, in paragraphs 250 to 292 of the judgment under appeal, the interpretation adopted by the Commission in the decision at issue according to which the concept of ‘appropriate use’ corresponded to the ‘absence of misuse’ for the purposes of Clause 1.13 of the final commitments.
First, the General Court held, in paragraphs 253 to 278 of the judgment under appeal, that the grant of grandfathering rights pursued the objective of making slots more attractive, in that it was intended to constitute an incentive for an entrant to take over those slots, thereby making it sufficiently likely that those commitments would be effectively implemented. Thus, the General Court rejected American Airlines’ argument relating to ‘maximum competitive constraint’, on the ground that it was not supported by the Clearance Decision or in the clauses of the final commitments and that it was irreconcilable with the very nature of grandfathering rights.
Second, the General Court held, in paragraphs 279 and 280 of the judgment under appeal, that the Airport Slots Regulation provided a general context for interpreting the concept of ‘appropriate use’ as corresponding to the ‘absence of misuse’. It considered that Delta’s use of its slots during the utilisation period had, moreover, complied with the requirements of Article 10(2) and (3) of that regulation.
The General Court concluded, in paragraph 293 of the judgment under appeal, that the term ‘appropriate use’ in Clause 1.10 of the final commitments had been correctly interpreted by the Commission as meaning the ‘absence of misuse’ for the purposes of Clause 1.13 of those commitments.
As regards the second plea in law, the General Court held, in paragraph 303 of the judgment under appeal, that, in so far as the assessment of the various items of evidence relied on in support of that plea was irrelevant to the assessment of the existence of ‘misuse’ within the meaning of Clause 1.13 of the final commitments, that plea had to be rejected.
The procedure before the Court of Justice and forms of order sought
By document lodged at the Registry of the Court of Justice on 26 February 2021, American Airlines brought an appeal against the judgment under appeal.
By its appeal, American Airlines claims that the Court should:
–
set aside and annul the judgment under appeal;
–
annul the decision at issue;
–
in the alternative, if deemed necessary, remand the case to the General Court for reconsideration in accordance with the Court of Justice’s judgment; and
–
order the Commission to pay the costs of these proceedings and of the proceedings before the General Court.
The Commission contends that the Court should dismiss the appeal and order American Airlines to pay the costs.
Delta contends that the Court should dismiss the appeal in its entirety and order American Airlines to pay the costs of the present proceedings and of the proceedings before the General Court.
The appeal
In support of its appeal, American Airlines relies on a single ground of appeal, alleging that the General Court erred in law in holding that the concept of ‘appropriate use’, within the meaning of Clause 1.10 of the final commitments, should be interpreted as meaning the ‘absence of misuse’. It further claims that the General Court incorrectly upheld the decision to grant grandfathering rights to Delta in so far as Delta has not operated the slots allocated.
That ground of appeal is divided into three limbs. By the first limb, American Airlines submits that, when interpreting ‘appropriate use’, the General Court failed to take into account the objectives of, respectively, the Merger Regulation, the Commission notice on remedies and the specific commitments concluded between the parties to the merger. By the second limb, it submits that the General Court erred in ruling that the concept of ‘appropriate use’ should be interpreted as meaning ‘absence of misuse’. By the third limb, American Airlines alleges that the General Court erred in interpreting the Form RM in relation to the final commitments and Clause 1.9 of those commitments, specifically the legal implications of the phrase ‘in accordance with the bid’.
The first limb of the single ground of appeal
Arguments of the parties
By the first limb of its single ground of appeal, American Airlines disputes, in essence, the purposive and contextual interpretation adopted by the General Court, in paragraphs 250 to 292 of the judgment under appeal, in respect of the concept of ‘appropriate use’ within the meaning of Clause 1.10 of the final commitments. American Airlines submits in that regard that the General Court failed to take into account, when interpreting the term ‘appropriate use’, first, the objectives of the Merger Regulation and the remedies under that regulation, second, the specific objectives of the final commitments and, third, the full remedial framework set up by those commitments.
In the first place, American Airlines submits that, when interpreting whether ‘appropriate use’ is made of the remedy slots, it is necessary to assess whether the slots were used in a way that is consistent with the objective of the commitments, as set out in recital 30 of the Merger Regulation and in paragraph 9 of the Commission notice on remedies, which is to ‘entirely eliminate’ the competition concerns. According to American Airlines, since the judgment under appeal disregards those elements in its analysis, it is vitiated by a manifest error of interpretation.
In the second place, American Airlines submits that the General Court erred in law in its interpretation of the concept of ‘appropriate use’ by failing to take into account the specific objective pursued by the final commitments and by focusing on the purpose of grandfathering rights. In that regard, American Airlines complains that the General Court, first of all, did not refer, in paragraph 30 of the judgment under appeal, to critical elements of the Commission’s findings regarding those commitments, mentioned in paragraphs 176, 178 to 181, 186 and 197 to 199 of the decision at issue.
Next, American Airlines claims that the General Court failed to apply the criterion of the effectiveness of the remedy when interpreting the concept of ‘appropriate use’ even though Delta failed to operate 470 of the remedy slots. As is apparent from the case-law cited in paragraph 120 of the judgment under appeal, the commitments must constitute a direct and sufficient response capable of clearly dispelling all serious doubts as to the transaction at issue.
