Judgment — ECLI:EU:T:2010:280
Date: 2010-07-06
Language of the case: English
Court formation: Third Chamber
Subject matter: Competition;Concentrations between undertakings
Procedure: Action for annulment - unfounded
Origin: Ireland

summary of the third plea, in accordance with Article 44 of the Rules of Procedure. That line of argument is referred to and expanded on in the reply in the light of the observations made on that point by the Commission in the defence. 323 As set out in paragraph 329 et seq. below, the applicant’s arguments seek, in essence, to call in question the Commission’s findings in the contested decision as regards the definition of the market as a point-to-point routes market (and not an airport-to-airport market, like, for example, that constituted by the Dublin-London (Stansted) route or the Dublin-London (Heathrow) route), the weight to be given to connecting passengers (like, for example, those whose actual destination is New York on the Dublin-New York, via London, route), the taking into account of the role played by business passengers or those who are time-sensitive and the possibility of an entry into the relevant market to compete with the merged entity (with the effect which the reputation of the companies in question in Ireland, the presence of a base at one of the points on that route or the specific features of the airports in question may have). 324 Those arguments, which are put forward in summary form in the application and expanded on in the first York Aviation report of September 2007 as well as in the reply, incorporate the applicant’s general assessment, relied on in the application, that the Commission made errors in its analysis of the competitive relationship between Ryanair and Aer Lingus and in the examination of possible entries into the various markets following the concentration. 325 Consequently, it must be held that the arguments set out in the application as regards the third plea meet the requirements of Article 44 of the Rules of Procedure and that they could be expanded on in the reply in the light inter alia of the statements in the first York Aviation report of September 2007, which was submitted as an annex to the application. 326 Incidentally, it must be pointed out that the applicant needs that line of argument to obtain the annulment of the contested decision. The analysis of a given route may in itself justify the Commission’s decision to prohibit the transaction in the light of the criterion set out in Article 2(3) of the merger regulation. The creation of a dominant position which would have the effect of significantly distorting genuine competition on one of those routes is itself sufficient to make the transaction incompatible with the common market, subject to the outcome of the analysis of the efficiency gains and commitments carried out in connection with the fourth and fifth pleas. 327 As regards the second York Aviation report, which was submitted to further illustrate the applicant’s arguments, it is clear that, as the Commission claims, that report was submitted in support of the line of argument expanded on in the reply as a supplement to the application and the first York Aviation report, without any reason being given for the delay in the submission of that report relating to the content of the route-by-route analysis in the contested decision. 328 Consequently, in accordance with Article 48(1) of the Rules of Procedure, the Court will not take account of the content of the second York Aviation report in its assessment of the arguments of the parties. 2. Substance a) The Dublin-London link Arguments of the parties 329 The applicant maintains that for the Dublin-London route, which accounts for about 30% of the passenger market between Ireland and the other Member States of the Union, with about 320 weekly rotations, 100 of which are effected by bmi, British Airways and CityJet, the Commission did not produce evidence permitting the inference that those competitors were not in a position to exert a ‘competitive constraint’ on the merged entity. 330 As regards bmi, which has a market share of 10 to 20% and, according to the contested decision, is its and Aer Lingus’s main competitor on the Dublin-London route, the applicant submits that the Commission has failed to explain the significance of the fact that bmi is able to offer its passengers connections through its hub at Heathrow (recital 795 of the contested decision). In fact, just as in the case of Aer Lingus, most bmi passengers are not connecting passengers. Similarly, the Commission did not explain why the fact that bmi offers economy class and business class means that it does not compete with Aer Lingus, which offers only a single class. According to the applicant, such a difference is indeed of little importance on such a short flight and no comparison of the fares between bmi’s economy class and Aer Lingus’s single class was undertaken by the Commission. Moreover, the fact that Aer Lingus has twice as many rotations as bmi and carries twice as many passengers is of no importance, since bmi is in a position to use the large number of slots it has at Heathrow Airport in order to use on the Dublin‑London route slots previously used for less profitable routes. 331 As regards British Airways, which operates some 26 or 27 weekly rotations to Gatwick Airport from Dublin, the applicant notes that the Commission did not consider whether the criteria it used, which are the same as those it set out with regard to bmi, actually matter for passengers on that route. Moreover, by taking the view that British Airways is less competitive with Aer Lingus because it does not serve the same London airport (Gatwick instead of Heathrow Airport), the Commission is contradicting its own view that the relevant markets are city pairs. 332 As regards CityJet, the applicant claims that the fact that that airline uses smaller aircraft, because of the shorter runways at London City Airport, which cannot be used by Aer Lingus and Ryanair aircraft, is not relevant to the competition analysis. The question is, rather, whether the CityJet product is sufficiently competitive to constitute an alternative on that route. In so far as both CityJet and Aer Lingus and Ryanair carry a large number of business customers, it is of little importance that only CityJet carries a majority of more time-sensitive business passengers. In fact, the Commission took the view, in recitals 312 to 331 and 800 of the contested decision, that there is a single market for airline passengers, with no distinction as to whether or not passengers are time-sensitive. Because CityJet, Ryanair and Aer Lingus carry as many business passengers as leisure passengers, CityJet exerts a competitive constraint with regard to those passengers. 333 The Commission, supported by Ireland and by Aer Lingus Group, disputes the applicant’s arguments by referring to the contested decision. Findings of the Court 334 In the contested decision, the Commission analysed the effects of the concentration on competition as regards the Dublin-London route (recitals 791 to 810 of the contested decision). It came to the conclusion that ‘the proposed transaction would significantly impede effective competition as a result of the creation of a dominant position on [that route]’ (recital 810). 335 As regards that issue too, the applicant reproduces the line of argument put forward during the administrative procedure, which was rejected in the contested decision. That line of argument, which is superficial and fragmented, cannot suffice to call into question the reasoning set out by the Commission in the contested decision on the basis of the results obtained during the administrative procedure. 336 It must be pointed out that the first factor taken into consideration in the contested decision was the size of the aggregate market share of the parties to the concentration, which was 79% for summer 2006 if all passengers were taken into consideration or 81% if connecting passengers were excluded. The aggregated market share based on aircraft capacity and not on the number of passengers carried was 76% for winter 2006-07 and 79% for summer 2007 (recitals 792 to 794). As is stated in the contested decision (footnote 802), such a market share in itself constitutes evidence of a dominant position on the market (see, to that effect, as regards the former merger regulation, General Electric v Commission, paragraph 41 above, paragraph 115; see also point 17 of the Guidelines). 337 It is clear that the applicant does not put forward any specific arguments as regards that market share. The arguments set out previously in that regard in the first plea have already been rejected (see paragraphs 39 et seq. above). The line of argument put forward in the third plea as regards the Dublin-London route must therefore be considered in a context in which the implementation of the transaction would make it possible for Ryanair-Aer Lingus combined to hold an extremely large market share of about 80%. As the applicant points out, that market is particularly significant since it accounts in itself for about 30% of the passenger market between Ireland and the other Member States of the Union (see paragraph 329 above). 338 The second factor taken into consideration by the Commission in the contested decision relates to the marginal role likely to be played by the three competitors on that route. It considers that none of those competitors would be capable of counterbalancing the anti-competitive effects connected with the disappearance of Aer Lingus, Ryanair’s closest competitor in respect of flights on the Dublin‑London route. 339 As regards bmi, which holds a market share of 12 to 16%, according to the data taken into consideration, the Commission stated that there were a number of differences between that carrier and Aer Lingus. bmi is a network carrier which operates out of London Heathrow Airport, even though the majority of its passengers on the Dublin-London route are not connecting passengers (their final destination being London and not any other destination), and offers a full service with both economy and business class, whereas Aer Lingus is a point-to-point low-frills carrier operating a single class cabin (recital 795). It is true that the Commission stated that Aer Lingus also carried connecting passengers on the basis of its code-sharing agreement with British Airways on this route as well as business passengers or time-sensitive passengers (recitals 795 and 799), but the cost structures of those undertakings are different, those of Aer Lingus being closer to those of Ryanair than to those of bmi. 340 The Commission also stated that Aer Lingus carried twice as many passengers as bmi and operated almost twice as many rotations per week (recital 795). As the Commission stated in the contested decision, in assessing barriers to entry, an expansion of its business activities to Dublin Airport is not intended by bmi and would furthermore give rise to significant difficulties on account of the location of Dublin Airport or the risk of retaliation (recitals 760 and 764). 341 The same is true as regards the two other competitors on the market, namely British Airways and CityJet. As is apparent from the contested decision, those companies are not in such close competition with Ryanair as Aer Lingus is (recital 802). British Airways is a full-service network carrier and CityJet is a carrier offering flights aimed at business passengers to an airport situated near London city centre. Those specific features mean that the business model and competitive capacity of those undertakings is unlike those of Ryanair‑Aer Lingus combined. Furthermore, both British Airways and CityJet have stated that the strengthening of their presence at Dublin Airport is not one of their priorities (recital 748 as regards British Airways and recital 718 as regards CityJet). 342 It is in that respect the Commission was able to conclude in the contested decision that both the competitors currently present on the market and capable of increasing their capacity in that market and the potential competitors capable of entering that market did not provide a ‘sufficient competitive constraint’ on the merged entity (recitals 804 to 809). In that regard, it must be pointed out that the marginal role of the three competitors referred to in the contested decision is not challenged by the applicant, which merely reproduces the analysis set out in the contested decision before concluding that it is wrong to maintain that those competitors are not in a position to exert ‘competitive constraint’ on the merged entity (see paragraph 329 above). That is not however what the Commission stated in the contested decision. It merely stated that the current and potential competitors are not capable of providing a ‘sufficient competitive constraint’ on that entity. 343 Consequently, having regard to the fact that its observations are superficial and fragmented, the applicant has not proved to the requisite legal standard that the Commission’s analysis as regards the Dublin-London route is unfounded. In essence, the applicant merely maintains that the Commission did not produce evidence permitting the inference that the three competitors examined in the contested decision, representing around 20% of the market share, were not in a position to exert a ‘competitive constraint’ on the merged entity which would control around 80% of that market, even though the Commission set out in the contested decision the reasons why those competitors were not in a position to compete effectively with that new entity on account of the difference in business models, barriers to entry and the extension of capacity, and their other priorities for development. b) The Dublin-Birmingham, Dublin-Edinburgh, Dublin-Glasgow, Dublin‑Manchester and Dublin-Newcastle routes Arguments of the parties 344 The applicant points out that the Commission considered that Aer Lingus and Ryanair would not face significant competitive constraints from other airlines on the Dublin-Birmingham, Dublin-Edinburgh, Dublin-Glasgow, Dublin-Manchester and Dublin-Newcastle routes, which account for around 3 million passengers a year. The reasons put forward in the contested decision are as follows: the business model is not appropriate (such as that of BA Connect, bmi, Air Malta, Hapag Lloyd Express, KLM, Lufthansa, Loganair, Luxair and CityJet (recitals 816, 817, 835, 841 and 852)); the business model is the same but the airline voluntarily discontinued operations on the relevant route (such as MyTravelLite, Go Fly, Brymon Airways, which became BA City Express and then BA Connect, and Gill Airways (recitals 812, 816, 821, 830 and 840 to 848)); the airline has ‘been scarred by a previous encounter with Ryanair – and not with Aer Lingus’ (such as easyJet and bmibaby (recitals 812, 816, 857, 862, 867, 878 and 880); the airline flies mainly business class and its aircraft are too small (such as CityJet and Luxair (recitals 825, 831, 832, 834, 835, 841, 852, 874, 880 and 882)); Dublin Airport is not part of the strategic focus of the airline even though it has aircraft based at relevant United Kingdom airports (such as BA Connect, Flybe, easyJet, Loganair, Globespan, Jet2 and Monarch (recitals 825, 834, 843, 852 and 882)); the airline did not confirm it would enter a given route (such as BA Connect, Flybe, Loganair, Globespan, bmibaby, Monarch and Jet2 (recitals 825, 834, 843, 852 and 882)) or has expressly told the Commission that it would not enter a route flown by Ryanair (such as Aer Arann (recital 826)); entry on a substantial scale, or expansion of frequencies by existing operations, would be required but would not be possible owing to airport congestion (as regards CityJet (recitals 815 to 817, 824, 826, 833, 842, 851, 860 and 870)) and/or would require substantial investment into brand awareness and marketing of its flights in Ireland (as regards BA Connect, Flybe, Globespan, easyJet and Monarch (recitals 816, 825, 843 and 882)). 345 The applicant accuses the Commission of being ‘inconsistent’ in its analysis of those routes. On the one hand, where competitors have a significant presence at an airport, the Commission regarded their presence as of no direct relevance for the assessment of competition on routes flown by Ryanair (recital 825 and footnote 864). The Commission also dismissed the presence of competitors who operate bases or hubs at those airports as insignificant for the route-by-route analysis on the ground that it is apparent from its investigation and their own statements that they invariably lack sufficient abilities or incentives to enter the route in question (recitals 816, 825, 834, 843, 852, 862, 872 and 882). On the other hand, where the combined Ryanair/Aer Lingus presence at an airport is significant – as at Birmingham or Edinburgh – the Commission argued that this was a problem in the light of barriers to entry, such as the absence of bases for competitors, the need for ‘substantial investments into brand awareness and marketing’ where carriers have no existing operations at an airport, and the shortage of available peak-time slots or limited access to infrastructure (contact stands) (recitals 816, 817, 826, 843, 844 and 882). 346 The Commission, supported by Ireland and by Aer Lingus Group, disputes the applicant’s arguments by referring to the contested decision. Findings of the Court 347 In the contested decision, the Commission analysed the effects of the merger on competition as regards various routes from Dublin to cities in the United Kingdom other than London. – The Dublin-Birmingham route 348 As regards the Dublin-Birmingham route (recitals 811 to 819 of the contested decision), the implementation of the transaction would have the effect of creating a monopoly which would eliminate all existing competition on that route. The Commission also referred to the unsuccessful attempt of MyTravelLite to enter that market in 2003-2004, the absence of any attempt of that kind since then (recital 815) and bmibaby’s exit following the entry of Ryanair (recitals 812 and 816). 349 Similarly, the Commission set out the reasons why the carriers with a presence in one of the two airports which serve Birmingham (BA Connect, easyJet, Flybe, bmi, bmibaby, Monarch, Thomsonfly) are not capable of providing a sufficient competitive constraint on the merged entity by entering the Dublin-Birmingham route following the transaction (recital 816). The applicant reproduces, without disputing them, the reasons referred to by the Commission, which relate to the existence of barriers to entry to Dublin Airport or to the intentions expressed by those carriers, which have priorities other than the Irish market. In that regard, it must be held that those reasons are, in themselves, sufficient to substantiate the findings which the Commission arrived at in the contested decision. 