CELEX: 32020M9673
Language: en
Date: 2020-02-17 00:00:00
Title: Commission Decision of 17/02/2020 declaring a concentration to be compatible with the common market (Case No COMP/M.9673 - COLUMBIA THREADNEEDLE INVESTMENTS / BRITTANY FERRIES / CONDOR) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                               Brussels, 17.2.2020
                                                               C(2020) 935 final
                                                                                PUBLIC VERSION
                                                                In the published version of this decision,
                                                                some information has been omitted
                                                                pursuant to Article 17(2) of Council
                                                                Regulation (EC) No 139/2004 concerning
                                                                non-disclosure of business secrets and
                                                                other confidential information. The
                                                                omissions are shown thus […]. Where
                                                                possible the information omitted has been
                                                                replaced by ranges of figures or a general
                                                                description.
                                                               To the notifying parties
Subject:            Case M.9673 – COLUMBIA THREADNEEDLE INVESTMENTS /
                    BRITTANY FERRIES / CONDOR
                    Commission decision pursuant to Article 6(1)(b) of Council Regulation
                    No 139/20041 and Article 57 of the Agreement on the European Economic
                    Area2
Dear Sir or Madam,
(1)       On 13 January 2020, the European Commission received notification of a
          concentration pursuant to Article 4 of the Merger Regulation which would result
          from a proposed transaction by which Columbia Threadneedle Investments (“CTI”,
          United Kingdom) and B.A.I. Bretagne Angleterre Irlande S.A., trading as Brittany
          Ferries (“BF”, France) intend to acquire within the meaning of Article 3(1)(b) of that
          Regulation joint control over MEIF II Channel Islands Transport Holdings Limited
          and its subsidiaries (“Condor” or “the Target”, Guernsey), by way of purchase of
          shares ( “the Transaction”).
1    OJ L 24, 29.1.2004, p. 1 (the “Merger Regulation”). With effect from 1 December 2009, the Treaty on the
     Functioning of the European Union (“TFEU”) has introduced certain changes, such as the replacement of
     “Community” by “Union” and “common market” by “internal market”. The terminology of the TFEU will
     be used throughout this decision.
2    OJ L 1, 3.1.1994, p. 3 (the “EEA Agreement”).
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak--- (2)     CTI, BF and Condor are hereinafter referred to as ‘the Parties’ to the Transaction
        while CTI and BF are referred to as ‘the Notifying Parties’. The undertaking that
        would result from the Transaction is referred to as ‘the merged entity’
1.      THE PARTIES
(3)     CTI is a UK global asset manager, offering a range of strategies and solutions
        covering global, regional and domestic markets and asset classes. It is the asset
        management group of Ameriprise Financial, Inc, a leading US-based financial
        services provider.
(4)     BF is a French shipping company, which operates passenger and freight transport
        services between France and the UK, France and Ireland, UK and Spain, and
        between Ireland and Spain. It also offers a selection of mini-cruises, holiday options
        and packages. It does not operate any services to or from the Channel Islands.
(5)     Condor is incorporated in Guernsey and operates passenger and freight ferry
        services between the Channel Islands and the UK, and the Channel Islands and
        France. Condor is (indirectly) owned by Macquarie European Infrastructure Fund II,
        a UK company, and belongs to the Macquarie Group.
2.      THE OPERATION
(6)     The Transaction is to be achieved by means of the execution of a share and purchase
        agreement, by which TopCo, a newly incorporated entity, will acquire the entire
        issued share capital of Condor, the Target.
(7)     The CTI Fund, an investment fund of CTI, will hold around […]% in TopCo (and
        ultimately in the Target) while BF will hold approximately […]% in it. The
        Notifying Parties’ precise participation in the Target is to be determined on or after
        closing. While the actual percentage may change, BF will in any event be the
        minority shareholder in TopCo. Notwithstanding this, pursuant to the Shareholders’
        Agreement between the CTI Fund and BF, they will jointly control TopCo because
        both shareholders’ consent will be needed to i) adopt or approve any variation to the
        Target’s business plan or annual budget and ii) appoint, terminate or approve a
        potential variation of the remuneration of the chief executive.