Furthermore, American Airlines submits that, in paragraphs 250 to 278 of the judgment under appeal, the General Court focused only on the purpose of grandfathering rights to enhance the intrinsic attractiveness of the slots, without assessing the specific objective of the final commitments, which is to replicate the lost competition from the daily service of one of the parties to the merger, ensuring sufficiency of entry of competitors on the LHR-PHL route. American Airlines states in that regard that whether the actual use of the slots met or failed to meet that objective is a critical element of any decision regarding grandfathering rights.
Lastly, American Airlines claims that, in paragraphs 266 and 267 of the judgment under appeal, the General Court confused the meaning and purpose of grandfathering with the ‘appropriate use’ condition to be satisfied in order to be granted grandfathering rights. According to American Airlines, given that the object of the part of the final commitments relating to slots was to replicate the daily service of one of the parties to the merger and thereby entirely eliminate the competition issue, the extent to which the remedy slots are actually used to achieve that objective is not only fully reconcilable with the determination of ‘appropriate use’ and whether to grant grandfathering rights, it is in fact a critical element in that analysis.
In the third place, American Airlines claims that the General Court failed to take into account, in the contextual interpretation of the concept of ‘appropriate use’, all the relevant provisions of the final commitments necessary to reach a correct legal interpretation of that concept. In that regard, it refers, inter alia, to Clauses 1.1, 1.10, 1.11, 1.24, 1.26 and 1.27 of those commitments. Considering those provisions together demonstrates that they form a coherent system which ensures that the remedy achieves the core goal of ‘entirely eliminating’ the competition concern. In particular, American Airlines challenges the General Court’s analysis, in paragraphs 245 to 248 of the judgment under appeal, of those considerations which, it submits, were not set out in full in that judgment.
Furthermore, American Airlines maintains that an incomplete consideration of the relevant internal context of the final commitments would have significant implications for the standard of slot operation required. In that regard, it submits that, where an entrant departs, as in the present case, from the basis on which slots were awarded in its bid, the Commission, when assessing whether the entrant made ‘appropriate use’ of the remedy slots, is required to evaluate the reasons for those departures and to determine whether they are justified based on the objective and the provisions of the commitments as well as relevant economic evidence and analysis. It submits that, if the Commission had adopted that approach, Delta would have sought to avoid any unjustified departure from its bid by observing the
pacta sunt servanda
principle, which would have contributed to eliminating the competition concerns resulting from the merger. It states that those considerations are borne out by paragraph 54 of the Monitoring Trustee’s report to the Commission of 13 April 2018 on the award of grandfathering rights to Delta.
Lastly, American Airlines submits that the General Court made a manifest error of interpretation in paragraphs 279 to 292 of the judgment under appeal in holding that the ‘contextual interpretation’ of the final commitments had to be carried out in the light of the Airport Slots Regulation.
The Commission contests American Airlines’ claims and maintains that in the judgment under appeal the General Court fully addressed the objectives of the Merger Regulation, the remedies under that regulation and the final commitments.
For its part, Delta contends that the present limb is inadmissible on the ground that American Airlines merely restates arguments already raised at first instance without conducting a precise analysis of the judgment under appeal.
Findings of the Court
As regards the admissibility of the first limb of the single ground of appeal, which has been called into question by Delta, it must be recalled that it follows, inter alia, from Article 168(1)(d) and Article 169(2) of the Rules of Procedure of the Court of Justice that an appeal must indicate precisely the contested elements of the decision which the appellant seeks to have set aside and also the legal arguments specifically advanced in support of the appeal. The Court has repeatedly held, in that regard, that an appeal is inadmissible in so far as, without even including an argument specifically identifying the error of law allegedly vitiating the judgment of the General Court, it merely repeats the pleas in law and arguments previously submitted to that court, including those based on facts expressly rejected by the General Court. Such an appeal amounts in reality to no more than a request for re-examination of the application submitted to the General Court, which the Court of Justice does not have jurisdiction to undertake on appeal (judgment of 20 January 2022, Romania v Commission,
C‑899/19 P
,
EU:C:2022:41
, paragraph
).
In the present case, as is apparent from paragraphs 64 to 72 of the present judgment, the line of argument in support of the first limb of American Airlines’ single ground of appeal expressly refers to the error of law allegedly made by the General Court in the purposive and contextual interpretation of the concept of ‘appropriate use’ and, in that regard, refers clearly and precisely to the paragraphs of the judgment under appeal which it seeks to challenge, namely paragraphs 245 to 278 thereof, and to the legal arguments specifically advanced in support of that limb.
Consequently, the plea of inadmissibility raised by Delta against the present limb, on the ground that American Airlines merely repeats the arguments relied on before the General Court, must be rejected.
As to the substance, it follows from recital 30 of the Merger Regulation and from paragraphs 5 and 9 of the Commission notice on remedies that, where a concentration raises competition concerns in that it could significantly impede effective competition, the parties to the merger may propose remedies under the Merger Regulation known as ‘commitments’ in order to eliminate the concerns identified by the Commission. Moreover, recital 30 of the Merger Regulation states that commitments can be accepted during the preliminary examination (Phase I) where the competition problem is readily identifiable and can easily be remedied.
Thus, the purpose of the commitments is, on the one hand, to eliminate entirely the competition concerns identified by the Commission such that the concentration in question does not significantly impede effective competition. On the other hand, in particular, the commitments entered into during the preliminary examination, as in the case with the final commitments, are intended to dispel any serious doubts as to whether the concentration would significantly impede effective competition in the internal market or a significant part of it.
In the first place, it must be stated that, in the judgment under appeal, the General Court duly examined the objectives of the Merger Regulation and the remedies under that regulation.