350 Furthermore, it cannot be claimed, as the applicant does, that the Commission was ‘inconsistent’ in its analysis in so far as it differentiated between, on the one hand, the specific situation of Ryanair and Aer Lingus at Dublin, and also at Birmingham as regards Ryanair (recital 816), and, on the other, the situation of the other carriers at the destination airport. Ryanair’s argument as regards the possibility of competing with the merged entity from bases held at the destination airport was examined and rejected by the Commission in respect of each route concerned (see recital 825 as regards the Dublin-Edinburgh route and footnote 864 under that recital, in which the Commission extends that finding to all the other routes). The applicant’s claim must therefore be rejected as regards all the routes in respect of which Ryanair maintains that there is such inconsistency. 351 As regards the specific situation of CityJet, which has aircraft based in Dublin and also overnights aircraft at Birmingham and could be tempted to fly the Dublin‑Birmingham route, on which there is significant business traffic, the Commission found that, to compete with Ryanair and Aer Lingus, CityJet would need to operate a high frequency service with all the peak times covered, which cannot be considered likely due to the slot constraints at peak times at Dublin Airport and the lack of contact stands (recital 817). In that regard, it must be pointed out that those reasons are not disputed by the applicant either and that they are, in themselves, sufficient to substantiate the findings which the Commission arrived at in the contested decision. 352 Lastly, in the contested decision the Commission rejected Ryanair’s argument that airlines which have no aircraft based in Birmingham (Air Malta, Hapag Lloyd Express, KLM and Lufthansa) could be tempted to fly from that destination to Dublin, from which they would also fly, but to other destinations, without having any aircraft based there. According to the Commission, entry to a route without a base at either end of that route is in general less efficient and as such rather uncommon. Furthermore, those carriers are rather full-service network carriers and would be unlikely to significantly constrain the merged entity (recital 817). In that regard, it must also be pointed out that those reasons are not disputed by the applicant either and that they are, in themselves, sufficient to substantiate the findings which the Commission arrived at in the contested decision. – The Dublin-Edinburgh route 353 As regards the Dublin-Edinburgh route (recitals 820 to 828 of the contested decision), the implementation of the transaction would have the effect of creating a monopoly which would eliminate all existing competition on that route. The Commission also referred to the unsuccessful attempt of Go Fly to enter that market in 2001-2002 and the absence of any attempt of that kind since then. It also stated that that route was very busy, with 5 rotations per day being operated by the parties to the concentration (recital 824). 354 Similarly, the Commission set out the reasons why the carriers with bases or hubs at Edinburgh Airport (BA Connect, easyJet, Flybe, Loganair and Globespan) are not capable of providing sufficient competitive constraints on the merged entity by entering the Dublin-Edinburgh route following the transaction (recital 825). The applicant reproduces, but does not dispute, the reasons given by the Commission, which relate to the existence of barriers to entry at Dublin Airport or to the intentions expressed by those carriers, which have priorities other than the Irish market. In that regard, it must also be held that those reasons are, in themselves, sufficient to substantiate the findings which the Commission arrived at in the contested decision. 355 As regards the specific situation of CityJet, which has aircraft based in Dublin and also overnights aircraft at Edinburgh and could be tempted to fly the Dublin‑Edinburgh route, on which there is significant business traffic, the Commission set out the same reasoning as that which it expounded regarding the Dublin-Birmingham route (recital 826). That reasoning is not disputed by the applicant and it must be held that it is sufficient to substantiate the finding which the Commission arrived at in the contested decision. – The Dublin-Glasgow, Dublin-Manchester and Dublin-Newcastle routes 356 The Dublin-Glasgow and Dublin-Manchester routes are characterised by the quasi monopoly which the merged entity would have and the Dublin-Newcastle route would result in a monopoly by Ryanair-Aer Lingus combined. As regards the Dublin-Glasgow route (recitals 829 to 837 of the contested decision), Ryanair‑Aer Lingus combined would have a 96 to 99% market share, its sole competitor being Loganair which holds a 1 to 4% market share and offers indirect flights via Londonderry (Go Fly having entered that route in 2001 before exiting after six months of operation in 2002). As for the Dublin-Manchester route (recitals 838 to 846), Ryanair-Aer Lingus combined would have a 98 to 99.6% market share, its sole competitor being Luxair which holds a 0.4 to 2% market share and offers flights from Luxembourg to Dublin, via Manchester. As regards the Dublin-Newcastle route (recitals 847 to 854), Ryanair-Aer Lingus combined would have a 96 to 99% market share, its sole competitor being Loganair, which holds a 1 to 4% market share and offers indirect flights via Londonderry (Brymon Airways, which became BA City Express and then BA Connect, having entered that route in 2001 before exiting in 2003 and Gill Airways having entered it in January 2001 before ceasing its operations in September of the same year). 357 On that point, the Commission also rejected in the contested decision the arguments put forward by Ryanair during the administrative procedure as regards potential entrants which have a base at the destination airport or CityJet (see, mutatis mutandis, paragraphs 352 and 355 above). In that respect, it must be pointed out that the Commission’s reasoning is not called into question by the applicant and be held that it is sufficient to substantiate the findings which were arrived at in the contested decision. c) The Shannon-London and Cork-London routes Arguments of the parties 358 The applicant submits that the Commission modified the scope of the geographic market to suit its needs. For the purposes of its assessment of existing competition, it included all London airports in the relevant market. On the other hand, in assessing potential entry, it asserted that Luton and London City Airports are not substitutes for Heathrow, Gatwick or Stansted (recitals 860 and 870 of the contested decision). Moreover, the Commission was wrong to gauge the potential for entry on the basis of the limited number of rotations currently operated by the airlines Wizzair, bmibaby, CentralWings, Jet2, Malev and Air Southwest (recital 873). 359 The Commission, supported by Ireland and by Aer Lingus Group, disputes the applicant’s arguments by referring to the contested decision. Findings of the Court 360 As regards the Shannon-London route (recitals 855 to 864 of the contested decision), Ryanair-Aer Lingus combined would have a 100% market share (easyJet having withdrawn from that market in October 2006 following the arrival of Ryanair in reaction to the entry of easyJet to the Cork-London and Knock‑London routes). 361 As for the Cork-London route (recitals 865 to 876), Ryanair-Aer Lingus combined would have a 100% market share (easyJet having withdrawn from that market in October 2006, bmibaby having exited in January 2005 from that route on which it had been operating since March 2004 and City Flyer Express having operated on that route only until October 2001). 362 On that point, the Commission also rejected in the contested decision the argument put forward by Ryanair during the administrative procedure as regards potential entrants which have a base at the destination airport. That reasoning, which is based on the strong presence of the parties to the concentration in Ireland and on the specific features of certain London airports, cannot be called into question by the applicant’s arguments. Contrary to what the applicant maintains, the substitutability of London airports from the demand side does not mean that their specific features may not be taken into account from the supply side when it is the capacity of a carrier to establish itself at a destination which is being assessed. The reasoning set out by the Commission in the contested decision is not therefore contradictory on that point. 363 The Commission was also right to find that the carriers which could enter those routes by operating ‘a W-route’ without a base at one or other of the destinations (Wizzair, bmibaby, CentralWings, Jet2, Malev and Air Southwest) were not likely to compete efficiently with the merged entity. 364 Consequently, the findings that the proposed transaction would significantly impede effective competition as a result of the creation of a dominant position on the Shannon-London and Cork-London routes are not called into question by the applicant’s arguments. d) The Dublin-Frankfurt, Dublin-Paris, Dublin-Madrid, Dublin-Brussels, Dublin‑Berlin and Dublin-Hamburg (Lübeck) routes Arguments of the parties 365 The applicant criticises the Commission for excluding the following companies from its analysis: Lufthansa as regards the Dublin-Berlin, Dublin-Frankfurt and Dublin-Hamburg (Lübeck) routes on the ground that point-to-point passengers carried on that route clearly form only a minor part of that company’s activities (recitals 913, 951 and 962 of the contested decision); CityJet for the Dublin-Paris route on the ground that it concentrates on higher-yield business customers (recital 1017); Iberia for the Dublin-Madrid route on the ground that its business model is based on full-service network operations (recital 984); Brussels Airlines, KLM and also VLM, Transavia and Airlinair, for the Dublin-Brussels route (recital 936). In the applicant’s view, it is ‘not credible’ for the Commission to maintain that those carriers would not be able to respond effectively to a price increase by the merged entity, particularly because they already operate on the routes in question. 366 The Commission, supported by Ireland and by Aer Lingus Group, dispute the applicant’s arguments by referring to the contested decision. Findings of the Court 367 Even though the reasoning followed by the Commission in examining each route is quite similar, each of them has a certain specific feature which must be borne in mind, particularly as regards competitors or airlines which are capable of entering those markets to compete with the merged entity. – The Dublin-Berlin and Dublin-Hamburg (Lübeck) routes 368 As regards the Dublin-Berlin route (recitals 908 to 915 of the contested decision), the implementation of the transaction would have the effect of creating a monopoly which would eliminate all existing competition on that route. The Commission also referred to the presence on that market of Lufthansa, which exited from it in October 2000. It pointed out that there were barriers to entry connected with congestion at Dublin Airport, even though they might be less marked in that case on account of the limited number of frequencies and the smaller share of time-sensitive passengers than elsewhere. 369 As for the Dublin-Hamburg (Lübeck) route (recitals 956 to 964), the implementation of the transaction would have the effect of creating a monopoly which would eliminate all existing competition on that route. The Commission also referred to the presence on that market of Lufthansa, which exited from it in October 2000, and of Hapag-Lloyd Executive, which entered that market in April 2004 and exited from it in January 2006. It pointed out that there were barriers to entry connected with congestion at Dublin Airport, even though they might be less marked in that case on account of the limited number of frequencies and the smaller share of time-sensitive passengers than elsewhere. 370 Similarly, the Commission set out the reasons why the carriers with bases at Berlin (Lufthansa, Air Berlin, Germanwings, easyJet) or Hamburg-Lübeck (Lufthansa, Air Berlin, Germanwings) are not capable of exerting a sufficient competitive constraint on the merged entity by entering the Dublin-Berlin or Dublin-Hamburg (Lübeck) routes following the transaction (recitals 913 and 962). The applicant merely states in that regard that, so far as concerns Lufthansa, it is ‘not credible’ for the Commission to maintain that that carrier would not be able to respond effectively to a price increase by the merged entity (see paragraph 365 above). It must, however, be pointed out that the Commission stated a number of perfectly credible reasons in that regard. It found, first, that Lufthansa was a traditional network carrier operating a hub and spoke system different from the point-to-point low-frills models of Ryanair and Aer Lingus and, secondly, that, given its exit from the market in 2000 (when there was no other competitor at that time), Lufthansa would thereafter no longer be likely to be willing to enter those markets when confronted with a new powerful entity with a different costs structure. – The Dublin-Brussels route 371 As regards the Dublin-Brussels route (recitals 931 to 938 of the contested decision), the implementation of the transaction would have the effect of creating a monopoly which would eliminate all existing competition on that route. The Commission also referred to the presence on that market of Sabena (now Brussels Airlines), which exited from it in November 2001. It pointed out that there were barriers to entry connected with congestion at Dublin Airport and the rather ‘thick’ nature of that route. 372 Similarly, the Commission set out the reasons why the carriers with bases at Brussels (Brussels Airlines, KLM and VLM) or at Eindhoven in the Netherlands (Transavia and Airlinair), which is not regarded as a substitutable airport for Brussels airport, are not capable of exerting a sufficient competitive constraint on the merged entity by entering the Dublin-Brussels route (recital 936). The applicant merely states in that regard that it is ‘not credible’ for the Commission to maintain that those carriers would not be able to respond effectively to a price increase by the merged entity (see paragraph 365 above). It must, however, be pointed out that the Commission stated a number of perfectly credible reasons in that regard. It found that Brussels Airlines and KLM were primarily full-frills, network carriers with a business model different from that of Ryanair and Aer Lingus, that VLM was focused on serving business customers using smaller aircraft which made it possible to land at London-City Airport and that Transavia and Airlinair operated to Eindhoven and not Brussels. – The Dublin-Frankfurt route 373 As regards the Dublin-Frankfurt route (recitals 948 to 955 of the contested decision), the parties to the concentration had a 59 to 87% combined market share in terms of capacity in summer 2006, whether or not connecting passengers are taken into account. The market share of the competitor Lufthansa thus fluctuated between 13 and 41% when connecting passengers were taken into account. 374 In that regard it must be pointed out that in the contested decision the Commission set out the reasons why Lufthansa would not be capable of competing effectively with the merged entity on that market. In the contested decision the Commission stated that Lufthansa’s business model is clearly different from Aer Lingus and Ryanair. Furthermore, it stated that Lufthansa operated a high frequency service with schedules accommodated according to the departure/arrival waves at Frankfurt Airport. The Commission also stated that it is apparent from the results of the customer survey that more Aer Lingus or Ryanair customers had considered the other Irish company as a substitute for a Dublin-Frankfurt flight than they had Lufthansa. The applicant cannot therefore claim that the Commission purely and simply excluded Lufthansa from its analysis on the ground that point-to-point passengers carried on that route form only a minor part of that company’s activities (see paragraph 365 above). – The Dublin-Madrid and Dublin-Paris routes 375 As regards the Dublin-Madrid route (recitals 981 to 989 of the contested decision), the parties to the concentration had a 66 to 75% combined market share in terms of capacity in summer 2007, whether or not connecting passengers are taken into account. The market share of the competitor Iberia thus fluctuated between 25 and 34% when connecting passengers were taken into account. The Commission also mentioned the presence on that market of Spanair, which exited from it in October 2006. It also stated that there were barriers to entry connected with congestion at Dublin Airport, even though they might be less marked in that case in so far as it is not a high frequency route. 376 As regards the Dublin-Paris route (recitals 1014 to 1021), the parties to the concentration had a 61 to 80% combined market share in summer 2006, whether or not connecting passengers are taken into account. The market share of the competitor CityJet thus fluctuated between 20 and 39% when connecting passengers were taken into account. No other carrier has entered that market in recent years. 377 In that regard it must be pointed out that in the contested decision the Commission set out the reasons why Iberia, so far as concerns the Dublin-Madrid route (recital 984), and CityJet, so far as concerns the Dublin-Paris route (recital 1017), would not be capable of competing effectively with the merged entity. The Commission stated that Iberia could not be considered to be a close competitor to the parties to the merger due to its business model based on full-service network operations, including a significant proportion of connecting passengers on that route. Furthermore, the Commission stated that CityJet is primarily focused on feeding the medium and long-haul services of Air France at Roissy‑Charles‑de‑Gaulle Airport. The applicant does not dispute that reasoning in itself and solely criticises its credibility without any other details. The applicant cannot therefore claim that the Commission purely and simply excluded those two companies from its analysis (see paragraph 365 above). e) The Dublin-Milan and Dublin-Rome routes Arguments of the parties 378 The applicant maintains that the Commission is wrong to exclude Alitalia as a potential competitor to the merged entity on the grounds of its recent exit from the Dublin-Rome and Dublin-Milan routes and its financial difficulties (recitals 1011 and 1041 of the contested decision). Similarly, the Commission wrongly dismisses any competitive threat from that full-service network carrier. The Commission has failed to produce any evidence that Alitalia could not easily resume flights to Dublin in the event of a price increase by the merged entity, in so far as Alitalia has numerous aircraft based in Rome and Milan. 