EUROPEAN COMMISSION C(2017) 4866 final To the notifying parties: Subject:Case M.8382 - VINCI / DUFRY / LFP

Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004 and Article 57 of the Agreement on the European Economic Area Dear Sir or Madam, (1)On 30 May 2017, the European Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 by which the undertakings VINCI Airports International, S.A. (Belgium), a wholly-owned subsidiary of the VINCI Group ("VINCI", France), and DUFRY International AG (“DUFRY”, Switzerland), acquire within the meaning of Article 3(1)(b) of the EU Merger Regulation joint control of the undertaking LFP – Lojas Francas de Portugal, S.A. (“LFP”, Portugal) by way of purchase of shares ("the Transaction"). VINCI and DUFRY are collectively referred to as the "Notifying Parties", and VINCI, DUFRY and LFP as the "Parties". 1.THE PARTIES (2)VINCI is a diversified group notably active in the fields of (i) concessions and infrastructures (mainly motorways and airports), (ii) building, public works and civil engineering, (iii) road works, (iv) energy, and (v) information technology services. VINCI's wholly owned subsidiary VINCI Airports S.A.S ("VINCI Airports") manages and operates 35 airports: 13 in France, 10 in Portugal, 3 in Cambodia, 2 in Japan, 6 in Dominican Republic, and 1 in Chile. In Portugal, VINCI Airports is active in the development, management and operation of airports through its indirect wholly-owned subsidiary ANA – Aeroportos de Portugal, S.A ("ANA"). ANA manages and operates ten airports through a 50-year concession contract granted by the Portuguese State. ANA is also in charge of ground handling, safety, security and passenger assistance services at the Portuguese airports it operates via its wholly-owned subsidiary Portway. (3)DUFRY operates retail outlets at airports and other transport hubs in North America, South America, Europe, Asia, the Middle East and Africa. (4)LFP is an airport and on-board retailer active only in Portugal. LFP is present in the airports of Lisbon, Porto, Faro, Madeira and Azores. 2.THE CONCENTRATION (5)On 23 December 2016, VINCI entered into a Sale and Purchase Agreement to acquire from TAPGER – Sociedade de Gestão e Serviços, S.A. (“TAPGER”) its majority stake of 51% of LFP’s share capital and voting rights. DUFRY currently holds (and will hold post-Transaction) the remaining 49% of LFP's share capital and voting rights. (6)Pursuant to the Shareholder’s Agreement to be concluded between VINCI Airports International and DUFRY, VINCI is entitled […], while DUFRY is entitled […]. In order for the Board to take valid decisions, a minimum quorum of […] members is required, […]. (7)The day to day management of the business of LFP will be carried out by an Operations Committee, consisting of […] members: […]. The members of the Operations Committee will ultimately be appointed […]. (8)In addition, according to the Shareholder’s Agreement, […]. (9)Therefore, each of VINCI and DUFRY shall have decisive influence over LFP's commercial behaviour. Thus, each of VINCI and DUFRY will jointly control LFP.

(10)In light of the above, the Transaction constitutes a concentration under Article 3(1)(b) of the Merger Regulation. 3.UNION DIMENSION (11)The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million [VINCI: EUR 38 518 million; DUFRY: EUR 7 147 million; LFP: EUR […]]. Each of VINCI and DUFRY has an EU-wide turnover in excess of EUR 250 million [VINCI: EUR […]; DUFRY: EUR […]], but they do not achieve more than two-thirds of their aggregate EU-wide turnover within one and the same Member State. (12)The Transaction therefore has an EU dimension pursuant to Article 1(2) of the Merger Regulation. 4.MARKET DEFINITION (13)The Parties' activities overlap horizontally in the provision of travel retail services in airports. The Transaction also gives rise to a vertical link between the Parties' activities in the provision of travel retail services (downstream) and VINCI's presence in the market for the award of concessions for the provision of retail services at airports (upstream). 4.1.Travel retail services 4.1.1.Product market (14)Travel retailers operate shops at different locations including airports, on-board aircraft, seaports, cruise liners and other tourist locations, such as hotels or resort complexes. At airports, travel retailers operate a variety of duty free and duty paid retail outlets including general travel retail shops that sell “typical” duty free products (such as perfumes and cosmetics, confectionery, wine and spirits and tobacco), specialised shops, brand boutiques and news and convenience stores. Prior decisional practice (15)As regards the market for the provision of travel retail services in airports, the Commission, in its previous decisional practice, distinguished the following sub-segmentations, ultimately leaving the exact product market definition open: (a)retail product category (e.g. general travel retail stores, fashion & accessories, alcohol & tobacco, perfume & cosmetics, and fine food & confectionary); (b)airside areas (duty free and “travel value” only accessible to ticket holding passengers and staff who have passed through customs, immigration and security) and landside areas (duty paid, accessible to non-travellers as well as ticket holders). The Notifying Parties' view (16)The Notifying Parties consider that the above sub-segmentations should not be applied. Firstly, as regards retail product category sub-segmentation, the Notifying Parties submit that previous market test investigations were not conclusive as to whether customers’ purchasing behaviours and motivations differ depending on the category of products, and revealed a certain degree of demand-side substitutability between the above mentioned product categories. Also, from a supply-side perspective, retail services operators at airports appear to be active (or can easily become