(8)     In light of the above, and taking into account the fact that the operation would result
        in the acquisition by CTI and BF of joint control, through TopCo, over Condor, the
        Transaction, in line with paragraphs 24 and 91 of the Commission's Consolidated
        Jurisdictional Notice3 ("CJN"), would result in a concentration pursuant to Article
        3(1)(b) of the Merger Regulation.
3   OJ C 95, 16.4.2008, p.1.
                                                  2
 ---pagebreak--- 3.      UNION DIMENSION
(9)     The undertakings concerned have a combined aggregate world-wide turnover of
        more than EUR 5 000 million4 [CTI: EUR 10 868 million; BF: EUR […] million;
        Condor: EUR […] million]. The aggregate Union-wide turnover of two of the
        undertakings concerned is more than EUR 250 million [CTI: EUR […] million; BF:
        EUR […] million]. Not each of the Parties achieves more than two-thirds of their
        aggregate Union-wide turnover within one and the same Member State.5
(10)    The Transaction therefore has a Union dimension within the meaning of Article 1(2)
        of the Merger Regulation.
4.      MARKET DEFINITION
(11)    Both BF and Condor are active in the provision of (passenger and freight) ferry
        services. BF is also active in the (upstream) market for the provision of
        stevedoring/container terminal services.
4.1.    Ferry Services
(12)    Condor provides both passenger and freight6 services between a) the Channel Islands
        and the UK and b) the Channel Islands and France. BF is also active in maritime
        transport of freight and passengers as well as tourism; its principal activity is the
        operation of passenger and freight transport between France and the UK, France and
        Ireland, UK and Spain and between Ireland and Spain.
(13)    Condor does not operate any UK-France services,7 while BF has no operations or
        activities in, to or from the Channel Islands.
4.1.1. Product market
(14)    In its decision in case M.2838- P&O Stena Line (Holding) Limited, the Commission
        indicated that: ‘ferry operators can carry both freight and passengers (passengers
        accompanying a vehicle or foot passengers) and that most of the ferry operators who
        offer passenger services operate with so-called multi-purpose vessels carrying both
        passengers and freight on the same vessel, which allows capacity to be shifted
        between the two services, depending on the specific demand for a particular
        sailing.’8
(15)    Both BF and Condor provide both freight and passenger ferry services. With regard
        to freight ferry services, they are only active in short-see container liner shipping
        services. Short-sea container liner shipping involves the provision of regular,
4   Turnover calculated in accordance with Article 5 of the Merger Regulation.
5   […].
6   While the services Condor provides fall within ‘short sea containerised shipping’, the ‘containers’
    involved are trucks which are driven on and off ships.
7   For completeness, although Condor does not operate a service between the UK and France, a small
    number of passengers travel from Portsmouth to St Malo via the Channel Islands. In terms of Condor’s
    market share, it accounts for [0-5]% of passengers on the Portsmouth-St Malo route. See Form CO,
    paragraph 115 and footnote 18.
8   See paragraph 7 of the Commission decision of 7 August 2002.
                                                           3
 ---pagebreak---         scheduled intracontinental (usually coastal trade) services for the carriage of cargo
        by container liner shipping companies.
(16)     This Decision examines each of these possible markets separately below.