379 The Commission, supported by Ireland and by Aer Lingus Group, disputes the applicant’s arguments by referring to the contested decision. Findings of the Court 380 As regards the Dublin-Milan route (recitals 1006 to 1013), the implementation of the transaction would have the effect of creating a monopoly which would eliminate all existing competition on that route (100% combined market share having been forecast for summer 2007). The Commission also referred to the presence on that market of Alitalia, which exited from it in October 2006 a few months after Ryanair entered that route. It pointed out that there were barriers to entry connected with congestion at Dublin Airport at peak times. 381 As regards the Dublin-Rome route (recitals 1036 to 1043), the implementation of the transaction would have the effect of creating a monopoly which would eliminate all existing competition on that route (100% combined market share having been forecast for summer 2007). The Commission also referred to the presence on that market of Alitalia, which exited from it in October 2005 before briefly re-entering in summer 2006. It pointed out that there were barriers to entry connected with congestion at Dublin Airport at peak times and the development of that route. 382 Similarly, the Commission set out the reasons why the carriers with bases at Milan or Rome (Alitalia, Air One, easyJet and MyAir) would not be capable of providing sufficient competitive constraints on the merged entity by entering the Dublin-Milan and Dublin-Rome routes (recitals 1011 and 1041). The applicant merely states in that regard that the Commission was wrong to find that Alitalia was not capable of competing effectively with the merged entity on account of its financial difficulties and its full-service airline business model. It must however be stated that those reasons can justify the conclusion which the Commission drew from them in the contested decision. 383 It follows from all of the above that the arguments put forward by the applicant as regards a number of routes analysed in the contested decision are not capable of calling into question the Commission’s finding that the implementation of the proposed transaction would significantly impede effective competition on those routes as a result of the creation of a dominant position. 384 Furthermore, it must be pointed out that the dominant positions which the proposed concentration would give rise to on those routes are monopolistic, quasi monopolistic or very significant and are sufficient, in themselves, to validate at this stage of the analysis the Commission’s finding that the implementation of the concentration should be declared incompatible with the common market. 385 Consequently, it must be held, subject to the analysis of efficiencies and commitments in the context of the examination of the fourth and fifth pleas, that the Commission was right to declare that the proposed concentration is incompatible with the common market. D – The fourth plea, concerning the assessment of the efficiency claims 386 It should be noted at the outset that according to recital 29 in the preamble to the merger regulation: ‘In order to determine the impact of a concentration on competition in the common market, it is appropriate to take account of any substantiated and likely efficiencies put forward by the undertakings concerned. It is possible that the efficiencies brought about by the concentration counteract the effects on competition, and in particular the potential harm to consumers, that it might otherwise have and that, as a consequence, the concentration would not significantly impede effective competition, in the common market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position. The Commission should publish guidance on the conditions under which it may take efficiencies into account in the assessment of a concentration.’ 387 The guidance of the Commission referred to in recital 29 of the merger regulation is set out in points 76 to 88 of the Guidelines. Point 78 of the Guidelines states that for the Commission to take account of efficiency claims in its assessment of the concentration and be in a position to reach the conclusion that, as a consequence of efficiencies, there are no grounds for declaring the merger to be incompatible with the common market, the efficiencies have to benefit consumers, be merger-specific and be verifiable. These conditions are cumulative and will be examined below in the order adopted by the Commission in the contested decision. 388 The analysis carried out by the Commission in the contested decision, which is relevant in assessing this plea, takes the form of the following stages. First, the Commission set out the arguments submitted by Ryanair during the administrative procedure in terms of which the concentration would not give rise to any risk for competition on account of the efficiencies connected with the application to Aer Lingus of Ryanair’s low-fares business model. Those efficiencies would derive from cost savings relating to staff costs, aircraft ownership costs, maintenance costs, airport charges, ground operational costs and distribution costs. According to Ryanair, those efficiencies cannot be obtained by any alternative transaction and would not be achieved by the two companies individually in the absence of the concentration. Those efficiency gains would be passed on to consumers in terms of reduced fares, higher frequencies and more routes for passengers, and also in terms of better quality products and services, without affecting Aer Lingus’s quality of service (section 7.10.2 of the contested decision). Aer Lingus’s analysis is also set out in the contested decision (section 7.10.3). 389 Secondly, the Commission stated that it is apparent from the principles set out in recital 29 of the merger regulation and in the Guidelines that, to counteract the negative effects of a merger on consumers, the resulting efficiency gains need to be verifiable (namely reasoned, quantified and supported by internal studies and documents if necessary), likely to benefit consumers and could not have been achieved to a similar extent by means that are less anti-competitive than the proposed concentration (merger specificity). Those three conditions (verifiability, consumer benefit and merger specificity) are cumulative (sections 7.10.1 and 7.10.4 of the contested decision). 390 Thirdly, the Commission took the view that Ryanair’s efficiency claims were not verifiable because they were in essence based on the general claim that Ryanair would be able to transfer its business model, and in particular the related cost levels, to Aer Lingus without the offsetting of downgrades in product characteristics and revenue having been sufficiently taken into account. Several of Ryanair’s efficiency claims also rely on assumptions which cannot be independently verified (section 7.10.4.2 of the contested decision). The contested decision also contains an assessment of the specificity of the concentration (section 7.10.4.3) and of benefits to consumers (section 7.10.4.4). 391 The Commission concluded, in recital 1151 of the contested decision, that the efficiencies claimed by Ryanair were not sufficiently verifiable and were not merger specific. According to the Commission, even if those two conditions had been satisfied those efficiencies would have affected Aer Lingus’s fixed (aircraft operating) costs, which makes it uncertain that they would have benefited consumers. Lastly, the Commission referred to point 84 of the Guidelines which states that ‘[i]t is highly unlikely that a merger leading to a market position approaching that of a monopoly, or leading to a similar level of market power, can be declared compatible with the common market on the ground that efficiency gains would be sufficient to counteract its potential anti-competitive effects’. 392 In essence, the applicant criticises that aspect of the contested decision by submitting that, despite any anti-competitive effects, the merger would give rise to efficiencies. Those efficiencies would be verifiable, merger specific and beneficial to consumers. Accordingly, the criteria laid down in point 76 et seq. of the Guidelines have been complied with and therefore the Commission should have declared the merger compatible with the common market. In general, the applicant criticises the Commission for dismissing specific evidence produced by it and basing its decision on ‘speculation’ from Aer Lingus. Not only is Ryanair a point of reference for achieving efficiencies, but Aer Lingus could not have known the cost savings which Ryanair would have achieved and Aer Lingus had an incentive to downplay the efficiencies resulting from the concentration in order to defend itself against Ryanair’s bid and not admit its own inefficiency. The applicant also criticises the Commission for applying an ‘unreasonable and wrong standard’ as to the amount of efficiencies that Ryanair would have to show, relying on point 84 of the Guidelines, which sets out a negative presumption against efficiency gains in the case of a market position approaching that of a monopoly. In the present case, Ryanair submits that the proposed concentration does not create a monopoly. 393 The Commission, supported by Ireland and by Aer Lingus Group, observes that, since the merger would result in a position close to a monopoly, it is highly unlikely that it could be declared compatible with the common market on the ground that the efficiency gains generated would counteract its potential anti‑competitive effects. In any event, the three criteria to be considered are not fulfilled: the efficiencies alleged by Ryanair are not verifiable or merger-specific and would not be of benefit to consumers. 1. The verifiability of the alleged efficiency gains a) Arguments of the parties 394 First, the applicant contests the Commission’s assertion that its efficiency claims are based on very strong assumptions (recital 1133 of the contested decision). ‘Very detailed calculations’ were provided to the Commission, based on 15 years experience in Europe using over 130 aircraft on over 500 routes. Ryanair was therefore in the best position to offer ‘sound, reliable and verifiable calculations’, unlike the Commission, which has no experience of running airlines, and Aer Lingus, which has a poor track record in regard to efficiency. Even if there had been a margin of error in those calculations, the outcome, namely efficiencies amounting to EUR 221.7 million, could not be dismissed outright. The applicant also criticises the requirement laid down in recital 1133 of the contested decision that it should have provided documents dated prior to the concentration which objectively and independently assessed the scope for efficiency gains. Efficiencies exist whether they are put in writing before or after a proposed concentration is announced. Such a requirement is impossible to satisfy because bidders may often obtain better access to the target’s books only after the public bid is announced. 395 Second, the applicant observes that the Commission bases its claim that efficiencies cannot be verified on the proposition that Ryanair will be able to ‘fully’ transfer its business model to Aer Lingus without offsetting downgrades in product characteristics. The Commission thus clearly admits a difference between Ryanair’s business model and that of Aer Lingus. That statement however misses the point since Ryanair did not intend to ‘fully’ transfer its business model to Aer Lingus, but only to continue a differentiated service, enhancing Aer Lingus’s position in terms of efficiencies and lower costs. 396 Third, the applicant maintains that the Commission’s reference, in recital 1134 of the contested decision, to Ryanair’s acquisition of Buzz does not support the Commission’s case. Aer Lingus’s fleet is much larger than Buzz’s fleet and therefore the savings on fuel, maintenance and replacements would be larger, not smaller than those which that acquisition made possible. Moreover, as it did in the case of Buzz, Ryanair could replace the aircraft in question and negotiate better leasing terms than those that Aer Lingus has. 397 Fourth, the applicant states that it gave irrevocable commitments, in connection with its public bid, that it would reduce Aer Lingus’s fares, eliminate fuel surcharges by specified amounts, retain frequencies and enhance service. Only efficiencies would have enabled it to satisfy those commitments, whilst ensuring its profitability. The Commission was therefore not entitled to assert, in recital 1135 of the contested decision, that it did not have any verifiable data that the efficiencies can be realised as regards the three fundamental points for consumers, namely fares, flight frequencies and quality of service for each route. 398 Fifth, the applicant insists that the merged entity would have the ability to achieve savings in regard to advertising costs because of increased network-wide buying power following the transaction. 399 Sixth, the applicant criticises the Commission for not acknowledging the relevance of Ryanair’s ability to use its options to buy or lease Boeing 737s to replace high cost Aer Lingus aircraft leases. The Commission regarded it as ‘no more than a rent transfer’ (recital 1137 of the contested decision). In the absence of a concentration, Ryanair’s operations would not require it to exercise all those options. Accordingly, if it exercised those options in favour of Aer Lingus, Ryanair would not bear any ‘opportunity cost’. The Commission has not established that the terms of the contracts concluded with Boeing enabled Ryanair to exercise those ‘unwanted options’ and resell the aircraft on the open market, or that Ryanair would actually choose to use the options so as to compete with Boeing in the market for new aircraft. Such conduct would not be ‘feasible or commercially sensible’. The Commission was also wrong to take the view, in recital 1138 of the contested decision, that Ryanair’s calculations as regards aircraft ownership costs were ‘particularly optimistic’, thus failing to take seriously Ryanair’s experience in that area. 400 Seventh, the applicant insists that it was wrong for the Commission to ‘assume’, in recital 1139 of the contested decision, that some of the airport charge savings must arise from Ryanair’s relocating Aer Lingus flights from high cost primary airports to lower cost secondary airports. Ryanair in fact demonstrated that the prospective airport cost savings did not rely on lower costs from Dublin Airport or from changing Aer Lingus destination airports. The rationale of the merger is to operate Aer Lingus aircraft at primary airports. Moreover, contrary to Aer Lingus’s assertions in recital 1118 of the contested decision, Ryanair achieves 25 minute turnaround times at Dublin Airport, even though it is a primary airport, whereas Aer Lingus operates on the basis of 40 to 55 minute turnarounds. Those times are also achieved in busy airports such as Birmingham and Manchester (see York Aviation’s note of 19 January 2007 on turnaround efficiencies). 401 Eighth, the applicant claims that the Commission erred in its understanding of Irish company law because, under that law, Ryanair would control Aer Lingus once it acquired more than 50% of the shares. The ‘hostile nature’ of the takeover, referred to in recital 1140 of the contested decision, would then be an irrelevance and the Commission wrongly supposed that integration of the two undertakings would be made more difficult if Ryanair controlled less than 100% of Aer Lingus’s shares. 402 The Commission, supported by Ireland and by Aer Lingus Group, disputes the applicant’s arguments by referring to the contested decision. b) Findings of the Court 403 In the contested decision, the Commission stated that Ryanair’s efficiency claims were not verifiable because they were in essence based on the general claim that Ryanair would be able to transfer its business model, and in particular the related cost levels, to Aer Lingus without the offsetting of downgrades in product characteristics and revenue having been sufficiently taken into account. The Commission also took the view that several of Ryanair’s efficiency claims also relied on very strong assumptions which cannot be independently verified (section 7.10.4.2). 404 According to the Commission, the condition concerning the verifiability of the efficiency gains, which is set out in the Guidelines, is not therefore met. That is disputed by the applicant, which submits eight heads of claim on that point. 405 As regards, first, the assessments by the Commission in the contested decision of the data provided by Ryanair (recital 1133; see paragraph 394 above), it must first of all be borne in mind that the Commission considered that ‘several of Ryanair’s efficiency claims rel[ied] on very strong assumptions which cannot be independently verified’. The Commission also stated in the contested decision that ‘[t]here appear[ed] not to exist business documents, dated pre-merger, which objectively and independently assess the scope for efficiency gains from acquiring Aer Lingus’. Against that background, the Commission stated that it ‘consider[ed] that such documents are critical to show, first, that Ryanair’s business model is different, non-replicable and superior to that of Aer Lingus and, secondly, that its cost structure can be successfully replicated in Aer Lingus post merger’. Such statements may be understood as meaning that the notifying party may be required to produce data which comply with the above definition of documents whose submission is regarded as ‘critical’ by the Commission. 406 However, it is apparent from point 86 of the Guidelines that efficiencies have to be ‘verifiable’ so that the Commission can be reasonably certain that the efficiencies are ‘likely’ to materialise and be substantial enough to counteract a merger’s potential harm to consumers. That point in the Guidelines also states that the more ‘precise and convincing’ the efficiency claims are, the better the Commission can evaluate the claims. In that regard point 86 in the Guidelines states that, where reasonably possible, efficiencies and the resulting benefit to consumers should therefore be ‘quantified’ and that, when the necessary data are not available to allow for a precise quantitative analysis, it must be possible to foresee a ‘clearly identifiable’ positive impact on consumers, ‘not a marginal one’. The condition relating to the verifiability of efficiencies does not therefore require the notifying party to provide data capable of being independently verified by a third party or documents, dated pre-merger, which serve to objectively and independently assess the scope for efficiency gains generated by the acquisition. 407 That interpretation is reinforced by a reading of point 87 of the Guidelines, from which it is apparent that most of the information allowing the Commission to assess efficiencies is solely in the possession of the parties to the concentration and that it is, therefore, incumbent upon the notifying parties to provide in due time the relevant information. 408 Similarly, the non-exhaustive list of evidence relevant to the assessment of efficiency claims in point 88 of the Guidelines includes evidence of various kinds, and does not stress that it must be capable of being independently verified or dated pre-merger. That list refers, in particular, to internal documents that were used by the management to decide on the merger, statements from the management to the owners and financial markets about the expected efficiencies, historical examples of efficiencies and consumer benefit, and pre-merger external experts’ studies on the type and size of efficiency gains, and on the extent to which consumers are likely to benefit. 