In that regard, the General Court first of all noted, in paragraph 110 of the judgment under appeal, that, in interpreting the provisions of the final commitments, it was necessary to consider not only their wording but also the context in which they occur and the objectives pursued by the rules of which they are part. The General Court specified, in paragraphs 111 and 112 of the judgment under appeal, that account should also be taken of the specific rules of interpretation set out in the third paragraph of the final commitments, according to which those commitments must be interpreted in the light of the Clearance Decision, in the general framework of EU law, in particular in the light of the Merger Regulation, and by reference to the Commission notice on remedies.
Next, the General Court recalled, in paragraphs 117 and 120 of the judgment under appeal, that, in order for commitments to be acceptable to the Commission, they must render the notified transaction compatible with the internal market. The remedies resulting from those commitments must be sufficiently workable and lasting to ensure that the creation or strengthening of a dominant position, or the impairment of effective competition, which the commitments are intended to prevent, will not be likely to materialise in the relatively near future. The General Court stated that, having regard to their scope and content, the commitments entered into during the preliminary phase are such as to permit the Commission to adopt a decision of approval without initiating the in-depth investigation phase, in so far as those commitments permitted the Commission to take the view that those commitments constituted a direct and sufficient response capable of clearly dispelling all serious doubts.
Lastly, in the context of its purposive interpretation of the concept of ‘appropriate use’, the General Court pointed out, in paragraph 255 of the judgment under appeal, that the parties to the merger had entered into the commitments in order to enable the Commission to find that they had remedied any serious doubts it had and thus to declare the merger compatible with the internal market.
It follows that American Airlines cannot claim that the General Court failed to take into account, when interpreting the term ‘appropriate use’ in Clause 1.10 of the final commitments, the objectives of the Merger Regulation and the remedies under that regulation. The fact that the General Court did not expressly mention recital 30 of the Merger Regulation or paragraph 9 of the Commission notice on remedies in the judgment under appeal does not mean that it failed to take into account the objectives of the commitments as evident from the applicable rules. That line of argument must therefore be rejected.
In the second place, American Airlines submits that the General Court erred in law in its interpretation of the concept of ‘appropriate use’, in that it failed to take into account the specific objective pursued by the final commitments of entirely eliminating the competition concerns created by the merger.
In that regard, it is sufficient to note that American Airlines starts from the incorrect premiss that the specific objective of the final commitments, established so that the concentration in question could be compatible with the internal market, is to replicate in full the daily service previously operated by one of the parties to the merger.
As is apparent from paragraph 79 of the present judgment, the objective of the commitments given by the parties to the merger, as provided for in the Merger Regulation, is to dispel the serious doubts raised by the Commission as to the compatibility of the concentration in question with the internal market.
Furthermore, the grant of grandfathering rights in the context of those commitments, as observed by the Advocate General in point 76 of his Opinion, did not pursue a separate objective but aimed to help attain the general objective of those commitments of eliminating the competition concerns on the LHR-PHL route, by making the slots at issue more attractive for airlines, which would have had an incentive to enter that route with a competitive air service.
In that context, it should be noted that, first, as the General Court found in paragraphs 266 and 267 of the judgment under appeal, the very nature of grandfathering rights is irreconcilable with the appellant’s argument that the concept of ‘appropriate use’ should be interpreted so as to ensure ‘maximum competitive constraint’. Granting grandfathering rights enables the entrant to use the slots on any airline route after an operating period of six IATA seasons. However, the inclusion of grandfathering rights in the final commitments cannot pursue the objective of exerting maximum competitive constraint on the LHR-PHL route.
Second, it should be noted that the final commitments do not specify the particular number of frequencies that the prospective entrant was required to operate. Clause 1.1 of the final commitments simply indicates the maximum number of remedy slots released, but not the number of frequencies that the prospective entrant must operate. In addition, Clause 1.13(b) of the final commitments, relating to ‘misuse’, simply mentions the number of frequencies which must be operated for the operation of fewer frequencies than the prospective entrant proposed to use not to be considered ‘misuse’. Furthermore, that clause states that the use of slots must be consistent with the 80/20 rule.
Furthermore, as the Advocate General observed, in essence, in points 71 and 72 of his Opinion, the objective of those commitments is to replicate not the daily service provided by the parties to the merger before that transaction, but the competitive constraint provided by them before that transaction. The replication of that daily service is also not a precondition for the grant of grandfathering rights to the prospective entrant or entrants. The divestiture of slots to a new entrant as envisaged by the final commitments is intended to enable that entrant to use them under the same conditions as those which applied to the parties to the merger prior to the merger.
In addition, a requirement that slots be fully utilised would not be consistent with the specific objective of the final commitments, which is, as is apparent from paragraph 87 of the present judgment, to foster sufficient, timely and likely entry by a prospective entrant on that route.
Third, as is apparent from paragraph 180 of the Clearance Decision, slot availability was the main barrier to entry on that route where serious doubts had been identified and, consequently, that decision finds that the purpose of the final commitments was to remove or significantly reduce that barrier to entry at LHR in order to foster sufficient, timely and likely entry by a prospective entrant on that route.
American Airlines’ argument that the objective of the final commitments is to ensure that the problem regarding the lost competition from the daily service of one of the parties to the merger is ‘entirely eliminated’ by replicating that daily service must therefore be rejected.
In addition, American Airlines cannot criticise the General Court for focusing only on the objective pursued by the grant of grandfathering rights, which is to enhance the attractiveness of the remedy slots, while ignoring the broader goal of the final commitments, which is to ensure an effective solution to the competition concerns raised by the notified concentration.