        Freight (short sea container liner) shipping services
(17)    In its prior decisional practice, the Commission has left open “whether shipping
        services should be part of a broader door-to-door multimodal transport services
        market.”9 Should a separate market for shipping services exist, the Commission has
        considered that (i) container shipping is distinct from non-containerised shipping
        (such as bulk shipping), (ii) short-sea container shipping is distinct from long-sea
        container shipping (that is, deep-sea shipping), (iii) container liner shipping
        (scheduled service) is different from non-liner shipping (that is, charter, tramp or
        specialised transport services).10
(18)    In its prior decisional practice, the Commission has also considered, but ultimately
        left open, whether a distinction should be made between reefer (that is, refrigerated)
        and dry or non-reefer (that is, non-refrigerated) services.11
(19)    The Commission has also to date left open whether the transport of wheeled
        container cargo on ferries (roll on-roll off, “RoRo”) should be considered as a
        different product market from the transport of lift on - lift off (“LoLo”) container
        cargo on container vessels.12
(20)    Finally, the Commission has also considered, but left open, whether feeder services,
        that is, transport of cargo between hub ports and (smaller) outports, should be
        considered as part of the short-sea container transport services market or as a
        separate product market.13
        Passenger shipping services
(21)    The Commission has previously defined two separate markets within passenger
        shipping services, namely the market for business passenger services and the market
        for tourist passenger services14 and concluded that there was a separate market for
        tourist passenger shipping.15 The Commission has also noted that, for passengers
9  See, for instance, case M.9319- DP World / P&O Group, paragraph 20; M.9093-DP World
   Investments/Unifeeder, paragraph 31; M. 8330-Maersk Line/HSDG, paragraph 19; M.7523-CMA
   CGM/OPDR, paragraph 48.
10 See, for instance, case M.9319-DP World/P&O Group, paragraphs 20 and 27.
11 See, for instance, M. 9319- DP World/P&O Group, paragraph 27; M.9093-DP World
   Investments/Unifeeder, paragraph 34.
12 See, for instance, case M. 9319- DP World/P&O Group, paragraph 27; M.9093-DP World
   Investments/Unifeeder, paragraph 35. Roll-on/roll off (Ro-Ro) shipping corresponds to the transport of
   wheeled cargo (lorries, cars, etc) on ships. Ro-Ro vessels have built-in ramps for the rolling-on and rolling
   off of the cargo. In Lo-Lo shipping, dock mounted cranes lift and stack containers on vessels.
13 See, for instance, M. 9319- DP World/P&O Group, paragraph 27; M.9093-DP World
   Investments/Unifeeder, paragraph 35.
14 See, for instance, IV/36.253-P&O Stena Line, paragraph 22.
15 See case M. 5756 – DFDS / Norfolk, paragraph 23.
                                                          4
 ---pagebreak---         travelling by ferry without a car, rail and air transport could be a possible
        substitute.16
4.1.1.1. The Notifying Parties’ views
(22)    The Notifying Parties submit that, as a general rule, almost all ferry service providers
        offer passenger and freight services and many will be able to do so on the same
        vessel.17 With regard to transportation services to and from the Channel Islands,
        where the Target is active, they consider that the relevant product markets should be
        considered broadly (including passenger and freight ferry services in the same
        market), since a standalone passenger ferry service would be uneconomic and
        unsustainable.18
(23)    In any event, the Notifying Parties submit that the exact product market definition
        (including whether passenger and freight ferry services to the Channel Islands
        belong to the same market) can be left open in this case, given the lack of overlap
        between the Parties’ activities, since they operate between different destinations.19
(24)    With particular regard to freight ferry services, the Notifying Parties submit that, as
        Condor only offers RoRo freight services and carries both refrigerated and non-
        refrigerated containers on the same vessels, it is not necessary for the Commission to
        reach any conclusion on the possible segmentations referred to in (17) to (20),
(25)    With particular regard to passenger ferry services, since Condor’s passengers are
        almost exclusively tourists, the Notifying Parties further submit that the distinction
        between business and tourist passenger services would not make any difference to
        the assessment in this case.
4.1.1.2. The Commission assessment
(26)    First, with regard to freight ferry services, the Commission notes that there is no
        need, for the purposes of assessing the Transaction, to distinguish between reefer and
        non-reefer services or RoRo and LoLo freight services. The Target only offers RoRo
        freight services and it can offer both reefer and non-reefer services while there is no
        horizontal overlap arising from the Transaction.