409 The possibility of independently verifying the assumptions on which Ryanair’s efficiency claims rely was not therefore required by the Guidelines, which set out the guidance of the Commission applicable in that regard. In any event, in the present case, the Commission was not therefore entitled to reject the data submitted by Ryanair solely on the ground that they relied on very strong assumptions which could not be independently verified. Likewise, the Commission was not entitled to require a particular type of document, such as documents, dated pre-merger, which objectively and independently assess the scope for efficiency gains generated by the acquisition, to dispute the relevance of information deriving from another type of document which might be provided. 410 Against that background, Ryanair was entitled to submit to the Commission its own data about the efficiencies expected from the merger, without necessarily having to rely on an assessment capable of being independently verified by a third party or carried out before the merger was announced. Business life does not always allow such documents to be produced in due time and the documents used by an undertaking to initiate a public bid, whether they come from that undertaking or from its advisers, are by nature likely to be of some relevance as regards substantiating efficiency claims. 411 It must however be pointed out that the Commission specifically examined whether Ryanair’s efficiency claims were ‘verifiable’, in the sense that they made it possible for it to be reasonably certain that the efficiencies were likely to materialise and be substantial enough to counteract the concentration’s potential harm to consumers. The Commission stated in recital 1133 of the contested decision that, in the light of Ryanair’s efficiency claims, ‘the proposition that Ryanair w[ould] be able to fully transfer its business model, and in particular the related cost levels to Aer Lingus without offsetting downgrades in product characteristics and revenue appear[ed] highly optimistic’. The Commission stated that ‘Ryanair present[ed] no objective or convincing evidence in this respect other than a general confidence in “Ryanair’s more ruthless management style”‘. 412 That criticism of the data provided by Ryanair calls into question their capacity to show that the efficiencies claimed are capable of counteracting the negative effects that the transaction could otherwise have on competition. Point 87 of the Guidelines states that it is incumbent upon the notifying parties to provide that evidence. Those efficiencies have to be ‘quantified’ or, at the very least, ‘clearly identifiable’, as is apparent from point 86 of the Guidelines. 413 In the absence of information proving that the expected efficiencies as a result of the transfer to Aer Lingus of Ryanair’s business model took into consideration the downgrades which would be the result of giving up Aer Lingus’s business model, the Commission was entitled to call into question the verifiability of the efficiency claims. On this point too, the applicant merely claims in its written pleadings that its business model is superior to that of Aer Lingus and that that would give rise to efficiencies amounting to EUR 221.7 million (recital 1106 of the contested decision and in particular table 3). Those figures are disputed by the Commission. In recitals 1135 and 1140, the Commission also stated that Ryanair had not demonstrated that it could reduce Aer Lingus’s costs without offsetting reductions in service quality. 414 Consequently, since Ryanair has not stated how the Commission’s reasoning is wrong as regards its failure to demonstrate that it could reduce Aer Lingus’s costs without offsetting reductions in that undertaking’s service quality, it must be held that the Commission was entitled to call into question the verifiability of the efficiency claims in the light of the data provided by Ryanair on that point. 415 As regards, secondly, the effect on the analysis of the difference between Aer Lingus’s and Ryanair’s business models, Ryanair maintains, in essence, that the Commission did not take into account its intention to continue a differentiated service and not to ‘fully’ transfer its business model to Aer Lingus (recital 1133 of the contested decision; see paragraph 395 above). 416 That head of claim does not take into account the fact that the Commission did indeed take into consideration the applicant’s premiss. Its doubts as to the verifiability of the efficiency claims in the light of the data provided by the applicant are as follows: either Ryanair fully implements its business model in which case it is necessary to take into consideration the downgrades in product characteristics and revenue resulting from Aer Lingus’s business model when assessing Ryanair’s efficiency claims, or Ryanair retains the product characteristics and revenue resulting from Aer Lingus’s business model, as it states is its intention, in which case the efficiencies will necessarily be fewer than those resulting from a complete transfer of Ryanair’s low-cost and low-fares service model. It is on that lack of precision affecting the data provided by Ryanair that the Commission correctly based the reasoning that it followed in the contested decision. 417 As regards, thirdly, the reference in the contested decision to the events following the acquisition, by Ryanair, of the airline Buzz, a subsidiary of KLM (recital 1134; see paragraph 396 above), it must be pointed out that the parties agree that that acquisition was not of the same kind as the planned acquisition of Aer Lingus. That is exactly the finding set out in the contested decision which notes the differences between those two transactions (disappearance of the Buzz brand, withdrawal of its aircraft and discontinuation of most of its services). Ryanair’s efficiency claims on the basis of that example are therefore based on the assumption that Ryanair’s business model will be fully transferred to the undertaking acquired. 418 Concerning, fourthly, the scope of the applicant’s commitments, in connection with the public bid, to reduce Aer Lingus’s fares, eliminate fuel surcharges, retain frequencies and enhance service (recital 1134 of the contested decision; see paragraph 397 above), as the Commission states in its written pleadings, without being challenged on that point by the applicant, a promise to behave, for an undefined and potentially very short period of time, in a certain way cannot be regarded as an efficiency, nor as proof of the existence of an efficiency. 419 As regards, fifthly, efficiencies relating to possible reductions in advertising costs (recital 1136 of the contested decision; see paragraph 398 above), the criticism made by the applicant does not call into question the scope of the concerns set out in the contested decision. If Ryanair plans to maintain the Aer Lingus brand and quality differentiation, it will continue to be necessary for Aer Lingus to follow its own, differentiated marketing strategy. Indeed, it may be necessary to maintain advertising expenditures in order to ensure that consumers do not confuse the two airlines. 420 As regards, sixthly, aircraft ownership costs (recitals 1137 and 1138 of the contested decision; see paragraph 399 above), the Commission took the view in the contested decision that, as regards the use of the options held by Ryanair to buy aircraft at below market prices, the probable assumption is that Ryanair would exercise that option to renew its own fleet of aircraft. If Ryanair intended to secure an immediate profit by selling new aircraft to another airline or to transfer those options to Aer Lingus to renew that airline’s fleet of aircraft, the opportunity cost of the aircraft’s alternative use would be exactly equal to the claimed efficiency, which would cancel it out. The Commission also stated that, even if those two assumptions were not to be borne out, the assumptions under which aircraft ownership costs are quantified seemed ‘particularly optimistic’, in so far as they were based on the possibility of realising the book value of Aer Lingus’s fleet. 421 The applicant’s criticisms do not call into question the merits of that analysis. The possibility of not exercising those options does of course exist, but Ryanair would lose any benefit of it. As regards the applicant’s wish that the Commission establish that the terms of the contracts concluded with Boeing enabled Ryanair to exercise those ‘unwanted options’ and resell the aircraft on the open market, or that it would actually choose to use those options so as to compete with Boeing in the market for new aircraft, it is difficult to understand why the Commission should be required to do so. The Commission merely refers to the various courses of action open to Ryanair if it decided to exercise those options and points out that those options were initially conceived to renew Ryanair’s fleet. Lastly, the applicant does not state why the Commission’s criticism as regards the optimistic nature of realising the book value of Aer Lingus’s fleet is wrong merely on account of its experience in that area. 422 As regards, seventhly, airport charges and ground operations costs (recital 1139 of the contested decision; see paragraph 400 above), it must be pointed out, as did the Commission, that the Commission merely stated in the contested decision that ‘cost reductions from merely switching Aer Lingus services to secondary airports would in themselves not constitute efficiencies’. That may be understood by means of the example given by the Commission, which observes that Ryanair has claimed inter alia that it had an agreement with Bergamo Airport under which that airport charged Ryanair a passenger cost significantly below that which it charged Aer Lingus to operate to Milan. Bergamo is, however, a secondary airport not served by Aer Lingus, so the claimed efficiency could be realised only by diverting Aer Lingus’s current flights to Milan-Linate and Milan-Malpensa to Bergamo. Having regard to the need for that change in Aer Lingus’s services, the Commission was right to dispute in the contested decision the existence of such an efficiency. 423 As regards, eighthly, the effect of a greater or lesser controlling interest on the part of Ryanair in Aer Lingus (recital 1140 of the contested decision; see paragraph 401 above), the Commission was right to find, in essence, in the contested decision that an interest of less than 100% would make it more difficult to achieve the claimed efficiencies having regard to the ‘hostile nature’ of the notified concentration. The opposition likely to be shown by Aer Lingus’s shareholders which do not accept Ryanair’s takeover, some of which, like Ireland or Aer Lingus’s staff may have a significant holding in Aer Lingus, means that certain decisions that Ryanair may make to reduce costs could be delayed or called into question. 424 It follows from the foregoing that the applicant’s heads of claim relating to the verifiability of the efficiency claims must be rejected. 2. The merger-specific nature of the efficiency claims a) Arguments of the parties 425 The applicant rejects the Commission’s assertion that certain efficiency gains, such as the reduction in staff costs, improved aircraft utilisation and reductions in fuel and distribution costs, ‘are likely to be not merger specific’ and could be obtained by Aer Lingus independently of the merger (recitals 1143 to 1145 of the contested decision). The applicant acknowledges that Aer Lingus has reduced its unit costs since 2001, but observes that according to that company’s most recent interim report, its costs are rising. Moreover, Aer Lingus’s costs remain substantially higher than those of Ryanair, and the gap is widening. Without the merger, Aer Lingus could not benefit from the economies of scale associated with acquisition by Ryanair. Given that Aer Lingus has not substantially increased its aircraft ownership over the past five years, it must be reasonable to presume that Aer Lingus could not and would not grow rapidly to achieve a scale similar to that of Ryanair. Certain non-scale related efficiencies, such as fast turnaround times at Dublin Airport, are to a large degree merger-specific, since Aer Lingus has not attempted to achieve shorter turnaround times (see Ryanair’s response of 25 January 2007 to the Commission’s request for information under Article 11 of the merger regulation). Contrary to the Commission’s assertions, Ryanair’s alleged competition with Aer Lingus did not in itself provide incentives for Aer Lingus to remain an efficient operator. 426 The Commission, supported by Ireland and by Aer Lingus Group, disputes the applicant’s arguments by referring to the contested decision. b) Findings of the Court 427 It is apparent from point 85 of the Guidelines that efficiencies are relevant to the competitive assessment when they are a direct consequence of the notified concentration and cannot be achieved to a similar extent by less anti-competitive alternatives. In those circumstances, the Commission deems the efficiencies to be caused by the concentration and thus to be merger-specific. It is for the parties to the concentration to provide in due time all the relevant information necessary to demonstrate that there are no less anti-competitive, realistic and attainable alternatives than the notified concentration. The Commission only considers alternatives that are reasonably practical in the business situation faced by the parties to the concentration having regard to established business practices in the industry concerned. 428 In the contested decision, the Commission stated that a number of efficiencies claimed, such as the reduction in staff costs, improved aircraft utilisation and reductions in fuel and distribution costs, could also be achieved by Aer Lingus independently of the proposed concentration (section 7.10.4.3). 429 To dispute that claim, the applicant merely states that it is apparent from Aer Lingus’s most recent interim report of 30 August 2007 that that airline’s costs are rising and that they are, in any event, higher than its own. The proposed concentration would make it possible for Aer Lingus to benefit from greater economies of scale than those which it could attain if there were no concentration. 430 However, the applicant’s first argument cannot be accepted inasmuch as the Commission cannot be criticised for not having taking into consideration, with a view to the adoption of the contested decision on 27 June 2007, results which were published only on 31 August 2007. Consequently, as the applicant indeed concedes, the Commission was entitled to base its finding in the contested decision on the fact that ‘since 2001 Aer Lingus ha[d] built a significant track record of reducing unit costs’. Furthermore, the argument relating to economies of scale, put forward by Ryanair, does not call into question the merits of the Commission’s argument, which focuses more on the efficiency of the price‑quality combination chosen by Aer Lingus. 431 Accordingly, the heads of claim relating to the merger specificity of a certain number of efficiency claims must be rejected. 3. Consumer benefit a) Arguments of the parties 432 The applicant submits that the Commission accepts the link between fixed entry costs into a route and the yield levels at which entry becomes profitable, as well as the increase in competition to which such entry tends to give rise for a given route (recital 1147 of the contested decision). The Commission was therefore wrong to consider that ‘the claimed fixed cost efficiencies would not affect Ryanair’s price‑setting decisions on existing flights’ (recital 1148). By so doing, the Commission takes no account of the fact that, in the airline industry, fixed costs rapidly feed through to marginal output and frequency decisions. Ryanair has a demonstrable track record of low operating costs, of reducing operating costs and of passing these lower costs on to consumers in lower fares. Moreover, in the aviation industry, suppliers have to make frequent and short-term adjustments to capacities and schedules, which the cost structure of Aer Lingus would not permit. The Commission was also wrong to say that ‘any consumer benefit would therefore not be immediate but conditional on a chain of events and thus considerably less certain than the price effect of a marginal cost reduction (which would create immediate incentives for price reductions)’ (recital 1148). The Commission does not give reasons or provide evidence for that assertion and it runs contrary to Ryanair’s actual experience. 433 The Commission, supported by Ireland and by Aer Lingus Group, disputes the applicant’s arguments by referring to the contested decision. b) Findings of the Court 434 As regards consumer benefit, point 79 of the Guidelines states that the relevant benchmark in assessing efficiency claims is that consumers will not be worse off as a result of the merger. For that purpose, efficiencies should be substantial and timely, and should, in principle, benefit consumers in those relevant markets where it is otherwise likely that competition concerns would occur. 435 In that regard, it is apparent from point 80 of the Guidelines that mergers may bring about various types of efficiency gains that can lead to lower prices or other benefits to consumers. For example, cost savings in production or distribution may give the merged entity the ability and incentive to charge lower prices following the merger. In line with the need to ascertain whether efficiencies will lead to a net benefit to consumers, cost efficiencies that lead to reductions in variable or marginal costs are more likely to be relevant to the assessment of efficiencies than reductions in fixed costs; the former are, in principle, more likely to result in lower prices for consumers. Cost reductions which merely result from anti-competitive reductions in output cannot be considered to be efficiencies benefiting consumers. 436 Furthermore, it is apparent from point 84 of the Guidelines that the incentive on the part of the merged entity to pass efficiency gains on to consumers is often related to the existence of competitive pressure from the remaining firms in the market and from potential entry. The greater the possible negative effects on competition, the more the Commission has to be sure that the claimed efficiencies are substantial, likely to be realised, and to be passed on, to a sufficient degree, to the consumer. As regards that point, the Guidelines state that it is highly unlikely that a merger leading to a market position approaching that of a monopoly, or leading to a similar level of market power, can be declared compatible with the common market on the ground that efficiency gains would be sufficient to counteract its potential anti-competitive effects. 