Notice pursuant to Article 19(3) of Council Regulation No 17 — Case COMP/38.006 — Online Travel Portal (Text with EEA relevance)
Date: 2001-11-20
Institutions: European Commission
Subjects: air transport, economic concentration, joint venture, merger control, shareholder, travel agency

C 323/6

EN

Official Journal of the European Communities

20.11.2001

Notice pursuant to Article 19(3) of Council Regulation No 17

Case COMP/38.006 (cid:151) Online Travel Portal

(2001/C 323/03)

(Text with EEA relevance)

INTRODUCTION

1. On 3 November 2000 Air France Finance SA (Air France),
Aer Lingus Ltd (Aer Lingus), Alitalia (cid:151) Linee Aeree
Italiane
SpA (Alitalia), AUA Beteiligungen GmbH
(Austrian Airways), British Airways plc (BA), Lufthansa
Commercial Holding GmbH (Lufthansa), Finnair Oyj
Iberia L(cid:237)neas AØreas de Espaæa SA (Iberia),
(Finnair),
and
Koninklijke Luchtvaart Maatschappij NV (KLM)
Online
the
notified
Limited
Commission of a joint venture agreement (JVA) setting
up Online Travel Portal Limited (OTP), a limited liability
company incorporated under English law. On 13 July 2001
Online Travel Portal Ltd changed its registered name to
Opodo Limited.

Travel

Portal

(OTP)

2. The Commission published a notice requesting comments

on Opodo on 2 February 2001 (1).

THE PARTIES

3. The nine shareholders in Opodo are all European airlines.

(cid:151) SociØtØ Air France is the parent company of the Air
France Group which is active in the air transport
sector. Air France Finance is a wholly owned subsidiary
of SociØtØ Air France which deals with strategic
acquisitions.

(cid:151) Aer Lingus Ltd is part of the Aer Lingus Group plc. Its
core business is the provision of airline services.

(cid:151) Alitalia (cid:151) Linee Aeree Italiane SpA is the parent
company of the Alitalia Group, whose core business
is the provision of airline services.

(cid:151) AUA Beteiligungen GmbH is a fully owned subsidiary
of Austrian Airlines (cid:214)sterreichische Flugverkehrs AG
which is active in the air transport sector. AUA Beteili-
gungen GmbH is a holding company dealing with
strategic
the Austrian
investments
Airlines Group.

financial

for

(cid:151) British Airways plc is the parent company of

British Airways group and is active
transport sector.

the
in the air

(cid:151) Lufthansa Commercial Holding GmbH is a holding
company for
connected businesses which
complement the activities of Deutsche Lufthansa AG.

several

(1) OJ C 35, 2.2.2001, p. 6

It is a fully owned subsidiary of Deutsche Lufthansa
AG, whose core business is air transport.

(cid:151) Finnair Oyj is the parent company of Finnair Group

and is active in the air transport sector.

(cid:151) Iberia L(cid:237)neas AØreas de Espaæa SA is the parent
company of the Iberia group and is active in the air
transport sector.

(cid:151) Koninklijke Luchtvaart Maatschappij NV is the parent
company of the KLM group of companies, which is
active in the air transport sector.

RELEVANT MARKETS

4. The product market on which Opodo will operate is the
market
for travel agency services which comprises the
marketing and distribution of airline seats and other
travel and travel-related service. Opodo will offer Internet
travel agency services including airline ticket sales, hotel
bookings, car hire and travel insurance. In several recent
merger cases the Commission has considered whether the
market
should be
considered as separate from the travel agency market as
a whole (2). This issue has not been investigated in this
case, however, since the competition concerns are the
same whether Opodo is considered to be operating only
on a narrowly defined online travel agency services market
or on a broader travel agency services market.

for online travel agency services

5. In the abovementioned cases the Commission considered
that the geographical market for virtual travel agencies was
national in scope. This definition was based on language
barriers and the need to set up national distribution
arrangements for tickets. The Commission believes that
this
valid,
although an EU-wide travel agency market may develop
with the adoption of the euro and the growth of online
agents.

geographical market

definition

remains

6. The shareholders in OTP have only limited activities on
the travel agency market in any Member State (eg share-
holdings in existing travel agencies) and direct sales by
phone or Internet on their own behalf are also relatively
limited. However, all the shareholders have a large share of
certain transport markets. The Commission generally
in terms of city
transport markets
defines passenger

(2) Case COMP/M 1812 (cid:151) Telef(cid:243)nica Terra/Amadeus, decision of 27
April 2000. Case COMP/M 2149 (cid:151) T-Online/TUI/C & N inter-
national (withdrawn 13.6.2001). Press release IP/01/670.