In that regard, it is sufficient to note that, as follows from paragraph 88 of the present judgment, the grant of grandfathering rights did not pursue a separate objective but aimed to help attain the general objective of the final commitments of entirely eliminating the competition concerns on the LHR-PHL route.
The General Court therefore did not err in finding, in paragraphs 257 to 261 of the judgment under appeal, that the inclusion of grandfathering rights in the final commitments was intended to constitute an incentive for an entrant to take over slots, thereby making it sufficiently likely that those commitments would be effectively implemented on the LHR-PHL route, thus contributing to the common objective of those commitments, namely the elimination of the competition concerns identified by the Commission. The General Court did not err in law by taking particular account of the objective pursued by the grant of grandfathering rights in interpreting the concept of ‘appropriate use’ in Clause 1.10 of the final commitments.
Lastly, in so far as it has been found, in paragraphs 87 to 96 of the present judgment, that the specific objective of the final commitments was not to ensure the maximum operation of slots so as to ensure ‘maximum competitive constraint’, American Airlines’ argument that the General Court failed to take account, in paragraph 30 of the judgment under appeal, of critical elements of the final commitments resulting from the Clearance Decision cannot succeed.
In the third place, American Airlines submits that the General Court erred in its contextual interpretation of the concept of ‘appropriate use’ because it confined its analysis to Clause 1.13 of the final commitments in isolation, without taking into consideration the full remedial framework of those commitments, in particular Clauses 1.1, 1.10, 1.11, 1.24, 1.26 and 1.27 thereof.
In that regard, it should be noted that it is clear from those clauses that they concern arrangements for implementing the final commitments which are not capable of determining whether the entrant made appropriate use of the slots allocated for the grant of grandfathering rights. The maximum number of remedy slots released (Clause 1.1), the number of frequencies that the entrant has decided to operate (Clause 1.24), the criteria for assessing the entrant’s bid (Clauses 1.26 and 1.27) and the fact that grandfathering is subject to approval of the Commission, advised by the Monitoring Trustee at the end of the utilisation period (Clause 1.11), do not provide relevant criteria for determining whether the use of the bid was ‘appropriate’. Thus, as the General Court rightly stated in paragraph 248 of the judgment under appeal, the provisions governing the new entrant’s bid and the evaluation of that bid are relevant for the granting of remedy slots, but not for the grant of grandfathering rights.
Furthermore, as already stated in paragraph 90 of the present judgment, the only provision of the final commitments which actually relates to the use of the slots is Clause 1.13(b) of those commitments, which determines the number of frequencies which must be operated for the operation of fewer frequencies than the prospective entrant proposed to use not to be considered‘misuse’. That use must be consistent with the 80/20 rule. It is therefore apparent from reading that clause that the prospective entrant was not required to use all of the remedy slots which it has requested to use, as American Airlines claims.
In any event, none of the clauses in the final commitments referred to by American Airlines requires the prospective entrant to undertake to use all of the remedy slots which it has requested to use or to justify any departure from its bid. Accordingly, American Airlines’ argument that a more complete interpretation of the provisions of the final commitments would have had implications for the standard of slot operation required must also be rejected.
Lastly, since Clause 1.13(b) of the final commitments provides that, in order to determine whether the entrant has misused the allocated slots, that use must be consistent with the ‘use it or lose it’ principle under Article 10(2) of the Airport Slots Regulation, the General Court also did not err in considering that the contextual interpretation of the final commitments had to be carried out in the light of the Airport Slots Regulation.
Moreover, the contextual interpretation of the concept of ‘appropriate use’ in the light of the Airport Slots Regulation is justified in so far as the third paragraph of the preamble of the final commitments states that they must be interpreted, inter alia, in the ‘general framework of EU law’. The General Court was therefore fully entitled to hold, in paragraph 124 of the judgment under appeal, that account should be taken of the Airport Slots Regulation, which forms part of the ‘general framework of EU law’.
American Airlines’ argument relating to the errors made by the General Court in paragraphs 279 to 292 of the judgment under appeal, which is more a part of the claims raised in the second limb of the single ground of appeal, will be examined below.
In the light of the foregoing considerations, the first limb of the single ground of appeal must be rejected.
The second limb of the single ground of appeal
Arguments of the parties
By the second limb of its single ground of appeal, American Airlines claims that the General Court erred in concluding that the concept of ‘appropriate use’ should be interpreted as equivalent to the ‘absence of misuse’.
In that regard, American Airlines submits, in the first place, that the application of the ‘absence of misuse’ standard in interpreting the concept of ‘appropriate use’ results in a slot usage level that is inconsistent with the objectives of the final commitments pursued by the parties to the merger.
In particular, American Airlines contests the General Court’s assessment, in paragraph 291 of the judgment under appeal, that the fact that Delta’s slot utilisation rate ranged between 76.4% and 81% does not mean that the object of the final commitments was compromised. According to the appellant, on each day a remedy slot was not operated, the objective of the Merger Regulation of ‘entirely eliminating’ the competition problem was not achieved, constituting a ‘significant impediment to effective competition’. It submits that, in so far as Delta chose not to provide 470 services (total, outward and return journeys) on the LHR-PHL route, the specific objective established by the final commitments was not met, since those slots were ultimately not provided by any airline. That result is therefore, according to American Airlines, a strong indication that the ‘absence of misuse’ is not equivalent to ‘appropriate use’.