437 In the contested decision, in response to Ryanair’s claim that reductions in aircraft operating costs affect the airline’s ‘marginal’ decision whether or not to operate a flight on a certain route, the Commission accepted that lower fixed entry costs into a route lowered the yield levels at which entry becomes profitable, and that such entry tended to increase competition for a given route (recitals 1146 and 1147). 438 The Commission then examined the degree of certainty and timeliness with which those benefits would be passed on to consumers and stated that the claimed fixed-cost efficiencies would not affect Ryanair’s price setting decisions on existing flights. According to the Commission, any consumer benefit would materialise only when and if Ryanair opted to increase frequencies on existing routes or opened a new route that was not viable before the fixed-cost reduction but became so after the concentration. Even if the claimed efficiencies were realised, any consumer benefit would therefore not be immediate but conditional on a chain of events and thus considerably less certain than the price effect of a marginal cost reduction, which would create immediate incentives for price reductions (recital 1148). 439 Furthermore, the Commission stated that as Ryanair only argues that Aer Lingus’s costs can be brought down towards its own levels, there would be no change compared to the pre-merger situation since Ryanair’s ‘hurdle yield’ and the scope of potential profitable routes would not change, even if all claimed efficiencies were realised (recital 1149). By contrast, on existing overlap routes, the immediate effect of the concentration lies in the internalisation of Ryanair’s and Aer Lingus’s pricing and output decisions. Assuming profit maximising conduct, the merged entity would have an incentive to raise prices on these routes due to the very high combined market shares and any transfer of passengers between the Ryanair and Aer Lingus brands would largely remain within that entity, in particular on the routes moving from duopoly to monopoly (recital 1150). 440 The Commission conceded that, theoretically, that effect could be counteracted if and when fixed-cost efficiencies made it profitable for Ryanair to add extra frequencies to the affected routes, which would in turn put downward pressure on prices. However, it found that given the extremely high combined market shares, often approaching monopoly levels, and the fact that the claimed efficiencies apply largely to the Aer Lingus brand, it is highly unlikely that the price-reducing effect of such efficiencies would be sufficient to reverse the price increase resulting from the horizontal overlap and consequent loss of competition (recital 1150). 441 In that regard it must be pointed out, as did the Commission, that Ryanair does not dispute the assessment that any efficiencies are unlikely to be passed on to consumers in view of the very high market shares of the merged entity on most overlap routes. Therefore, even if Ryanair’s claim that all cost savings are used to lower fares further in order to drive higher volumes were to be established, Ryanair’s actual priority is still probably that of maximising profit. On markets where all competition is eliminated as a result of the merger, it is likely to be much more profitable not to pass on to consumers the claimed reduction in Aer Lingus’s fixed costs. 442 Consequently, the complaints relating to consumer benefit must be rejected. 443 It follows from the above that the applicant’s complaints relating to the verifiability and merger specificity of the efficiencies and to consumer benefit must all be rejected. Therefore, since the applicant has not shown that the Commission’s analysis in the contested decision is incorrect as regards the three cumulative conditions established to define the circumstances in which it may take account of efficiency claims in assessing a merger, the fourth plea must be rejected in its entirety. 4. Conclusion in respect of the analysis of the effects of the transaction on competition 444 It is apparent from the analysis of the first four pleas that none of the arguments put forward by the applicant is capable of calling into question the findings made by the Commission in the contested decision according to which the implementation of the merger would significantly impede effective competition as a result of the creation of a dominant position on a number of routes from or to Dublin, Cork and Shannon. 445 Those dominant positions are monopolistic, quasi monopolistic or very significant and are sufficient, in themselves, to validate the Commission’s finding that the implementation of the merger should be declared incompatible with the common market. 446 The fifth and final plea, relating to commitments, must now be examined. E – The fifth plea, concerning the assessment of the commitments 1. Preliminary considerations 447 It is appropriate to note the analytical framework applicable to commitments before examining the content of the commitments at issue in the present case. a) The framework for analysing commitments 448 The purpose of the control of concentrations is to provide to the undertakings concerned the authorisation which is necessary and preliminary to the implementation of any concentration having a Community dimension. As part of the arrangements for control, those undertakings may submit commitments to the Commission in order to obtain a decision finding their concentration to be compatible with the common market (Case T-212/03 My Travel v Commission [2008] ECR II-1967, paragraphs 116 to 118). 449 Depending on the stage which the administrative procedure has reached, the commitments proposed must allow the Commission either to form the view that the notified concentration does not raise serious doubts as to its compatibility with the common market at the stage of the preliminary examination (Article 6(2) of the merger regulation) or to respond to the objections sustained during the detailed investigation (Article 18(3), read together with Article 8(2) of the merger regulation). Those commitments therefore make it possible to avoid the initiation of a detailed investigation phase or a subsequent decision declaring that the concentration is incompatible with the common market (see My Travel v Commission, paragraph 448 above). 450 Article 8(2) of the merger regulation allows the Commission to attach to a decision declaring a concentration compatible with the common market in accordance with the criterion laid down in Article 2(2) of the regulation 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 common market (see My Travel v Commission, paragraph 448 above). 451 Having regard both to the significance of the financial interests and industrial or commercial stakes inherent in that type of transaction and to the powers available to the Commission in the field, it is in the interest of the undertakings concerned to facilitate the work of the administration. For the same reasons, the Commission must display the utmost diligence in performing its supervisory duties in the field of concentrations (see, as regards the former merger regulation, My Travel v Commission, paragraph 448 above, paragraph 119). 452 It must also be noted that, in the context of merger control, the Commission has power to accept only such commitments as are capable of rendering the notified transaction compatible with the common market (see, as regards the former merger regulation, General Electric v Commission, paragraph 41 above, paragraph 555). 453 It must be held in that regard that commitments proposed by one of the parties to a merger will meet that condition only in so far as the Commission is able to conclude, with certainty, that it will be possible to implement them and that the remedies resulting from them will 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 (see, as regards the former merger regulation and having regard to the fact that the remedies suggested in the present case are not all of a structural nature, General Electric v Commission, paragraph 41 above, paragraph 555). 454 Furthermore, it is apparent from Article 19(2) of Commission Regulation (EC) No 802/2004 of 7 April 2004 implementing the merger regulation (OJ 2004 L 133, p. 1) that commitments offered by the undertakings concerned pursuant to Article 8(2) of the merger regulation are to be submitted to the Commission within not more than 65 working days from the date on which proceedings were initiated. Where the period for the adoption of a decision pursuant to Article 8(2) of the merger regulation is extended, the period of 65 working days is automatically extended by the same number of working days. In the present case, the period provided for in Article 19(2) of Regulation No 802/2004 expired on 3 May 2007 (recital 1237 of the contested decision). 455 As regards commitments which are submitted out of time, it is apparent from point 43 of the Notice on remedies acceptable under the former merger regulation and under Commission Regulation (EC) No 447/98 (OJ 2001 C 68, p. 3) (‘the notice on remedies’), whose approach was adopted by the Commission in the present case as regards the merger regulation and Regulation No 802/2004, that the parties to a notified concentration may have such commitments taken into account subject to two cumulative conditions, namely, first, that those commitments clearly and without the need for further investigation resolve the competition concerns previously identified and, secondly, that there is sufficient time to consult the Member States on those commitments (see with regard to the former merger regulation EDP v Commission, paragraph 28 above, paragraph 163, and My Travel v Commission, paragraph 448 above, paragraph 127). b) Description and assessment of the 3 May 2007 commitments 456 In recital 1153 of the contested decision, the Commission stated that, during the administrative procedure, Ryanair submitted a number of sets of commitments: on 29 November 2006, the ‘Initial Phase I Commitments’; on 14 December 2006, the ‘Modified Phase I Commitments’; on 17 April 2007, in reply to the statement of objections, the ‘Initial Phase II Commitments’; and on 3 May 2007, according to the Commission, the ‘Final Commitments’ (‘the 3 May 2007 commitments’). 457 The Commission stated that the 3 May 2007 commitments took the form of several documents, namely, first, a ‘commitments letter’ which contained a description of the commitments proposed and general comments on the investigation and on the appropriateness of those commitments and, secondly, an Annex which is aligned to the commitments format of the Commission’s model texts and describes ‘the details of the proposed mechanics of Commitment No 2’ (recital 1162). 458 According to the description in the contested decision (recital 1164), the content of the proposed commitments can be summarised by distinguishing slot-related commitments (the first four measures) from non slot-related commitments (the last two measures): – first, Ryanair committed to make available slots for the London-Heathrow route under a so-called ‘leasing arrangement’, as those slots were exclusively reserved for British Airways and Air France (see also footnote 1410 which accompanies recital 1164); – secondly, Ryanair also committed, if necessary, to make available slots for other overlap routes from and to Dublin (allowing airlines, according to Ryanair, to operate with a certain number of aircraft based in Dublin) and also offered to make available an equivalent number of slots at specific destination airports on the overlap routes, if necessary; – thirdly, Ryanair committed to make available slots for overlap routes from and to Cork and Shannon if necessary. (This involves daily slots at Cork and Shannon, an equivalent number of slots at London-Stansted for flights to London-Stansted and slots relating to the Cork and Liverpool routes in order to facilitate entry on the Cork-Manchester and Cork-Liverpool routes); – fourthly, in the ‘Commitments Letter’, Ryanair offered ‘not to complete the acquisition of Aer Lingus’ before it had found a ‘buyer’ that committed to taking up the slots to operate the aircraft based at Dublin; – fifthly, Ryanair committed to reduce Aer Lingus’s short-haul fares by at least 10% immediately, to eliminate the fuel surcharges Aer Lingus applies on its long-haul flights immediately, to retain the Aer Lingus brand and to continue to operate Ryanair and Aer Lingus separately; – sixthly, Ryanair committed (i) not to increase, in excess of the frequencies jointly operated by it and Aer Lingus, the frequencies of flights on any of the overlap routes concerned ‘in the event of a new entrant to the route’ for a period of six International Air Transport Association (IATA) seasons after completion of the merger and (ii) not to reduce the frequencies on those routes ‘unless a route is or becomes unprofitable’ (frequency freeze). 459 The Commission then stated that it had sent a non-confidential version of the 3 May 2007 commitments together with a questionnaire to third parties in order to allow them to express their views and to clarify certain factual issues (for example, as regards the sufficient scope of the remedy or the likelihood of entry triggered by those commitments) (recital 1165). 460 Lastly, the Commission set out the results of the assessment of the 3 May 2007 commitments (recitals 1166 to 1234) before concluding that they ‘[were] not sufficient to remedy the identified significant impediment to effective competition and, thus, [could not] render the proposed concentration compatible with the common market’ (recital 1235). 461 First, the Commission stated that the 3 May 2007 commitments were formulated in an unclear and often contradictory manner (section 8.2.1 of the contested decision). According to the Commission, the 3 May commitments were not sufficiently clear to be implemented or enforced as they do not satisfy the minimum conditions established by the notice on remedies and in General Electric v Commission, paragraph 41 above, paragraph 555. 462 The Commission’s observations on that point relate to the format of the commitments (section 8.2.1.1), the lack of clarity of the commitment relating to the ‘up-front buyer’ (section 8.2.1.2), the mechanics of the slots divestiture (section 8.2.1.3) and the description of ‘Commitment No 1’ (section 8.2.1.4). 463 Secondly, the Commission examined the substance of the 3 May 2007 commitments before concluding that they could not eliminate the competition problems identified (section 8.2.2). In essence, the Commission criticised the fact that the proposed commitments did not constitute a business divestiture, which is necessary in the present case, but mainly an ‘access remedy’ which was defined following the model of previous airline cases. The following grounds are elaborated on in the contested decision: – as regards the slots package for the overlapping routes from and to Dublin, Cork and Shannon (section 8.2.2.1), the Commission’s market investigation and the results of the market test of the 3 May 2007 commitments showed that there were no indications of sufficient entry on the vast majority of the identified routes and that that offer of slots will not restore competition on a large number of the more than 30 affected overlap routes. The Commission thus stated that the ‘up-front’ proposal cannot remedy the missing perspective of entry (recitals 1197 and 1198), that the scope of the proposed commitments was insufficient as airport congestion was not the main barrier to entering into direct competition with Ryanair-Aer Lingus combined (recitals 1199 to 1206), that the commitments do not relate to slots at important destination airports such as Roissy-Charles-de-Gaulle, Frankfurt am Main, Brussels, Milan-Linate or Milan-Malpensa (recitals 1207 to 1209), that the commitments could only provide for ‘fragmented’ entry which is less likely to restore effective competition (recitals 1210 to 1212) and that the commitments disregarded the operating model of the entrant (recitals 1213 to 1215); – as regards the slot package for the Dublin-London (Heathrow) route (section 8.2.2.2), the market test confirmed the Commission’s analysis that British Airways and Air France, as well as at least one other competitor, were interested in obtaining these slots and in expanding their existing operations on that route. Although, due to the exclusivity clause concerning British Airways and Air France, the offered slots would not lead to new entries, the Commission acknowledged that that offer of slots, should they actually be divested, would most likely lead to expansion by competitors on that route which could constrain Ryanair-Aer Lingus combined on the Dublin-London route to a certain extent (recital 1216). However, the Commission expressed doubts as regards the sufficiency and effectiveness of those commitments for a number of reasons: the lack of clarity as to whether those airlines could offer low-fares services comparable to those offered by Ryanair that would be capable of substituting for the disappearing competitive pressure from Aer Lingus to a sufficient extent (recital 1217), the uncertainty as to whether the flight frequencies offered to the two airlines concerned is sufficient to impose effective competitive constraints on the merged entity (recital 1218) and the lack of clarity of the commitments (recital 1219); – as regards the non slot-related commitments (section 8.2.2.3), consisting of an immediate reduction of at least 10% in Aer Lingus’s short-haul fares, the immediate elimination of the fuel surcharges Aer Lingus applies on its long‑haul flights, a ‘frequency freeze’ and the retention of separate operations and brands, the Commission stated that they did not directly solve any of the competition problems identified and that they gave rise to numerous questions relating to monitoring and the workability of that monitoring. 464 Furthermore, the Commission observed that it was unclear whether the proposed commitments could be implemented without the consent of other Aer Lingus shareholders (section 8.2.2.4). In particular, it found that there were serious legal doubts as regards the possibility of Ryanair’s disposing of Aer Lingus’s slots at Heathrow, given that Aer Lingus’s Articles of Association confer certain rights of veto on the Irish Government, which would make it possible for it to block the transfer of the slots. (c) Description and assessment of the draft commitments of 1 June 2007 465 The Commission pointed out that, on 29 May 2007, a meeting was held in the form of a conference call in which Ryanair was informed about the results of the market test of its commitments and the Commission’s preliminary assessment of the 3 May 2007 commitments (recital 1153). The Commission stated that on 1 June 2007, following that meeting and subsequent additional discussions, Ryanair submitted, in draft form, revised commitments which are referred to as the ‘draft modified final commitments’ in the contested decision (‘the draft commitments of 1 June 2007’). The Commission explained that, according to Ryanair, the proposed modifications aimed at ‘addressing’ the identified shortcomings of the 3 May 2007 commitments (recital 1236). 