(27)    Similarly, with regard to passengers ferry services, as the majority of the passengers
        travelling with Condor are tourists, there is no need, for the purposes of assessing the
        Transaction, to distinguish between tourist and business services.
(28)    In light of the above, the Commission considers that the relevant product market
        concerns the market for the provision of ferry/shipping services overall and it can be
        left open (i) whether this includes both passenger and freight ferry services; (ii)
        whether this includes both RoRo and LoLo services; and (iii) whether this includes
        both business and tourist passengers, since the Transaction would not raise serious
        doubts as to its compatibility with the internal market under those alternative product
        market definitions.
16  See case M.5756- DFDS/Norfolk, paragraph 23.
17  Form CO, paragraph 72.
18 Form CO, paragraph 74.
19 Form CO, paragraphs 73, 74 and 76.
                                                   5
 ---pagebreak--- 4.1.2. Geographic market
         Freight (short-sea container) shipping services
(29)     In its prior decisional practice, the Commission has considered that the short-sea
         container shipping market should be segmented on the basis of (i) either single trade
         or corridor, defined by the range of ports which are served at both ends of the
         service;20 or (ii) single leg of trades, hence, direction of the trade flows. The
         Commission has, however, left the exact scope of the geographic market definition
         open.21
         Passenger shipping services
(30)     The Commission has previously examined the geographic markets for passenger
         shipping for Short Sea and North Sea routes on the corridors: i) Western Channel,
         and the Short Sea and ii) the North Sea and the Short Sea. In its decision in case
         M.2838-P&O Stena Line (Holding) Limited, the Commission noted that the Western
         Channel consists of routes between ports on the south coast of England and ports on
         the north coast of France.22
4.1.2.1. The Notifying Parties’ views
(31)     The Notifying Parties submit that the relevant geographic markets for passenger
         shipping services in this case are i) between the UK and the Channel Islands and ii)
         between France and the Channel Islands. With regard to freight/short-sea container
         shipping services, they submit that the relevant geographic markets should be as
         follows: i) from the UK to the Channel Islands, ii) from the Channel Islands to the
         UK, iii) from France to the Channel Islands and iv) from the Channel Islands to
         France.
(32)     The Notifying Parties submit that it is not necessary, for the purposes of this
         Decision, to determine whether ferry services to and from the Channel Islands to the
         UK and to and from the Channel Islands to France comprise separate markets or
         belong to the same market for the provision of passenger and freight services to and
         from the Channel Islands. They also submit that it is not necessary to consider if
         separate ports constitute potential separate markets, as this would make minimal (if
         any) difference to Condor’s position.
20  See, for instance, case M.3973-CMA CGM/Delmas, where the Commission left open the exact geographic
    market definition but observed that for both containerised shipping and RoRo shipping the relevant
    geographic market ‘consists of single trades, defined by the range of ports which are served at both ends
    of the service’, paragraphs 8 and 11.
21 See, for instance, cases M.9319- DP World/P&O Group, paragraph 28; M.9093 – DP World
    Investments/Unifeeder, paragraph 36 and 38; M;8330-Maersk Line/HSDG, paragraph 20; M.7523 – CMA
    CGM/OPDR, paragraphs 53, 60 and 61.
22 See case M.2838-P&O Stena Line (Holding) Limited, paragraph 6. The Short Sea consists of routes across
    the Short French Sea (Routes between Dover, Folkstone, Ramsgate, Newhaven and Calais, Dieppe,
    Boulogne, Dunkirk and the Channel Tunnel) and the Belgian Straits (Ramsgate/Ostend) while the North
    Sea consists of routes between ports on the east coast of England and ports in Belgium and the
    Netherlands.