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Official Journal of the European Communities

C 323/7

pairs, with service between any pair of cities being a
separate market. The Commission has not
investigated
the shareholders’ position on various transport markets
in detail in this case but it has been assumed that some
of the shareholder airlines are dominant on at least some
city pairs within the EU and may be dominant purchasers
of travel agency services in their home market (1). There is
therefore a concern that the shareholders might use their
strong position on these related markets
to leverage
market share on the travel agency services market.

(cid:151) Opodo will ensure that its management and personnel
are fully informed of the importance of maintaining
the confidentiality of sensitive commercial information
relating to its shareholders.

These safeguards are similar to those accepted by the
Commission in relation to the Volbroker.com joint
venture (2).

THE AGREEMENT

7. The notified agreement is a joint venture agreement estab-
lishing Opodo Ltd. The agreement was signed on 18
August 2000.

8. Opodo is a limited liability company incorporated under
English law.
It will be managed separately and inde-
pendently of its shareholder airlines and will be open to
participation by non-shareholders. Nine directors of
Opodo will be appointed by the shareholders and there
will be an independent chairman. The joint venture
agreement provides that (cid:145)The business shall be conducted
in accordance with the business plan and in the best
interests of the company on sound profit-making prin-
ciples so as to generate the maximum long-term value of
the company(cid:146). There are a number of provisions in the JVA
and the business plan intended to ensure that Opodo
operates as an independent company in its dealings with
both shareholder and non-shareholder airlines:

(cid:151) Opodo will be managed separately from the share-
holder airlines and none of the management or staff
will have any contractual obligation to any of
the
shareholders,

(cid:151) marketing agreements with both shareholder and
non-shareholder airlines will be negotiated on a confi-
dential basis by Opodo staff and no information
relating
airline
marketing agreements will be disclosed to Opodo’s
directors or shareholders,

individual

contents

the

of

to

undertake

9. In the business plan originally notified to the Commission
into
it was envisaged that airlines wishing to enter
agreements with Opodo (shareholder or
marketing
a
to
have
non-shareholder) would
minimum requirement to provide Opodo with access to
published and unpublished fares available through online
channels and with the lowest fares made available to other
online travel agents (so-called most favoured nation clause
these
(cid:151) MFN). The Commission was concerned that
provisions would restrict
travel
competition on the
agency services market and Opodo has now agreed to
modify
its business plan in accordance with the
commitments set out below.

as

ARGUMENTS PUT FORWARD BY THE PARTIES

10. The parties argue that Opodo will be active on a separate
market from its shareholders and that the JVA is therefore
not a restrictive agreement. Opodo will be an independent
player on the travel agency services market and as such
should be free to enter into whatever contracts it wishes
with airlines. Any restriction on this freedom could make
it difficult for Opodo to compete with established on-line
travel agencies. In particular, the parties have presented
evidence that airlines enter
into MFN contracts with
some other travel agents and that Opodo should be free
to request similar clauses from airlines.

it more favourably than other

11. The Commission accepts that Opodo will be active on a
separate market from its parents but it is concerned that
the airlines’ equity interest in Opodo might lead them to
treat
travel agencies
(potentially restricting competition on the travel agency
to induce Opodo to discriminate against
market) or
restricting
non-shareholder
competition on transport markets). The parties have
therefore offered various
intended to
ensure that the shareholder airlines deal with Opodo on
a strictly commercial basis and that Opodo treats all
airlines equally.

commitments

(potentially

airlines

(cid:151) Opodo’s staff and management will be located in
premises which are separate from those of its parents,

COMMITMENTS OFFERED BY THE PARTIES

(cid:151) the

shareholders will not have

access

information technology systems of Opodo nor
information belonging
commercially
Opodo or to other shareholders,

sensitive

to the
to
to

12. Each shareholder airline of Opodo Ltd undertakes that it

shall:

(cid:151) not enter into exclusive arrangements with Opodo
relating to fares and product-related services (3) except

(1) Case IV/34.780 (cid:151) Virgin/BA. Commission press release IP/99/504.
BA found to be dominant purchaser of travel agency services in the
UK.