According to the appellant, although the Commission has a broad discretion in assessing whether the commitments constitute a sufficient response capable of dispelling all serious doubts, it cannot modify those binding commitments through an interpretation of the concept of ‘appropriate use’ that is incompatible with the objectives and terms of those commitments.
In the second place, American Airlines maintains that the General Court made other errors in the judgment under appeal in finding that the concept of ‘appropriate use’ had to be understood as the ‘absence of misuse’.
First, it asserts that, in paragraphs 95, 103, 104 and 207 of the judgment under appeal, the General Court incorrectly relied on the ordinary meaning of the term ‘misuse’ in concluding that it could be reconciled with the concept of ‘appropriate use’. American Airlines submits in that regard that the General Court should have recognised that the ordinary meaning of ‘misuse’ covers a situation where a promise made to secure a legal benefit, including grandfathering rights, is not respected without sufficient justification, which is the case here.
Second, American Airlines claims that, in paragraphs 209 and 210 of the judgment under appeal, the General Court incorrectly relied on the fact that the clauses on ‘misuse’ appeared in the section entitled ‘Grandfathering of Slots’ in the commitments at issue in the IAG/bmi Case and incorrectly concluded that that term means ‘inappropriate use’. The appellant notes in that regard that, in the present case, the final commitments do not contain that heading. Furthermore, it maintains that that section of the commitments at issue in the IAG/bmi Case, which was deemed to relate to ‘grandfathering’, in reality concerns other aspects that are irrelevant to the interpretation of ‘appropriate use’.
Third, American Airlines submits that the General Court did not undertake a single, complete analysis of the reasoning according to which Clause 1.13 of the final commitments, relating to the concept of ‘misuse’, provides the standard for determining what is meant by ‘appropriate use’. It states that the grounds on which the General Court considered that that provision provided the standard for determining the scope of the concept of ‘appropriate use’ are located in different parts of the judgment under appeal and that, therefore, that approach is indicative of a failure in that analysis.
Fourth, American Airlines submits that the General Court erred in holding, in paragraph 279 of the judgment under appeal, that the Airport Slots Regulation provides the ‘context’ for interpreting the concept of ‘appropriate use’ as meaning the ‘absence of misuse’. It submits, first of all, that that consideration is inconsistent with the wording of the third paragraph of the preamble of the final commitments in so far as that provision does not mention the Airport Slots Regulation among the legislation in accordance with which the commitments must be interpreted, although it is referred to in other parts of the commitments. Next, it submits that the objective of the Airport Slots Regulation does not match the objectives of Merger Regulation remedies and the specific remedies in this case. Lastly, it maintains that the General Court failed to explain, in paragraph 281 of the judgment under appeal, how or why the Airport Slots Regulation should set the standard for ‘appropriate use’.
The Commission, supported by Delta, disputes American Airlines’ claims.
Findings of the Court
In the first place, American Airlines submits that the General Court erred in law in applying the ‘absence of misuse’ standard in interpreting the concept of ‘appropriate use’. According to the appellant, that interpretation thus resulted in the adoption of a slot usage level that is incompatible with the very objectives of the final commitments. In that regard, it has already been stated in paragraphs 86 to 94 of the present judgment that the objective of the remedies established in the present case is to facilitate the entry of competitors on the LHR-PHL route, not to replicate in full the daily service previously operated by one of the parties to the merger. Moreover, the text of the final commitments does not establish a specific number of frequencies that should be operated by the prospective entrant to ensure effective competition.
It is instead the obligation to use the slots allocated for the purposes of the grant of grandfathering rights, advocated by American Airlines, which, consequently, would be contrary to the provisions and objectives of the final commitments and would risk undermining their effectiveness.
First, a requirement for full use of the slots allocated to the entrant, mentioned in paragraph 89 of the present judgment, would be contrary to the sector-specific rules on slots, referred to in Clause 1.13 of the final commitments, under which there must be consistency with the 80/20 rule. Thus, the imposition on the entrant of an operating rate exceeding that rule would mean that Delta would be subject to stricter operating conditions than those to which the parties to the merger were subject before that transaction and which would apply to American Airlines after that transaction.
Second, that requirement for maximum operation of the slots allocated to the entrant would disregard the applicable rules and the objective of the final commitments, which is to ensure effective competition on the LHR-PHL route. In so far as the entrant would be required to have an operating rate exceeding that of its competitors that were parties to the merger, which would benefit from the 80/20 rule, Delta would not operate on an equal footing with its main competitor, American Airlines.
Third, to make the entrant subject to such a requirement to operate slots would be contrary, as is apparent from paragraph 92 of the present judgment, to the specific objective of the final commitments, which is to facilitate the entry of competitors on the LHR-PHL route by making it more attractive through granting grandfathering rights. The imposition of a utilisation rate exceeding the 80/20 rule could result in a deterrent effect, by reducing or even nullifying the effectiveness of the part of the final commitments relating to slots. In such circumstances, the commitments given by the parties to the merger would not have made it possible to dispel all serious doubts as to the compatibility of a concentration with the internal market, within the meaning of paragraph 179 of the Clearance Decision.
Fourth, the interpretation advocated by American Airlines would harm not only the entrant but also third parties that take over the activities of the parties to the merger which, as the General Court rightly pointed out in paragraphs 125 and 275 of the judgment under appeal, are largely determined by the final commitments. To the extent that the conditions under which such activities may be taken over are determined by the commitments, they have an impact on third parties’ commercial choices and are likely to give rise to legitimate expectations on their part.