                                                          6
 ---pagebreak--- 4.1.2.2. The Commission assessment
(33)    The Commission notes that, for customers of ferry services seeking a route either
        from the UK or France to the Channel Islands, suppliers of ferry services on routes
        that do not go to the Channel Islands are not potential substitutes. Furthermore, in
        the Commission’s understanding, the topography of the Channel Islands is such that
        vessels that service the cross-Channel routes (that is, between the UK and France)
        would not in general be used on routes to the Channel Islands as the ports in St
        Helier (Jersey) and St Peter Port (Guernsey) are subject to tidal movements and are
        generally shallower than the ports serving the UK-France routes.23
(34)    Moreover, in the Commission’s understanding, the authorisation agreements under
        which ferry services can be provided to the Channel Islands contain stringent
        obligations, which effectively mean that only one operator can profitably provide
        primary ferry services sufficient to ensure security of supply for the Channel Islands.
        These obligations relate, for instance, to the kind of vessels to be used and the
        quality of the services to be provided on a long term basis, requiring the provision of
        both passenger and freight services.24
(35)    Therefore, for the purposes of this decision, and on the basis of its precedents and the
        arguments put forward by the Parties, the Commission considers that the cross-
        Channel routes, that is, the routes between UK and France (as serviced by BF) do
        not belong to the same geographic market as routes to the Channel Islands (serviced
        by Condor) because of, among others, the lack of demand-side substitutability and
        the specific topography of the Channel Islands ports (tidal movements and
        shallowness), which require a specific type of vessels for providing such services.
4.1.3. Conclusion
(36)    For the purposes of this Decision, it is not necessary to conclude on the exact
        product and geographic definition for the market for the provision of ferry services
        (freight and passengers), as the Transaction would not raise serious doubts as to its
        compatibility with the internal market under any alternative market definition.
4.2.    Stevedoring services
(37)    BF provides limited25 stevedoring services in several ports, including at the port of
        Portsmouth where it provides its services to Condor through its subsidiary
        Portsmouth Handling Services Limited (PHS).
4.2.1. Product market
(38)    Stevedoring services for containers (also called container terminal services) are an
        input for the provision of (short-sea) container liner shipping services. The provision
        of container stevedoring services by terminal operators involves the loading,
23  See Form CO, paragraph 90, and the Parties’ reply to question 1 of RFI 1.
24  See Form CO, paragraphs 91, 139 and 147 and the Parties’ reply to question 1 of RFI 1.
25 The services offered by BF are limited to only moving unaccompanied RoRo trailers onto ferries and
    mainly involve self-supply. See Form CO, paragraph 100.
                                                         7
 ---pagebreak---         unloading, storage and land-side handling for inland transportation of containerised
        cargo.26 It relates only to freight and does not concern passenger services.
(39)    The Commission has consistently distinguished the provision of container terminal
        services to deep-sea container ships from the provision of terminal services to
        vessels carrying non-containerised cargo (such as bulk, liquid bulk, etc.) and short
        sea vessels.27
(40)    In previous decisions the Commission has delineated container terminal services by
        traffic flows, and has considered separate markets for container terminal services for
        hinterland traffic and container terminal services for transhipment traffic, ultimately
        leaving the product market definition open.28
4.2.1.1. The Notifying Parties’ views
(41)    The Parties submit that BF provides stevedoring services that are not as
        comprehensive as those described in previous Commission decisions. BF only
        provides a service to unaccompanied trailers and moves trailers (that is, cargo
        containers on wheels) onto and off ferries where the trailer is unaccompanied (that
        is, the engine which drove the trailer to the port does not travel).29 Such
        unaccompanied trailers represent only a small portion of total RoRo freight.30
(42)    The Parties submit that stevedoring is not a core part of BF’s offering, as BF only
        provides stevedoring services as an ancillary service at ports where it operates and
        typically as self-supply.
(43)    In the Notifying Parties’ view, there is no need for the Commission to define the
        relevant product market for stevedoring services in this case as, on any basis,
        irrespective of the market definition, the Transaction does not give rise to any
        foreclosure concerns in the provision of stevedoring services.