(2) Commission press release IP/00/896.
(3) That

including online functionality (e.g. e-ticketing, online

is,
check-in).

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Official Journal of the European Communities

20.11.2001

in respect of such agreements that may have been
individually negotiated between the shareholder and
Opodo and are commercially justifiable,

under objective and equal conditions, to all prospective
marketing partners whether or not
they are share-
holders,

(cid:151) not contract with Opodo in respect of particular
categories of products, services or geographic markets
to afford it terms, including but not limited to terms in
relation to fares, access to inventory and product-
related services, on at least as favourable a basis as it
offers to any other online travel agent in respect of
such categories of products, services or geographic
markets
is
including but
commercially justified by the benefits,
not
technical benefits or
market penetration, afforded to such shareholder by
Opodo,

limited to financial or

unless MFN status

(MFN status),

(cid:151) not be prevented from offering fares, access

to
inventory and product-related services to any other
online travel agent on a more favourable basis by
reason of any MFN status granted to Opodo in circum-
stances where another online travel agent is able to
offer the shareholder benefits that are comparable to
or greater than those offered by Opodo,

of

or

services,

products,

(cid:151) maintain a memorandum recording the benefits upon
which it has assessed the commercial justification for
affording Opodo MFN status in respect of particular
geographic
categories
markets. Where a shareholder which grants Opodo
MFN status refuses a request for MFN status from an
online agent in which it has no equity interest for
reasons other than the failure by that online agent to
offer or provide the same benefits to the shareholder
recorded as commercial
justification for affording
Opodo MFN status, the shareholder shall also record
in the memorandum the reasons for the difference in
treatment between Opodo and such online agent. This
memorandum may be produced to the Commission
from time to time upon request,

(cid:151) not offer MFN status in respect of fares which are only
accessible by customers on shareholder airlines’ own
websites.

13. Opodo Ltd undertakes:

(cid:151) that it is not necessary to be a shareholder of Opodo in
order to participate in Opodo as a marketing partner
and
against
non-shareholders but will offer fair and open access,

that Opodo will not

discriminate

(cid:151) that shareholders are not obliged to confer MFN status
on Opodo and that agreements conferring MFN status
on Opodo will not be a requirement for shareholders
or other airlines wishing to enter
into industry
standard agency agreements with Opodo,

(cid:151) that it will maintain in place various safeguards against
the exchange of commercially sensitive information
between shareholders (see point 8.),

(cid:151) that

the
it will voluntarily apply those parts of
currently applicable CRS Code of Conduct (1)
(the
transparency
relating to non-discrimination,
Code)
those
save
and neutral display of
information,
provisions of
to
relevant
the Code that are not
Opodo as an online travel agent, and subject to any
change in the scope of the Code that may come into
effect in the future,

(cid:151) that, upon becoming an accredited IATA member, it
will apply,
in so far as it is possible to do so, the
sales
provisions of
the standard IATA passenger
agreement and will not expect or seek any different
or more favourable treatment
from its shareholders
than any other online travel agency nor will it utilise
principles different to those employed by websites of
offline agents,

(cid:151) that it will not seek that Amadeus will provide its CRS
services to Opodo other than at market rates and on
market terms and conditions and on a non-exclusive
basis.

INTENTION OF THE COMMISSION

14.

In view of the foregoing, the Commission intends to adopt
a favourable position concerning Opodo. Before doing so,
it invites interested third parties to submit their obser-
vations within one month of
this
notice in the Official Journal of the European Communities.
These observations should be submitted quoting reference
Case COMP/38.006 (cid:151) Online Travel Portal, by post to:

the publication of

European Commission,
Directorate-General for Competition,
Anti-Trust Registry,
Rue de la Loi/Wetstraat 200,
B-1049 Brussels
fax (32-2) 295 01 28.

(1) Council Regulation (EEC) No 2299/89 of 24 July 1989 on a Code

of conduct for computerised reservation systems.