Fifth, American Airlines cannot validly argue that, on each day a remedy slot was not operated, the objective of ‘entirely eliminating’ the competition problem was not achieved, constituting a ‘significant impediment to effective competition’. As the General Court recalled in paragraph 250 of the judgment under appeal, it is important that clear and verifiable principles apply to the grant of grandfathering rights and ensure legal certainty for the entrant. In that regard, only the interpretation that ‘appropriate use’ is understood as corresponding to the absence of ‘misuse’, within the meaning of Clause 1.13 of the final commitments, ensures the necessary legal certainty by laying down a precise and clear rule, namely the 80/20 rule, for the use of slots.
It follows from the foregoing considerations that the use of slots by a competitor other than the parties to the merger, in compliance with the conditions set out in Clause 1.13 of the final commitments concerning ‘misuse’, ensures, in the light of those commitments, effective competition within the meaning of the applicable legislation.
As regards American Airlines’ argument that the General Court erred, in paragraph 291 of the judgment under appeal, in finding that the fact that Delta’s slot utilisation rate ranged between 76.4% and 81% does not mean that the object of the final commitments was compromised, it is sufficient to note that, by that argument, American Airlines disputes the factual assessments, in paragraphs 285 to 291 of the judgment under appeal, concerning the methodology used by the Commission and retained by the General Court to calculate Delta’s utilisation rates, without alleging any distortion of the facts or evidence. In any event, as is apparent from paragraph 294 of the judgment under appeal, such an argument is ineffective, in so far as American Airlines does not contest the conclusion drawn in the decision at issue that the use of the slots by Delta is not ‘misuse’ within the meaning of Clause 1.13 of the final commitments.
In the second place, American Airlines claims that the General Court made other errors in the judgment under appeal in finding that the concept of ‘appropriate use’ had to be understood as the ‘absence of misuse’.
In that regard, first, the claims that the General Court incorrectly relied on the ordinary meaning of the concept of ‘misuse’ in concluding that it was compatible with the term ‘appropriate use’ must be rejected. The General Court held, in paragraph 107 of the judgment under appeal, that a literal interpretation of the provisions in question alone was not decisive for the purposes of interpreting the concept of ‘appropriate use’. Moreover, the General Court concluded, in paragraph 249 of the judgment under appeal, that, according to a systemic interpretation of the provisions in question, the term ‘appropriate use’ in Clause 1.10 of the final commitments could be construed as equivalent to the absence of ‘misuse’ within the meaning of Clause 1.13 of those commitments.
Second, American Airlines’ argument that, in paragraphs 209 and 210 of the judgment under appeal, the General Court incorrectly relied on the fact that the clauses on ‘misuse’ appeared in the section entitled ‘Grandfathering of Slots’ in the commitments at issue in the IAG/bmi Case must be rejected.
As is apparent from paragraph 9 of the present judgment, the commitments at issue in the IAG/bmi Case served as a model for the final commitments. Therefore, the fact that the final commitments do not contain the heading ‘Grandfathering of Slots’ is irrelevant because, if the parties to the merger had wished to deviate from that model, that deviation should have been identified in the final commitments, in accordance with Section 3 of the Form RM, set out in paragraph 13 of the present judgment. In addition, the fact that the ‘Grandfathering of Slots’ section of the commitments at issue in the IAG/bmi Case also contains a number of clauses which do not concern the grant of those rights does not call into question the finding, in paragraph 209 of the judgment under appeal, that those commitments constitute a valid basis for the interpretation of the final commitments.
Third, the Court must also reject American Airlines’ argument that the fact that the standard for determining ‘appropriate use’ is developed in different parts of the judgment under appeal is indicative of a failure in that analysis. Such a consideration is not capable of demonstrating that the General Court erred in its assessment that the concept of ‘misuse’ is relevant in determining the scope of the concept of ‘appropriate use’.
Fourth, the argument that the General Court erred in holding, in paragraph 279 of the judgment under appeal, that the Airport Slots Regulation provides the ‘context’ for interpreting the concept of ‘appropriate use’ as meaning the ‘absence of misuse’ must be rejected for the reasons set out in paragraphs 103 and 104 of the present judgment.
To the extent that the provisions of Article 10(2) and (3) of the Airport Slots Regulation constitute the standard regulatory framework, at the level of EU law, referred to in Clause 1.13 of the final commitments, the General Court was entitled to take account, in paragraph 283 of the judgment under appeal, of the utilisation rate provided for in that regulation and to find that Delta could expect to carry on its activities on the basis of that regulatory framework.
As the Advocate General noted in point 105 of his Opinion, the fact that the Airport Slots Regulation pursues different objectives from the Merger Regulation does not prevent it from being taken into consideration in the context of merger control. The application of the 80/20 rule is not solely motivated by air traffic considerations, but is also necessary to ensure fair conditions of competition between Delta and its main competitor on the LHR-PHL route, namely American Airlines, as is apparent from paragraph 120 of the present judgment.
It follows that American Airlines has failed to demonstrate that the General Court erred in finding that the term ‘appropriate use’ in Clause 1.10 of the final commitments had to be understood as the absence of ‘misuse’ of slots, within the meaning of Clause 1.13 of the final commitments.
In the light of the foregoing considerations, the second limb of the single ground of appeal must be rejected.
The third limb of the single ground of appeal
Arguments of the parties
By the third limb of its single ground of appeal, American Airlines submits, in essence, that the General Court erred in interpreting Clause 1.9 of the final commitments, specifically as regards the legal implications of the phrase ‘in accordance with the bid’ contained therein. According to the appellant, the judgment under appeal incorrectly gave paramount importance to the content of the Form RM relating to the final commitments.