466 In the contested decision, the Commission stated that the draft commitments of 1 June 2007 had been provided explicitly in draft form, without signature and without complying with the formal requirements necessary pursuant to Article 20 of the Regulation No 802/2004. The Commission therefore found that, since Ryanair had not formally submitted new commitments, it was not obliged to assess them in the contested decision (recital 1237). 467 In any event, according to the Commission, even if the draft commitments of 1 June 2007 had been formally submitted, they would still not have been sufficient to allow it to conclude, on the basis of information already available, that they fully and unambiguously resolved the competition concerns identified. The Commission noted that the period for submitting commitments in line with Regulation No 802/2004 had expired on 3 May 2007. Furthermore, according to the Commission, although it may, in exceptional circumstances, accept amendments to remedies submitted even if a new market test is no longer possible, those commitments must resolve specifically all the competition problems identified (recital 1237). The Commission pointed out, in particular, that the draft commitments of 1 June 2007 were still based on slot transfer and did not provide any new elements which could address the other identified barriers to entry and thus enable it to re-evaluate the negative results of the market test as to likelihood of an actual entry. Furthermore, according to the Commission, the scope of the guaranteed new entry was still insufficient as the commitments provided only for one new ‘up-front’ entrant with a greater, but still insufficient, number of aircraft. Furthermore, the Commission pointed out that the draft commitments of 1 June 2007 did not provide for the transfer of slots at all relevant destination airports, in particular not for slots at congested airports, and that other unsolved problems related, in particular, to legal uncertainty with respect to the London-Heathrow Airport slots and the implementation of the ‘up-front’ provisions (recital 1238). 468 The Commission therefore concluded in the contested decision that, even if the draft commitments of 1 June 2007 had been formally submitted, they would clearly not have allowed it to determine with the required degree of certainty and without the need for another market test that such commitments, once implemented, would sufficiently resolve the identified competition concerns caused by the proposed concentration (recital 1239). 469 To dispute that analysis, the applicant states, in essence, that it offered five sets of commitments during the administrative procedure, on 29 November and 14 December 2006, 17 April, 3 May and 1 June 2007 respectively. The last two sets of commitments consisted of (i) behavioural commitments comprising a 10% reduction in the Aer Lingus tariff, elimination of Aer Lingus’s fuel surcharge, maintenance of frequencies on existing routes unless they become unprofitable and no increase of frequencies on routes on which a new entrant operates; (ii) commitments concerning slot divestiture at Dublin, allowing one or two competitors to base a substantial number of aircraft there (with a distinction between the Dublin-London (Heathrow) route and other routes), at Shannon and at Cork; and (iii) an ‘up-front buyer’ commitment, under which the merger would proceed only if there was a purchaser for the Dublin slots. 470 As regards the last set of commitments, the applicant refers to a meeting with the Commission on 1 June 2007, at which the Commission proposed modifications to the 3 May 2007 commitments to address the shortcomings identified. According to the applicant, those modifications concerned the need for it to propose within six months after the adoption of the contested decision (with a possible extension of six months) an ‘up-front buyer’ which would immediately base a substantial number of aircraft at Dublin. In response, Ryanair gave a commitment to find an ‘up-front buyer’ for the Dublin-London (Heathrow) slots, which would base two aircraft at Dublin, and another for the other slots, which would base half the substantial number of aircraft envisaged by the Commission there. Ryanair also committed to make available to the ‘up-front buyer’ for the Dublin slots, at any time during the first three years, additional slots needed to reach the substantial number of aircraft demanded by the Commission and to give preference for the acquisition of the Dublin slots to the entrant acquiring the Heathrow slots. Moreover, Ryanair gave a commitment to find the ‘up-front buyer’ within a period of six months after lodging a new bid for Aer Lingus and to lodge such a new bid within six months of the adoption of the contested decision, with a possible extension of six months. The contested decision does not make it possible to understand how the difference between the modifications requested by the Commission and the modifications made by Ryanair could lead to the conclusion that the last set of commitments was not satisfactory (recital 1238). 471 The Commission, supported by Ireland and by Aer Lingus Group, states that, in order to restore effective competition, the commitments proposed must eliminate the anti-competitive effects resulting from the elimination of actual and potential competition between Ryanair and Aer Lingus on all 50 of the markets affected. In that regard, the Commission set out in the contested decision the reasons why the commitments submitted on 3 May 2007, the last day of the period provided for in Article 19(2) of Regulation No 802/2004, displayed formal shortcomings and were not such as to eliminate the competition problems identified (recitals 1167 to 1234). As regards the draft commitments of 1 June 2007, which were submitted after the expiry of the period provided for in Article 19(2) of Regulation No 802/2004, the Commission set out the reasons why it was not possible to conclude that the modified concentration was compatible with the common market (recitals 1236 to 1239). In any event, the applicant cannot maintain that the Commission should have examined the differences between possible suggestions from its departments and the draft commitments of 1 June 2007. The only relevant question is whether the Commission could find, without making a manifest error of assessment, that the proposed concentration, as modified by the commitments validly offered by Ryanair, significantly impedes effective competition in the common market. 472 It is against that legal and factual background that the arguments of the parties must be examined. 2. Absence of formal shortcomings affecting the commitments of 3 May 2007 a) Arguments of the parties 473 The applicant maintains that the Commission cannot assert that the 3 May 2007 commitments were not validly submitted (recitals 1167 to 1182 of the contested decision) and that it is not required to assess them. Since the content of those commitments was analysed in the contested decision, it cannot be alleged that they could not be analysed. In that regard, the applicant denies the existence of the formal shortcomings identified in the contested decision. The format of those commitments was identical to that used for the commitments of 29 November 2006, 14 December 2006 and 17 April 2007. The only new elements were the commitment to seek an ‘up-front buyer’, as demanded by the Commission, and the additional slots at Cork and Shannon. Since the Commission did not raise any objection in the administrative procedure as to the format of those sets of commitments, it could not then criticise Ryanair for the use of a commitments letter and an explanatory Annex for the 3 May 2007 commitments (recital 1168). Furthermore, the Commission cannot criticise Ryanair for not having consulted it before lodging the 3 May 2007 commitments (footnote 1404 under recital 1161), in so far as those commitments correspond to the previous ones and a discussion had already taken place without the Commission ever having raised any formal complaints. The Commission cannot moreover criticise Ryanair for failing to use the non-obligatory model text adopted by it. 474 In any event, the applicant emphasises that the Commission did not take account of the fact that it had clarified a number of alleged ambiguities cited in the contested decision and that any remaining alleged inconsistencies could not in any event have prevented the adoption of the commitments. 475 As regards the statement in recital 1173 of the contested decision that there were doubts concerning the approval of the ‘up-front buyer’, the applicant points out that it agreed to include that condition at the request of the Commission and that it included the approval provision in the reformulated draft versions. As regards the assertion in the same recital that the time-limit for implementing the ‘up-front buyer’ solution was not defined, the applicant states that it subsequently clarified that time-limit and it explained to the Commission the relevant Irish takeover rules. 476 As regards the assertion in recital 1174 of the contested decision that there was a contradiction between the ‘up-front buyer’ solution referred to in the ‘commitments letter’ and the time-limit on the slots transfer provided for in clause 3 of Annex 1 to that letter, the applicant observes that it subsequently deleted that clause to avoid any doubt in respect of the duration of its commitments. 477 As regards the assertion made in recital 1175 of the contested decision that it was unclear whether the ‘up-front buyer’ solution concerned only Dublin slots or slots at Shannon and Cork as well, Ryanair made it clear that that solution referred only to Dublin slots. 478 With regard to the statement made in recital 1176 of the contested decision, that the ‘up-front buyer’ solution was unclear as to whether the transfer of slots was to different airlines or to only one, Ryanair had stated that that commitment applied to ‘an airline or airlines that wished to secure slots in order to base aircraft in Dublin’, thus referring, potentially, to a number of airlines. That is confirmed by the revised provisional versions of the 3 May 2007 commitments, submitted on 25 and 30 May 2007. 479 As regards the assertion in recitals 1177 and 1178 of the contested decision that the commitment concerning the transfer of slots was not clear, as evidenced by the terms ‘allocated from time to time so as to comply with the Articles of Association of Aer Lingus (as amended from time to time)’ or ‘binding leasing agreement’, the applicant observes that those terms were clarified, as was the general issue of slot divestments, in its letter dated 15 May 2007. Moreover, in response to the Commission’s request for information dated 25 May 2007, Ryanair provided further clarification and also attached the opinion of an Irish Senior Counsel. 480 As regards the assertion contained in recital 1179 of the contested decision that the 3 May 2007 commitments did not express a clear intention to make available slots at destination airports, the applicant submits that that is not a formal but a substantive issue. 481 As regards the assertion in recital 1180 of the contested decision that it was ambiguous ‘whether new entrant(s) could use the offered slots (except the Heathrow slots) for any route or whether the use is restricted to the overlap routes’, the applicant clarified that alleged ambiguity by stating repeatedly that the slots could be used to serve any route, without restriction, from Dublin, including the overlap routes. The Commission’s allegation appears to be based only on the wording of clause 2.15(iii) of Annex 1 to the ‘commitments letter’, which was subsequently removed. 482 As regards the allegation in recital 1179 of the contested decision that Ryanair’s definition of ‘relevant airport pairs’ in the 3 May 2007 commitments did not correspond to the pairs listed in the statement of objections, the applicant explained that it had omitted two destinations (namely Bologna and Salzburg) because those two routes were seasonal only, but that did not change the intention to cover all the routes. To dispel all doubt in that regard, Ryanair included those two destinations in the subsequent texts of the commitments. 483 As regards the allegation in recital 1179 of the contested decision that the total number of slots to be released at Cork and Shannon was unclear, the applicant emphasises that that information was clearly contained in the ‘commitments letter’. Moreover, Ryanair confirmed those numbers in a letter and in the draft commitments of 1 June 2007. 484 As regards the allegation in recital 1181 of the contested decision that the Commission was not apprised of the details of implementation of the behavioural remedies offered under commitment No 1, the applicant submits that it had clarified how monitoring would take place. The Commission did not provide a meaningful response to that explanation, asserting that it merely amounted to a modification of the commitments and it was under no obligation to accept it. In order to dispel any doubt, Ryanair included explicit reporting provisions in its subsequent submissions. 485 As regards the allegation in recital 1182 of the contested decision that the ‘inconsistency and lack of clarity’ of the remedies proposed, perceived ‘by some competitors’ as an obstacle to the viability of the commitments, were apparent from the responses of ‘some’ competitors to question No 5 of the May 2007 market testing questionnaire concerning clarity of the slot transfer remedy, the applicant submits that the Commission could not have properly formed such a conclusion. First, only 20 competitors responded to that questionnaire, nine of which did not respond to question No 5. As regards the 11 competitors who replied to the question, three did not actually address the question asked, three (LTU, Aer Arann and Clickair) commented positively on the clarity of the commitments and only five, of which two were anonymous, expressed reservations about the clarity of the slot transfer remedy. No other details of any alleged ‘inconsistencies’ or ‘lack of clarity’ have been identified by the Commission. 486 The Commission, supported by Ireland and by Aer Lingus Group, observes that it was for Ryanair to put forward commitments that were comprehensive and effective from all points of view to enable it to conclude, with certainty, that it would be possible to implement the commitments and that the new commercial structures resulting from them are sufficiently workable and lasting to ensure that the concentration would not significantly impede effective competition. Ryanair did not consult the Commission before submitting the 3 May 2007 commitments, or even the previous commitments. The Commission never stated that any of the commitments were sufficiently clear and precise to be implemented. Ryanair cannot claim to have entertained any legitimate expectations on this point. The slot-related and behavioural elements of the 3 May 2007 commitments did not correspond to those contained in previous commitments. In any event, the 3 May 2007 commitments were not sufficiently clear and precise to be implemented. 487 Furthermore, the Commission could not take into account informal clarifications submitted subsequently which, likewise, lacked clarity and precision. After the deadline for submitting commitments, the Commission could only accept modified commitments in exceptional circumstances if those modifications clearly removed all existing competition concerns without the need for a market test. However, following the submission of the 3 May 2007 commitments, Ryanair provided a number of informal explanations, some of which contradict the terms of the 3 May 2007 commitments, and reformulated draft versions of those commitments on 25 and 30 May 2007. None of those explanations was properly formalised. Moreover, the explanations were not sufficient to address all the formal shortcomings identified in the contested decision. Aer Lingus also indicates that Ryanair emphasised on 8 May that ‘to clarify, the Heathrow slots are not exclusive[ly] to British Airways and Air France’, before observing on 11 May that ‘these slots are exclusively reserved for British Airways and Air France’. The Commission also noted that at least 7 of the 10 competitors of Ryanair that answered the market test questionnaire believed the 3 May 2007 commitments were not sufficiently clear, which is enough to support the statement in the contested decision that the inconsistency and lack of clarity of the 3 May 2007 commitments is an obstacle to their viability. b) Findings of the Court 488 It is apparent from the contested decision (see paragraphs 460 to 464 above) that the commitments proposed by Ryanair in the period established for that purpose by Article 19(2) of Regulation No 802/2004, which ended on 3 May 2007, were not regarded by the Commission as satisfactory to deal with the competition problems identified at that stage. That finding is based on two reasons which are set out in the contested decision. First, ‘the [3 May 2007] Commitments fail to meet the requirements in terms of legal clarity and coherence in order to be acceptable to dismiss the identified competition concerns’ (recital 1182). Secondly, irrespective of the ‘formal shortcomings’ identified in section 8.2.1 of the contested decision, ‘the [3 May 2007] Commitments would not be sufficient to remove all the identified competition concerns’ (recital 1234). 489 The arguments submitted by the applicant are not capable of calling the Commission’s finding into question. 490 First, as regards the formal shortcomings listed by the Commission in the contested decision as regards the 3 May 2007 commitments, the applicant submits that they cannot be relied on, because an analysis of the content of those commitments was made in the contested decision. 491 It is, however, apparent from just reading the contested decision that that analysis of their content was carried out independently. In recital 1166, the Commission therefore stated that those commitments were ‘not only … formulated in an unclear and often contradictory manner (see section 8.2.1), their substance [was] also not sufficient to resolve the identified competition concerns (see section 8.2.2)’. That analysis of their content is explained by the Commission’s intention of informing Ryanair of the results of its market test regarding the 3 May 2007 commitments in order to explain what form the final offer of commitments might take. 492 The applicant cannot therefore dispute the existence of the formal shortcomings identified in section 8.2.1 of the contested decision as regards the format used to submit the commitments, the lack of clarity of the commitment relating to the ‘up-front buyer’ of the slots, the mechanics of the divestiture of those slots and the monitoring of the behavioural commitments, just because a substantive analysis was carried out, as that analysis was carried out for the sake of completeness and on the assumption that those commitments had been submitted in a way which ensured that they could be implemented. 