active) across several product categories (tobacco, perfumes and cosmetics, liquors, exclusive food, sweet and chocolates, fashion, accessories as is the case for DUFRY and LFP). In this respect, LFP was granted 13 licenses and operates 30 stores marketing different categories of products. Secondly, as to the distinction between landside and airside sales, although prices of certain products differ, this is not the case for all products (some products attract tax and/or duty, equalising the product price across the categories). From the supply-side perspective, many travel retailers are active in both airside and landside areas. The Commission's assessment (17)The market investigation results provided some indications that it may not be justified to distinguish between retail product categories. A competitor of LFP for instance indicated that "they can sell any product category and, as a matter of fact, they adapt to the airport and customer needs (by selling for example more Porto wine in its shops in the airport in Porto)". (18)As regards a possible segmentation within the market for the provision of airport retail services between airside and landside areas, the market investigation results also provided some indications that it may not be justified. A competitor of LFP indicated that "the main retail activity takes place on the airside, where passengers have more time available and are more prone to spend money and shop more impulsively than on the landside". The same competitor added that "[n]evertheless, operating retail space airside or landside does not make any difference to the operators and all competitors can be active on both airside and landside". Similarly, another competitor of LFP indicated that "the operation of airside and landside stores is similar". (19)For the purposes of the present decision, the precise definition of the relevant product market(s) for travel retail services can be left open as the Transaction does not give rise to serious doubts under any of the plausible market definitions. 4.1.2.Geographic market

Prior decisional practice (20)In its previous decisional practice, the Commission left open the exact geographic definition of the market for retail services. Results of previous market investigations indicated that retail areas in different airports exercise competitive pressure on each other at global level, or at least at EEA level. In addition, travellers can compare the prices in the departing airport with those for transit or arrival. Nevertheless, the Commission has not excluded the possibility that there may be local markets at individual airport level. The Notifying Parties' view (21)The Notifying Parties submit that the market for retail services at airports should be considered as being at least EEA-wide in scope. According to the Notifying Parties, travellers tend to compare prices between departure, arrival and transit airports. This behaviour is strengthened by the increasing use of on-line tools, mobile access to the Internet and by the fact that core products, such as alcohol, tobacco, perfumes and also branded apparel are standard products marketed across the EEA, which makes it easy to compare prices among retail channels, including other retail channels outside airports. In addition, European airports are more and more subject to the competition of new international airports. The Commission's assessment (22)The Commission acknowledges that numerous elements suggest that retail store operators at airports face European and even worldwide competitors, with travellers always having a choice of at least two or even three airports to shop. Since the Transaction does not raise serious doubts as to its compatibility with the internal market under any of the above-mentioned plausible geographic markets, the exact geographic delineation can be left open. 4.2.Award of concessions for the provision of retail services at airports 4.2.1.Product market (23)Retail services at airports are provided on the basis of concession agreements between airport operators and travel retail operators, which are mostly awarded through tenders, but which can also be negotiated directly without a tender process. They are typically awarded for a period of 5-10 years. Under these concession agreements, retailers typically pay the airport operator a concession fee which comprises a fixed fee and a variable amount linked to the revenues generated through retail sales. Prior decisional practice (24)In previous decisions, the Commission found that a separate market for the award of such concessions exists (i.e. competition for the market) but did not contemplate further segmentations. The Notifying Parties' view (25)The Notifying Parties agree with the Commission's decisional practice and do not consider a sub-segmentation of this market by product category appropriate given that most retail service operators usually participate in tenders for concessions of different duration with a very standardised range of products (tobacco, perfumes & cosmetics, liquors, exclusive food, fashion, or accessories). Furthermore, licences awarded can accommodate more than one retail store. The Commission's assessment (26)The market investigation results did not provide any indications that would warrant departing from the Commission's previous practice and to further segment the market for the purposes of the present decision. 4.2.2.Geographic market Prior decisional practice (27)In its previous decisions, the Commission left open the exact scope of the geographic market, while pointing to factors indicating the possible existence of an EEA-wide or even global market. The Notifying Parties' view (28)The Notifying Parties agree with the Commission's decisional practice, supported by the fact that tendering processes for the award of airport retail service concessions attract European and even non-European undertakings.