In the first place, American Airlines submits that the General Court erred in law by failing to recognise that that Form RM was a preparatory document that cannot alter the scope of the final commitments. It claims that the analysis carried out by the General Court in the judgment under appeal is inconsistent with the Court’s case-law according to which ‘
travaux préparatoires
’ are not considered to be methods of interpretation that can alter the content or finality of a provision of EU law. That preparatory nature is, according to American Airlines, clear from the provisions of the Implementing Regulation and from the Commission notice on remedies.
Furthermore, American Airlines submits that the General Court erred in law in so far as it relied on a preparatory document in order to interpret the provision in question and to hold that the phrase ‘in accordance with the bid’ constituted a ‘minor linguistic change’ that was irrelevant in the analysis of the concept of ‘appropriate use’.
In the second place, American Airlines submits that the General Court erred in interpreting the Form RM relating to the final commitments in so far as the expression ‘in accordance with the bid’ in Clause 1.9 of the final commitments has its origin in a relevant airport slot commitment template drawn up by the Commission and should therefore be given legal effect.
In the third place, American Airlines concludes that the General Court errs in interpreting Clause 1.9 of the final commitments. It maintains in that regard that, when the expression ‘in accordance with the bid’ and Clause 1.9 of the final commitments, read in conjunction with Clause 1.10 thereof, are correctly interpreted, an entrant’s bid must be seen as the starting point for the ‘appropriate use’ analysis and for deciding whether to grant grandfathering rights. According to the appellant, such an interpretation is in line with the
pacta sunt servanda
principle and is consistent with the objectives and the full remedial framework of the final commitments.
The Commission, supported by Delta, disputes the appellant’s claims. Furthermore, the Commission contends that the arguments relating to the preparatory nature of the Form RM relating to the final commitments must be rejected as inadmissible because that argument was not raised at first instance.
Findings of the Court
As a preliminary point, it should be recalled that, under Article 256 TFEU and Article 58 of the Statute of the Court of Justice of the European Union, an appeal is to be limited to points of law in so far as the grounds of appeal must be based on arguments made in the proceedings before the General Court. Thus, the jurisdiction of the Court of Justice in an appeal is confined to a review of the findings of law on the pleas and arguments debated before the General Court (judgment of 21 December 2021, Algebris (UK) and Anchorage Capital Group v SRB,
C‑934/19 P
,
EU:C:2021:1042
, paragraph
and the case-law cited).
However, the appellant is entitled to lodge an appeal relying, before the Court of Justice, on grounds which arise from the judgment under appeal itself and seek to criticise, in law, its correctness (see, to that effect, judgment of 25 January 2022, Commission v European Food and Others,
C‑638/19 P
,
EU:C:2022:50
, paragraph
).
The Commission contends that the arguments raised by American Airlines in support of the present limb are inadmissible on the ground that they were not put forward before the General Court.
It is sufficient to note that, by the present limb of the single ground of appeal, American Airlines contests the grounds of the judgment under appeal according to which the information in the Form RM suggests that the expression ‘in accordance with the bid’ is not relevant in interpreting the concept of ‘appropriate use’ within the meaning of Clause 1.10 of the final commitments. It follows that American Airlines’ line of argument is admissible.
However, as to the substance, that line of argument cannot succeed.
In the first place, as regards American Airlines’ argument that the General Court’s interpretation is incorrect on the ground that it based its analysis on a preparatory document, whereas, according to the case-law of the Court of Justice, the
travaux préparatoires
are not interpretative tools, it should first of all be noted that, as the General Court rightly held in paragraphs 122 and 123 of the judgment under appeal, the existence of the Form RM derives from the Merger Regulation and that, in so far as the third paragraph of the preamble of the final commitments provides that the terms of those commitments must be interpreted in the light of that regulation, the Form RM relating to the final commitments could be taken into account by the General Court in its analysis.
Next, Article 20(1a) of the Implementing Regulation, also referred to in the third paragraph of the preamble of the final commitments for the purposes of interpreting those commitments, provides that undertakings are required to specify in the Form RM the information and documents which they have to submit at the same time as offering commitments. In addition, Annex IV to that regulation states that the information in the Form RM is necessary to allow the Commission to examine whether the commitments are capable of rendering the concentration compatible with the internal market in that they will prevent a significant impediment to effective competition.
Moreover, paragraph 7 of the Commission notice on remedies also refers to the Form RM and specifies that it is the responsibility of the parties to a merger, which alone have all the relevant information, in particular as to the feasibility of the commitments proposed and the viability and competitiveness of the assets proposed for divestiture, to provide all such information available that is necessary for the Commission’s assessment of the remedies proposal.
That being so, it is clear from the foregoing provisions that the Form RM is not a purely preparatory document, as American Airlines claims, but a document complementing the commitments, which gathers the relevant information intended to demonstrate that the remedies taken in those commitments are capable of rendering the concentration in question compatible with the internal market. The finality of that document is therefore to facilitate the Commission’s examination of those commitments with a view to authorising, where appropriate, the transaction in question. Thus, as the General Court noted in paragraph 133 of the judgment under appeal, that document is of utmost importance to allow the Commission to evaluate the content, aim, viability and effectiveness of proposed commitments.