493 Secondly, the applicant cannot rely on the Commission’s attitude towards the commitments which had previously been submitted. The format used by the applicant had been used in the past only for the submission of the 17 April 2007 commitments, which were part of the response to the statement of objections, at a time when the assessment of the effects on competition had not yet been finalised. Although it is possible to accept that, in the latter context, the applicant may call into question the conclusions of such an assessment by disputing the existence of competition concerns, it could not include statements or opinions on the Commission’s analysis in an offer of commitments such as the 3 May 2007 commitments, since that offer had to express an intention to eliminate the problems identified at that stage in return for an approval decision. In the event of disagreement on the commitments desired by the Commission, the parties to the transaction may always refuse to propose them and bring an action before the Court to challenge any prohibition decision adopted in respect of their transaction. 494 Furthermore, by contrast with the previous proposals, some of the 3 May 2007 commitments were new, like the commitment relating to the ‘up-front buyer’, which the Commission stressed in particular in the contested decision was too vague in the light of its previous practice on that issue (recital 1172 and footnote 1428). That practice requires inter alia a clear and precise clause which actually makes the implementation of the merger conditional on the implementation of the corresponding commitment. 495 Thirdly, the applicant cannot seek to call into question the finding that the 3 May 2007 commitments have formal shortcomings by relying, as noted in paragraphs 474 to 485 above, on information and clarifications provided subsequently in response to requests from the Commission. That information is part of another context, that of the final offer of commitments, and not that of the Commission’s assessment of the form and clarity of the commitments submitted by Ryanair at the end of the procedure laid down for that purpose by Regulation No 802/2004. 496 Consequently, the applicant does not put forward any arguments capable of calling into question, to the requisite legal standard, the Commission’s assessment in the contested decision that the 3 May 2007 commitments had formal shortcomings such that it was unable to conclude, with certainty, that it would be possible to implement them and that the remedies resulting from them would be sufficiently workable and lasting to ensure that the impairment of effective competition which those commitments were intended to prevent would not be likely to materialise in the relatively near future. 497 It is thus now necessary to examine the applicant’s arguments concerning the draft commitments of 1 June 2007. The arguments relating to the substantive assessment of offers of commitments made to the Commission will be examined in that context. 3. Absence of formal shortcomings affecting the draft commitments of 1 June 2007 a) Arguments of the parties 498 The applicant maintains that the Commission was wrong to assert, in recitals 1236 and 1237 of the contested decision, that the draft commitments of 1 June 2007 were not validly offered and that it was not required to evaluate them. Since the content of the draft was analysed in the decision, it cannot be alleged that it could not be analysed. According to the applicant, the letter which it sent to the Commission on 1 June 2007 was submitted ‘in draft form’ to allow the Commission to make any final drafting amendments that might be required to ensure that the commitments were clear, unambiguous and consistent throughout the document. If the Commission considered that the label ‘draft’ and the absence of a signature were formal shortcomings that prevented it from assessing the substance of the 1 June commitments, it was incumbent upon the Commission to inform Ryanair accordingly, and it failed to do so. Thus, the Commission’s letter to Ryanair of 4 June 2007 merely indicated that the draft commitments of 1 June 2007 were insufficient to remedy the alleged competition concerns identified at that stage, without mentioning that the Commission considered that it was not obliged to assess them on the ground that they had been offered in draft form. By acting in that way, the Commission infringed the principles of good administration and protection of legitimate expectations. 499 The Commission, supported by Ireland and by Aer Lingus Group, observes that unsigned commitments that are explicitly submitted in draft form cannot be considered as commitments that the undertakings concerned have ‘entered into vis-à-vis the Commission’ within the meaning of Article 8(2) of the merger regulation. Such commitments can be changed or revoked by the undertaking that offered them. In any event, even if the draft commitments of 1 June 2007 had been formally submitted, they would not have allowed the Commission to determine with the required degree of certainty that they would resolve the identified competition concerns without the need for a further market test. Moreover, the applicant cannot invoke the principle of good administration, as such, in support of its claims that the Commission should have assessed the draft commitments of 1 June 2007 and the Commission never gave Ryanair any assurance that it would assess all the draft commitments in the contested decision. b) Findings of the Court 500 Like the 3 May 2007 commitments, the draft commitments of 1 June 2007 were rejected by the Commission in the contested decision for two reasons (see paragraphs 466 and 467 above). 501 First, the Commission stated in the contested decision that the draft commitments of 1 June 2007 ‘[had been] provided explicitly in draft form, without signature and without complying with the formal requirements necessary pursuant to Article 20 of … Regulation … No 802/2004’. It found that ‘[s]ince Ryanair ha[d] not formally submitted new commitments, the Commission [wa]s not obliged to assess them in the present decision’. The Commission stated in particular that it ‘could not make an authorisation conditional on compliance with such draft commitments’ (recital 1237). 502 Secondly, the Commission noted that ‘[i]n any event, even if the Draft … Commitments [of 1 June 2007] had been formally submitted, they would still not have been sufficient to allow the Commission to conclude, on the basis of information already available, that they fully and unambiguously resolve[d] the competition concerns identified’ (recital 1237, which refers to paragraph 43 of the Notice on remedies and to EDP v Commission, paragraph 28 above, paragraphs 161 to 163). 503 As regards the first reason which the Commission advanced for rejecting the draft commitments of 1 June 2007, it is apparent from the very wording of that document that it is a mere draft and not a version which is capable of binding Ryanair as is, however, required at that stage of the procedure. Therefore, even though the document is headed ‘Legally binding commitments by Ryanair to the European Commission’, it is presented in the form of a ‘draft’ and the space left for the signature of Ryanair’s Chief Executive has been left empty. The covering letter signed by Ryanair’s Chief Executive also states that that document is in draft form in order to allow for any final drafting amendments that may be required by the Commission to ensure that those commitments are clear, unambiguous and consistent throughout the document. However, the Commission is not in a position to provide such details at that very advanced stage of the procedure, where the final offer of commitments must not only be binding on the party offering them, but also sufficient in itself, in the sense that the Commission must be able to assess it without again having to seek the opinions of third parties on its content. 504 Furthermore, the fact that an analysis of the content of the draft commitments of 1 June 2007 was carried out ‘in any event’ cannot be interpreted as meaning that this in effect allows the applicant to refrain from submitting legally binding commitments to the Commission at the final stage of the procedure. 505 Consequently, the applicant does not put forward any arguments capable of calling into question, to the requisite legal standard, the Commission’s assessment in the contested decision that the draft commitments of 1 June 2007 did not allow it to conclude, with certainty, that it would be possible to implement them and that the remedies resulting from them would be sufficiently workable and lasting to ensure that the impairment of effective competition which those commitments are intended to prevent would not be likely to materialise in the relatively near future. 506 The assessment of the applicant’s arguments in respect of the substantive examination of the 3 May 2007 commitments and the draft commitments of 1 June 2007 will thus be carried out for the sake of completeness, as was the case in the contested decision. 4. Substantive assessment of the 3 May 2007 commitments and the draft commitments of 1 June 2007 a) Arguments of the parties 507 The applicant criticises the Commission for overstating the competitive constraint which it and Aer Lingus exercised on each other and for incorrectly assessing the threat of entry capable of preventing exploitation of a monopoly in an anti‑competitive manner (see the Guidelines and easyJet v Commission, paragraph 102 above, paragraph 202). By relying on an incorrect analysis of the effects of the merger on competition, the Commission disproportionately required Ryanair to find an ‘up-front buyer’ with a base of a substantial number of aircraft at Dublin in order to compete immediately with the merged entity. No airline could simultaneously base such a number of aircraft at a single airport and offer services on all 35 overlap routes within six months. Many of those routes are characterised by overcapacity and the time frame of six months would not have been sufficient to transfer the necessary number of slots to the new entrant, given the timing under the IATA slot transfer procedures. 508 The applicant submits that it is not for the parties to a concentration to prove that the commitments offered remedied the competition concerns identified by the Commission. On the contrary, it is incumbent on the Commission to prove that the transaction, as modified by the commitments, would lead to a significant impediment of effective competition (EDP v Commission, paragraph 28 above, paragraphs 63 and 77). However, the Commission did not undertake a global assessment of the merger, as modified, even though that is required in paragraph 77 of the EDP v Commission judgment, paragraph 28 above. Moreover, as regards the commitments proposed after the expiry of the time-limit laid down in Article 19(2) of Regulation No 802/2004, it is clear from paragraphs 161 to 163 of EDP v Commission, paragraph 28 above, that the Commission is required to take account of them only if they clearly, and without further consultation, resolve the competition concerns. Contrary to what is stated in recital 1237 of the contested decision, that rule does not apply to the draft commitments of 1 June 2007, since they responded to specific suggestions by the Commission made on the basis of its assessment of the 3 May 2007 commitments. 509 In essence, the applicant considers that the transfer of slots and the behavioural commitments were sufficient to eliminate any problem of competition. Thus, the transfer of London-Heathrow slots, ‘the most valuable slots in the industry’, ‘would most likely lead to expansion by competitors on this route’ (recital 1216 of the contested decision). The making available of slots for other routes from Dublin, Shannon or Cork would have enabled any airline to enter any of the overlap routes or any route of its choice, if necessary basing aircraft in Ireland. The ‘frequency freeze’ would have made certain that, in the event of additional demand on a route, Ryanair would not be able ‘to snap’ that demand away from a competitor. The commitment not to reduce frequency unless a route was unprofitable means that, even if there were no new entry on a particular route, the combined capacity of Ryanair and Aer Lingus would make it difficult to increase prices while maintaining an acceptable load factor. The reduction of Aer Lingus’s fares by 10% immediately following completion of the merger would have brought immediate savings to consumers. Those commitments were in line with the commitments that the Commission had accepted in its decision of 11 February 2004 (Case COMP/M.3280 – Air France/KLM) which concerned carriers with far more market power than Ryanair. 510 First, as regards the slot commitments, the applicant submits that the Commission erred in finding that they were not appropriate. The Commission posed the wrong question in its market testing. It should have asked whether competitors would be willing to enter routes if the merged entity was not devoting sufficient capacity to a route or was charging significantly higher fares than pre-merger. Moreover, several competitors declared that, while they did not have immediate plans to enter, they would consider entry if it was commercially attractive. Accordingly, the fact that no competitor answered that it would enter the overlap routes indicated that the competitors believed that the concentration would not have any anti-competitive effects. It was therefore unreasonable for the Commission to require that the commitments actually trigger entry. Such a requirement punishes Ryanair on the grounds that it is ‘highly efficient’ and offers such low prices that no airline wished to compete with it even on ‘monopoly’ routes. The applicant adds that the Commission could not rely on the responses to question 6 in the questionnaire addressed to competitors in the market, regarding entries, in order to assess the 3 May 2007 commitments. In any event, the commitments concerning the Dublin slots are sufficient to remedy the problems identified. The Commission provides no evidence as to why a new entrant must be able to operate immediately on all overlap routes with the same frequencies that Aer Lingus currently operates in order to be an effective competitive constraint (recitals 1200 to 1206). The notions of ‘critical size’ and ‘required degree of competition’ used in that regard are not defined by the Commission. 511 Second, with regard to slots at destination airports, the applicant maintains that the Commission is wrong to claim that the slot commitments were insufficient because of lack of precision on that point. Aer Lingus has only a limited number of slots at primary airports and Ryanair could not give them up without undoing the whole rationale for the merger and significantly weakening the ability of Aer Lingus to compete with network carriers. The latter have more than sufficient slots available at the primary destination airports. In most cases, they are dominant at their major hub airports. They do not therefore need additional slots in order to be able to enter routes from their home airports to Dublin or expand their operations on those routes. Those slots would merely make those companies more dominant at their home airports and undermine the competitive threat that the Aer Lingus brand could pose for them. That is not necessarily the case as regards low-fares carriers, which serve or can serve the same secondary airports as those to which Ryanair flies and which do not have any constraints as regards slots. In this context, it is wrong for the Commission to invoke the theory of city pairs and insist that the new entry must be a low-fares airline, and then require Ryanair to give up slots at primary airports. The Commission’s reference to the difference between demand and supply substitutability (recital 1208 of the contested decision) only serves to gloss over that ‘apparent contradiction’ in its reasoning. As regards market testing concerning destination airports, the responses by competitors must be read with great caution, as many of them would face greater competition if the concentration were approved. The only relevant question is whether access to the slots held by Aer Lingus at certain major airports is essential for entry in the event that the merged entity abuses its position. Thus, British Airways did not consider access to slots at primary airports to be essential on the ground that all those cities have other airports that are not slot constrained and the EU slot regulations provide for 50% of new capacity to be allocated to new entrants. 512 Third, with regard to fragmented entry, the applicant criticises the Commission for taking account of that element in recitals 1211 and 1212 of the contested decision. The draft commitments of 1 June 2007 specifically provided that the airline which takes the Heathrow slots would get priority for the Dublin slots. Moreover, to demonstrate that ‘fragmented entry’ would be a problem, the Commission relies only on a broad reference to the answers to question 2(b) of the market testing questionnaire and a reference to a ‘critical mass’, an unidentified term taken from LTU’s response to the market testing (recital 1212). However, only 15 of the 20 participants in the market testing answered the question concerning ‘fragmented entry’. Moreover, as in other cases, the Commission failed to acknowledge that important potential entrants, in this case British Airways, SAS, Flybe, Air Baltic and Clickair, made statements directly contradicting the Commission’s conclusions. Certain responses even suggest that entry by a single entrant would be bad for competition. The only relevant question, which should have been asked, is whether entry, be it fragmented or by a single competitor, would be a sufficient constraint on the merged entity in the event of the latter raising prices. The question whether entry by a single entrant would be a stronger competitive force than entry by more than one entrant is not the right question. 513 Fourth, with regard to the operating mode of the new entrant, the applicant claims that the Commission seems to assume that the new entrant must follow exactly the same business model as Aer Lingus. However, the applicant states that Aer Lingus exercises no material competitive constraint on Ryanair and that, in any event, there is no evidence that another carrier, irrespective of its business model, could not exercise significant competitive constraint. Moreover, the rationale of the transaction being to make Aer Lingus more efficient so that it can compete with the network carriers, expansion or entry by another network carrier such as British Airways or Air France would have easily provided consumers with an alternative to Aer Lingus. The Commission cannot, on the one hand, require Ryanair to refer to the business model used by a new entrant and, on the other hand, simply require that the proposed commitments allow the entry to the market of certain carriers who are in a better position than others to succeed in exerting a constraint on the merged entity. 