The Commission's assessment (29)The information obtained from competitors during the market investigation demonstrates the presence of a number of different bidders for concessions that are active at EEA-level and beyond. A competitor of LFP indicated that "there is no restriction to competitors established in other countries". The same competitor acknowledged that it "also bids for licences to operate airport retail space in other countries in addition to Portugal". This suggests that the scope of the relevant geographic market could be regarded as at least EEA-wide. (30)In any event, the exact geographic definition can be left open for the purposes of the Transaction as it does not give rise to serious doubts as to the compatibility of the Transaction with the internal market under any of the plausible market definitions. 5.COMPETITIVE ASSESSMENT 5.1.Horizontal overlap - Travel retail services (31)All Parties are present in the market for travel retail services. DUFRY operates travel retail stores worldwide. In Portugal, DUFRY is active in the market for travel retail services in airports only through LFP. (32)VINCI indirectly operates seven retail stores at the French airport of Lyon-Saint-Exupéry following its acquisition of sole control of Aéroports de Lyon (“ADL”) in November 2016. In addition, VINCI's indirect subsidiary ANA has created and registered the trademark "Portfolio", which is the commercial brand of three retail stores granted to Feito de Portugal. While VINCI disputes that it exercises control over Portfolio, it cannot be excluded that the additional rights held by VINCI under the licence agreement amount to control in the sense of the Merger Regulation. Portfolio focuses on the sale of products exclusively produced in Portugal such as handicraft, fashion, design, flavours and cultural products. (33)The overlap between the Parties' activities on the market for travel retail services in airports at EEA-level is very limited, with LFP adding an estimated [0-5]% market share to VINCI's [0-5]% and Feito de Portugal's [0-5]% in terms of 2016 revenues. The Parties would still face competitive pressure from major competitors such as Heinemann ([10-20]%) and Lagardére ([10-20]%). (34)At local level, an overlap only occurs if the sales volumes of Feito de Portugal are attributed to VINCI. Feito de Portugal's 2016 revenues would add [0-5]%, [0-5]% and [5-10]% to LFP's market shares in the airports of Lisbon, Porto and Funchal respectively, where LFP's estimated market shares are [60-70]%, [60-70]% and [60-70]%. (35)Competitors at those three airports include the internationally active group Lagardère, Áreas and Gateleven, with market shares of up to [5-10]%, [5-10]% and [0-5]% respectively, in addition to other smaller players. Although these competitors do not have a substantial market share at these three airports, they can all be considered credible competitors. Even the smaller Gateleven for instance which opened its first store in Lisbon airport in 1996, operates stores for fashion, sports and travel gear not only in Portugal but also in other Member States such as at Frankfurt Airport. (36)The vast majority of market participants stated in response to the Commission's questions that the Transaction would not materially change the competitive landscape for travel retail. In addition, some brands bid and compete against specialised travel retail operators to operate retail space in airports directly themselves. As one competitor of LFP put it: "there are other sizable competitors active in the operation of retail space in the Portuguese airports, such as Áreas Portugal – Restauração e Distribução S.A., or high street fashion retailers such as Desigual or Lacoste". Another competitor of LFP stated that in addition to specialised travel retail operators, there are "other local Portuguese competitors (e.g. selling hand-made gifts, wine, fashion) and international retailers (e.g. MaxMara, Fnac)". (37)Most importantly, LFP and Feito de Portugal (with its Portfolio stores) are not close competitors. The Portfolio stores focus on Portuguese specialties and have a narrower product offering than that of other classical duty free shops like LFP, where the origin of the products on offer is not part of their commercial strategy. In addition, LFP operates a purely duty free concept, while Portfolio is a duty paid store. (38)Finally, the Parties' retail stores in the Portuguese airports would still face competitive pressure from retail areas in other airports post-Transaction, as travellers normally have a choice between at least the airport of departure and the airport of arrival. (39)In light of the above, and considering all the evidence available to it, the Commission concludes that the Transaction does not give rise to serious doubts as to the horizontal overlap between the Parties' activities on the market for travel retail services in airports. 5.2.Vertical relationship - Award of concessions for the provision of retail services at airports (40)The Transaction results in a vertical relationship between the i) upstream market for the award of concessions for travel retail services at airports, on which only VINCI is active (as an airport infrastructure operator) and the ii) downstream market for travel retail services at airports on which all VINCI, LFP and DUFRY are active. (41)On the upstream market for the award of concessions for retail services at airports, at EEA level, VINCI's market share is well below 30% ([0-5]% in 2015). There are plenty of alternative credible suppliers at EEA level, such as Global Infrastructure Partners, BAA, AENA SA, Fraport AG, Flughafen München GmbH and Aeroporti di Roma. On the downstream market for the operation of travel retail services in airports, at EEA level, the Parties’ combined market share is below 30% both by number of stores ([10-20]%) and by value ([20-30]%). There is, therefore, no affected market at EEA-level. (42)Only if the downstream market for the operation of travel retail services in airports was considered local in scope, would a vertically affected market arise, since the market shares of LFP are above 30% in all the airports where it is active. 5.2.1.Ability to restrict access to travel retail services in airports (43)According to the Notifying Parties, there is no foreclosure risk in Portugal. The Notifying Parties submit that VINCI's subsidiary ANA would have no ability to foreclose the downstream market for retail services at airports because i) Portuguese law requires ANA, as concessionaire for the operation of the Portuguese airports, to grant licenses through competitive procedures subject to general principles of competition, transparency and non-discrimination; ii) any discrimination in favour of LFP is prohibited by the Portuguese Decree-Law 254/2012; and iii) the Concession Agreement requires ANA, as concessionaire, to provide fair and non-discriminatory treatment to all airport passengers and users.