Lastly, as is apparent from paragraphs 250 to 292 of the judgment under appeal, the analysis of the Form RM relating to the final commitments is only one of the factors which the General Court took into consideration in its interpretation of the provisions at issue. The General Court held, in paragraph 292 of the judgment under appeal, that the concept of ‘appropriate use’ could be interpreted as the absence of ‘misuse’, within the meaning of Clause 1.13 of the final commitments, in accordance with the objective of the provisions at issue and their context, not merely in the light of that Form RM, as American Airlines claims. Accordingly, there are no grounds for complaining that the General Court, by proceeding in that way, altered the content or finality of a provision of EU law, within the meaning of the case-law relied on by American Airlines.
In the light of the foregoing considerations, the General Court therefore did not err in law in holding, in paragraph 123 of the judgment under appeal, that the terms of the final commitments had to be interpreted in the light of the Form RM relating to those commitments.
In the second place, American Airlines’ argument that the General Court erred in not taking account of the expression ‘in accordance with the bid’, as provided for in Clause 1.9 of the final commitments, when interpreting the provision at issue cannot succeed either.
The Commission expressly insisted, as is apparent from paragraph 9 of the present judgment, that the commitments offered by the parties to the merger include grandfathering rights ‘based on’ those in the IAG/bmi Case so that the concentration could be declared compatible with the internal market. In that context, Section 3 of the Form RM submitted to the Commission by the parties to the merger explicitly stated that the final commitments were based on the commitments at issue in the IAG/bmi Case and that the points where the parties diverged from those commitments would be indicated in the Form RM relating to the final commitments. In addition, the parties to the merger specified that those points did not include ‘minor linguistic changes’ and clarifications required by specific circumstances. As regards the grandfathering provisions, no departure from the commitments accepted in the IAG/bmi Case was identified in the Form RM relating to the final commitments, as is apparent from paragraph 14 of the present judgment.
Consequently, since the expression ‘in accordance with the bid’ was not included in the commitments at issue in the IAG/bmi Case and that difference was not pointed out in the Form RM relating to the final commitments, the General Court did not err in law in holding, in paragraph 139 of the judgment under appeal, that that expression constituted a ‘minor linguistic change’ to the final commitments. Furthermore, as follows from Section 3 of the Form RM relating to the final commitments, the General Court was fully entitled to hold, in paragraphs 143 and 144 of the judgment under appeal, that it was the responsibility of American Airlines to indicate in that form any substantial change to the wording of the commitments at issue in the IAG/bmi Case, which served as a model in the present case.
In addition, as regards American Airlines’ claims concerning the use of models other than the commitments at issue in the IAG/bmi Case for the purposes of drafting the final commitments, it should be noted that, for the grant of grandfathering rights, the Form RM relating to those commitments refers only to the model corresponding to the commitments at issue in the IAG/bmi Case. The examples of commitments to which the appellant refers, in particular those at issue in Case COMP/AT.39595 – A++, did not concern grandfathering rights, as the General Court rightly stated in paragraph 165 of the judgment under appeal. Accordingly, American Airlines’ argument that the expression ‘in accordance with the bid’ should have been taken into account in interpreting the concept of ‘appropriate use’, in so far as that expression was used in other model commitments, must be rejected.
In the third place, American Airlines submits that the correct interpretation of the concept of ‘appropriate use’ can be understood only as corresponding to the expression ‘in accordance with the bid’ in Clause 1.9 of the final commitments, read in conjunction with Clause 1.10 thereof, in so far as an entrant’s bid would be seen as the starting point for the ‘appropriate use’ analysis and for deciding whether to grant grandfathering rights. According to the appellant, that interpretation is in line with the
pacta sunt servanda
principle and is consistent with the objectives and the full remedial framework of the final commitments.
That line of argument must be rejected for the reasons set out in paragraphs 101 and 102 of the present judgment.
In addition, it should be recalled, as Delta noted, that the fact that the expression ‘in accordance with the bid’ was already contained in the initial draft commitments submitted by the parties to the merger, which did not provide for grandfathering rights, shows that that clause had a purpose other than determining the conditions for granting grandfathering rights.
It follows that the General Court was fully entitled to hold that, in the light of the Form RM relating to the final commitments, the meaning of the expression ‘in accordance with the bid’, referred to in Clause 1.9 of the final commitments, was a ‘minor linguistic change’.
In the light of the foregoing considerations, the third limb of the single ground of appeal must be rejected and the appeal dismissed in its entirety.
Costs
Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is unfounded, the Court is to make a decision as to the costs.
In accordance with Article 138(1) of those rules, which apply to the procedure on appeal by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
Since American Airlines’ single ground of appeal has been unsuccessful and the Commission and Delta have applied for costs, American Airlines must be ordered to bear its own costs and to pay those incurred by the Commission and Delta.
Furthermore, Delta contended that the Court should order American Airlines to pay the costs incurred by Delta both in the present proceedings and before the General Court.
In that regard, it should be noted that, since Delta did not apply for costs at first instance, the General Court ordered Delta to bear its own costs, in accordance with Article 134(1) and Article 138(3) of the Rules of Procedure of the General Court.
In those circumstances, Delta’s claim that American Airlines should be ordered to pay the costs incurred by Delta in the proceedings before the General Court must be rejected.

On those grounds, the Court (Third Chamber) hereby:

1.
Dismisses the appeal;

2.
Orders American Airlines Inc. to bear its own costs and to pay those incurred by the European Commission and Delta Air Lines Inc. in the present proceedings.

Jürimäe
Safjan
Piçarra
Jääskinen
Gavalec
Delivered in open court in Luxembourg on 16 March 2023.
A. Calot Escobar
Registrar
K. Jürimäe
President of the Chamber
(
*1
)	Language of the case: English.