514 Fifth, with regard to the commitments concerning London Heathrow slots, the applicant claims that the Commission questioned their usefulness on the ground that they would be reserved to British Airways and Air France. However, that is not the case, Ryanair having indicated in writing, on 1 June 2007, that those slots could be taken up by any airline with an existing Heathrow infrastructure. In any event, the Commission did not discharge the burden of proof which it bears by simply calling in question the usefulness of slot divestiture. It was also wrong to assert, in recital 1217 of the contested decision, that those two companies could not make up for the disappearance of competitive pressure from Aer Lingus to a sufficient extent. In fact, British Airways and Air France, being among the most powerful competitors in Europe, have been operating in Ireland for decades and know the Irish market well. British Airways already code-shares with Aer Lingus on that route and Air France has an airline, CityJet, based at Dublin. Similarly, the Commission has not in any way proved, in recital 1218 of the contested decision, that, if the slots were split between two very powerful carriers, the concentration, as modified by the commitments, would significantly impede effective competition on the Dublin-London (Heathrow) route. Moreover, since there is limited substitutability between the London airports, according to the applicant, that route operated by Aer Lingus does not serve to exercise any material constraint on Ryanair’s operations to the other London airports. Finally, by just mentioning the ‘risk of a legal dispute’ regarding the possibility of Ryanair transferring Heathrow slots without the consent of other Aer Lingus shareholders, the Commission did not take account of a legal opinion by an Irish counsel to the effect that such a transfer would be possible. 515 Sixth, with regard to behavioural commitments, the applicant states that the commitment of the 10% reduction of Aer Lingus’s fares was easily verifiable because Aer Lingus publishes its average fare in its annual report. The Commission is wrong to ask Ryanair to specify whether the reduction of fares covers all overlap routes. It is virtually impossible to increase the fare on the overlap routes and still achieve a 10% overall reduction on all short-haul routes. Similarly, although the Commission observes that it cannot anticipate what a competitive price is, the fare reduction would bring about significant and realisable benefits. The ‘frequency freeze’ in the event of a new entrant was to address the Commission’s claims regarding Ryanair’s alleged aggressive response to new entrants, a reaction consisting in increasing frequencies on routes where another airline enters. Further, the commitment not to decrease frequencies was to address the concern that Ryanair would reduce capacity on the overlap routes and thus be able to increase prices. By committing itself to retaining the combined capacity on the overlap routes, Ryanair would not be able to increase prices and still maintain an acceptable load factor, which is crucial to its business model. 516 Seventh, with regard to the matter of the ‘up-front buyer’, the applicant observes first of all that that course of action was never followed in any previous airline cases. Such a requirement is also unnecessary and disproportionate. In view of the fact that Ryanair was offering the lowest fares in the market and that many overlap routes did not generate sufficient demand to add a third carrier, it would be commercially very difficult to find an ‘up-front buyer’. The only solution would be for Ryanair and Aer Lingus to abandon those routes or enter into an illegal price fixing agreement with the ‘up-front buyer’. Moreover, the ‘frequency freeze’ would have the effect that new entrants would not be dissuaded from entering overlap routes by the risk of Ryanair’s increasing the frequencies on those routes. With the exception of the Heathrow slots, the Dublin slots and those of most other airports around Europe (with the exception, perhaps, of the other main congested airports) have no inherent value and would not therefore be attractive to another airline. Finally, the Commission was wrong to consider that the ‘up-front buyer’ commitment was insufficient because of its limited scope and the fact that it would lead to ‘fragmented entry’ (recital 1238 of the contested decision). That commitment, enhanced in the draft commitments of 1 June 2007, was based on the request to that effect from the Commission. The applicant also criticises the Commission’s wish that it should bear the risk that no ‘up-front buyer’ might be found within the required time frame. 517 The Commission, supported by Ireland and by Aer Lingus Group, states that it examined and rejected the 3 May 2007 commitments on the basis of the following findings: the slot remedies were not appropriate since they were not likely to trigger any substantial entry on the overlap routes (recitals 1186 to 1196 of the contested decision); the ‘up-front’ proposal could not remedy the missing perspective of entry (recital 1197); the scope of the commitments was insufficient (recitals 1199 to 1206); commitments for slots at important destination airports were missing (recitals 1207 to 1209); the commitments could only have led to entry by several airlines (fragmented entry) (recitals 1210 to 1212); the commitments disregard the operating model of the entrant (recitals 1213 to 1215); the commitments concerning the London Heathrow slots could not remedy the competition concerns on the Dublin-London market (recitals 1216 to 1219); the additional commitments could not eliminate the impediment to effective competition (recitals 1220 to 1226). 518 In particular, the Commission considers that access remedies can only be acceptable in circumstances where it is sufficiently clear that there will be actual entry of new competitors that would address the identified competition concerns (recital 1188). The basic aim of commitments is to ensure competitive market structures and it is plain that a mere threat of entry by a competitor is insufficient to achieve that aim save in quite exceptional circumstances. It is well established that demand substitution constitutes the ‘most immediate and effective disciplinary force’ on the suppliers of a given product or service, in particular in relation to their pricing decisions, whereas the competitive constraints arising from potential competition are in general less immediate and in any case require detailed analysis. The Commission notes that in this case the relevant markets are not characterised by ‘proven ease of entry’ but rather by a ‘pattern of exit of competitors other than Aer Lingus’. The Guidelines do not indicate that a merger which culminates in the creation of a monopoly does not significantly impede effective competition if there is a sufficient threat of entry of new competitors. The easyJet v Commission judgment, paragraph 102 above, is no authority for that proposition either. In that case, the Court found that it was not necessary to identify the new entrant by name since various competitors had expressed an interest in entering the affected markets following the commitments and actual entry of a new competitor could therefore be considered very likely. In the present case, on the contrary, the entry of a new competitor is not likely at all, for the reasons set out in section 7.8 of the contested decision, and the fact that none of the competitors that replied to the market test indicated that they would enter any of the overlap routes (recitals 1190 to 1196), with the possible exception of Air France and British Airways expanding their operations on the Dublin-London route, which the Commission found to be insufficient to eliminate the concerns on that route (recitals 1216 to 1219). It is precisely because of the missing perspective of entry that the Commission suggested informally to Ryanair that it consider proposing an ‘up-front solution’. The fact that this may have been the first airline merger in which the Commission made such a suggestion and that Ryanair may have considered it difficult or impossible to adhere to are both irrelevant. This concentration is different from previous airline mergers in that it involves two point-to-point airlines that both operate with a significant number of aircraft out of the same airport on a large number of overlapping routes. On the other hand, in contrast to previous cases, airport congestion is not the main barrier to entry in this case. The Commission emphasises that it cannot accept commitments which only partially resolve those competition problems merely because the notifying party cannot agree to other commitments. b) Findings of the Court 519 The draft commitments of 1 June 2007 followed in-depth discussions between the Commission and Ryanair on the content of the 3 May 2007 commitments and the ways to remedy the problems identified. It is appropriate, in that regard, to refer to the arguments put forward by Ryanair in respect of the content of the meeting of 1 June 2007 (see paragraph 470 above) and the content of the recorded conference call which took place between Ryanair and the Commission on 29 May 2007. 520 Notwithstanding that information as to what was regarded as necessary to authorise the transaction, the applicant – by its own admission (see paragraph 470 above) – submitted a final offer of commitments which did not address the Commission’s demands as regards the substantial number of aircraft to be based at Dublin within six months after the adoption of the contested decision, with a possible extension of six months. Ryanair’s offer accepted the principle of immediately basing at Dublin half of that substantial number of aircraft plus two aircraft assigned to the London-Heathrow routes within a period of six months after the lodging of a new bid, which would be lodged within six months of the adoption of the contested decision, with a possible extension of six months. 521 Moreover, in the context of the remedies proposed in the present case, namely in essence the acquisition of slots by one or more players, Ryanair assumes that Ryanair-Aer Lingus combined would not pose any competition concerns as long as it allowed new entrants or present players as regards the London-Heathrow route to acquire slots to develop their market shares. The Commission regarded that measure as insufficient to call into question the anti-competitive effect represented by the disappearance of Ryanair’s main competitor. At the hearing it thus stated that, rather than wishing to secure acceptance of the principle of the creation or strenghtening of the dominant position of Ryanair-Aer Lingus combined on such and such a route, by taking the view that a hypothetical competitor would establish itself or develop its market share merely because slots were offered, Ryanair should, in the present case, have forgone part of its market share for the benefit of its competitors. 522 In that regard, it must be pointed out that, unlike previous mergers in the passenger air transport sector (such as those which were at issue in Air France/KLM and Lufthansa/Swiss), the Commission could not be satisfied in the present case that mere slots would ensure access to a route. This is not a transaction involving active operators which have a home airport in different countries. Ryanair and Aer Lingus operate from the same airport, Dublin Airport, where they have significant advantages which could not easily be countered by competitors. 523 Furthermore, the results of the market tests showed that current and potential competitors were not ready to compete with the merged entity on all of the routes affected by the transaction. Even on the Dublin-London (Heathrow) route, the interest of certain airlines, some of which were already present on that route, was not borne out by a firm undertaking in that respect, which could have been submitted by Ryanair to substantiate its commitment relating to the ‘up-front buyer’. 524 At this stage of the proceedings, for the reasons correctly stated in the contested decision as regards the 3 May 2007 commitments, and having regard to the information provided by the draft commitments of 1 June 2007, the applicant has not put forward any arguments capable of calling into question, to the requisite legal standard, the Commission’s assessment in the contested decision that the draft commitments of 1 June 2007 did not allow it to conclude, with certainty, that it would be possible to implement them and that the remedies resulting from them would be sufficiently workable and lasting to ensure that the impairment of effective competition which those commitments are intended to prevent would not be likely to materialise in the relatively near future. 525 The fifth plea must therefore be rejected both as regards the formal validity of the offers submitted to the Commission in the course of the administrative procedure and as regards the substantive assessment of the content of those offers. 526 In view of all of the foregoing considerations, the action brought by Ryanair must be dismissed. Costs 527 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. 528 Since Ryanair has been unsuccessful, and the Commission and Aer Lingus Group have applied for costs, Ryanair must pay the costs incurred by the Commission and by Aer Lingus Group in addition to its own costs. 529 The first subparagraph of Article 87(4) of the Rules of Procedure provides that the Member States which intervened in the proceedings are to bear their own costs. Accordingly, Ireland is to bear its own costs. On those grounds, THE GENERAL COURT (Third Chamber) hereby: 1. Dismisses the action; 2. Orders Ryanair Holdings plc to bear its own costs and to pay the costs incurred by the European Commission and Aer Lingus Group plc; 3. Orders Ireland to bear its own costs. Azizi Cremona Frimodt Nielsen Delivered in open court in Luxembourg on 6 July 2010. [Signatures] Table of contents Factual background to the dispute A – Parties to the proceedings B – Administrative procedure C – Content of the contested decision 1. Relevant markets 2. Assessment of the effects of the concentration on competition 3. Assessment of the commitments Procedure and forms of order sought Law A – The first plea, concerning the appraisal of the competitive relationship between Ryanair and Aer Lingus 1. The ‘excessive weight’ accorded to the market shares a) Arguments of the parties b) Findings of the Court 2. The failure to take account of the ‘fundamental differences’ between Ryanair and Aer Lingus a) Reliance on the ‘closest competitors’ concept and the ‘automatic’ inference that there are significant competitive constraints Arguments of the parties Findings of the Court b) The ‘fundamental differences’ concerning operating costs, prices charged and different service levels Arguments of the parties Findings of the Court c) The difference between the destination airports Arguments of the parties Findings of the Court 3. The competitive advantage of having a base at Dublin airport a) Arguments of the parties b) Findings of the Court 4. The ‘non-technical evidence’ a) Arguments of the parties b) Findings of the Court 5. The Commission’s econometric analysis a) Arguments of the parties b) Findings of the Court 6. The econometric analyses submitted by Ryanair a) Arguments of the parties b) Findings of the Court 7. The competitive constraints exerted by charter companies a) Arguments of the parties b) Findings of the Court 8. The passenger survey a) Arguments of the parties b) Findings of the Court 9. The survey of corporate customers a) Arguments of the parties b) Findings of the Court 10. The harm to consumers a) Arguments of the parties b) Findings of the Court B – The second plea, regarding assessment of barriers to entry 1. The significance to be attributed to the lack of entry of new competitors on the relevant markets a) Arguments of the parties b) Findings of the Court 2. Entries and withdrawals in the air transport sector a) Arguments of the parties b) Findings of the Court 3. The taking into account of the Ryanair economic model a) Arguments of the parties b) Findings of the Court 4. Advantages related to holding a base airport in Ireland a) Arguments of the parties b) Findings of the Court 5. Costs and risks related to an entry on the market a) Arguments of the parties b) Findings of the Court 6. Ryanair’s reputation as a barrier to entry a) Arguments of the parties b) Findings of the Court 7. Timeliness of entry a) Arguments of the parties b) Findings of the Court 8. The existence of more profitable routes outside Ireland a) Arguments of the parties b) Findings of the Court 9. Airport congestion a) Arguments of the parties b) Findings of the Court 10. The position of Ryanair-Aer Lingus combined at Dublin airport a) Arguments of the parties b) Findings of the Court C – The third plea, concerning the route-by-route competitive analysis 1. Admissibility a) Arguments of the parties b) Findings of the Court 2. Substance a) The Dublin-London link Arguments of the parties Findings of the Court b) The Dublin-Birmingham, Dublin-Edinburgh, Dublin-Glasgow, Dublin‑Manchester and Dublin-Newcastle routes Arguments of the parties Findings of the Court – The Dublin-Birmingham route – The Dublin-Edinburgh route – The Dublin-Glasgow, Dublin-Manchester and Dublin-Newcastle routes c) The Shannon-London and Cork-London routes Arguments of the parties Findings of the Court d) The Dublin-Frankfurt, Dublin-Paris, Dublin-Madrid, Dublin-Brussels, Dublin‑Berlin and Dublin-Hamburg (Lübeck) routes Arguments of the parties Findings of the Court – The Dublin-Berlin and Dublin-Hamburg (Lübeck) routes – The Dublin-Brussels route – The Dublin-Frankfurt route – The Dublin-Madrid and Dublin-Paris routes e) The Dublin-Milan and Dublin-Rome routes Arguments of the parties Findings of the Court D – The fourth plea, concerning the assessment of the efficiency claims 1. The verifiability of the alleged efficiency gains a) Arguments of the parties b) Findings of the Court 2. The merger-specific nature of the efficiency claims a) Arguments of the parties b) Findings of the Court 3. Consumer benefit a) Arguments of the parties b) Findings of the Court 4. Conclusion in respect of the analysis of the effects of the transaction on competition E – The fifth plea, concerning the assessment of the commitments 1. Preliminary considerations a) The framework for analysing commitments b) Description and assessment of the 3 May 2007 commitments (c) Description and assessment of the draft commitments of 1 June 2007 2. Absence of formal shortcomings affecting the commitments of 3 May 2007 a) Arguments of the parties b) Findings of the Court 3. Absence of formal shortcomings affecting the draft commitments of 1 June 2007 a) Arguments of the parties b) Findings of the Court 4. Substantive assessment of the 3 May 2007 commitments and the draft commitments of 1 June 2007 a) Arguments of the parties b) Findings of the Court Costs * Language of the case: English.