4.2.1.2. The Commission assessment
(44)    For the purposes of this Decision, the exact delineation of the product market
        (including the question of whether the market for container terminal services should
        be segmented between hinterland and transhipment traffic) can be left open, as the
        Transaction would not raise serious doubts as to its compatibility with the internal
        market under any plausible product market definition.
26  Cases M.9016- CMA CGM/Container Finance, paragraph 49; M.7523 – CMA CGM/OPDR, paragraph 63;
    M.5398 – Hutchison/Evergreen, paragraph 9.
27  Cases M. 8459-TIL/PSA/PSA DGD, paragraph 15; COMP/JV.55 – Hutchinson/RCPM/ECM,
    paragraph 25; M.5093 – DP World/Conti7/Rickmers/DP World Breakbulk/JV, paragraph 13.
28  Cases M.9016- CMA CGM/Container Finance, paragraph 51; M.8330 – Maersk Line/HSDG, paragraph
    29; M.8120 – Hapag-Lloyd/United Arab Shipping Company, paragraphs 21 and 24; M.7908 – CMA
    CGM/NOL, paragraph 17; M.5450 – Kühne/HGV/TUI/Hapag-Lloyd, paragraph 16 and M.5398 –
    Hutchison/Evergreen, paragraphs 9 and 10.
29  Form CO, paragraph 96.
30  Form CO, paragraph 97.
                                                    8
 ---pagebreak--- 4.2.2. Geographic market
(45)    In its prior decisional practice, the Commission considered that the relevant
        geographic dimension of stevedoring services is, in its broadest scope, regional, such
        as for Northern Europe (for transhipment traffic), or, in its narrowest possible scope,
        could be delineated based on the catchment area of the ports in a certain range, such
        as Hamburg-Antwerp (for hinterland traffic) or possibly even narrower, comprising
        the ports of a single Member State only.31
4.2.2.1. The Notifying Parties’ views
(46)    The Notifying Parties indicate that, whilst various plausible geographic markets have
        been considered, the Commission has never considered a possible market narrower
        than that of the ports of a Member State. There is therefore no basis, in their view, to
        consider individual ports as relevant geographic markets.
(47)    The Notifying Parties also submit that it is not necessary to conclude on the precise
        scope of the relevant geographic market for stevedoring services in this case as, on
        any plausible basis, the Transaction does not give rise to concerns in the provision of
        such services. They, however, submit that, in view of BF’s activities, it would be
        reasonable to consider the relevant geographic markets to be i) Southern England
        and ii) Northern France.
4.2.2.2. The Commission assessment
(48)    In its previous decisions concerning ‘full service’ stevedoring services, the
        Commission has not concluded on the precise scope of the relevant geographic
        market and has left the market definition open.
(49)    For the purposes of this Decision, the question of whether the market for container
        terminal services encompasses ports of a region, of a catchment area, or of one
        Member State can be left open, as the Transaction would not raise serious doubts as
        to its compatibility with the internal market under any alternative geographic market
        definition.
(50)    However, as the Parties have provided information at the level of the port of
        Portsmouth (where BF provides such services to Condor), the Commission will
        assess the effects of the Transaction on the overall market for the provision of
        stevedoring services (without distinction between hinterland and transhipment
        traffic) at the level of the ports in Southern England and, even though it does not
        believe that a single port constitutes the appropriate geographic market delineation,
        also at the narrowest level of the port of Portsmouth. As demonstrated below, the
        Transaction will not give rise to competition concerns even within this narrow scope
        comprising only the port of Portsmouth (which is where a vertical relationship arises
        between the Parties’ activities).
31  This possible geographic market definition mainly concerned deep-sea ports. See, for example, Cases
    M.9093-DP World Investments/Unifeeder, paragraph 15; M.9016-CMA CGM/Container Finance,
    paragraph 54; M.8330 – Maersk Line/HSDG, paragraph 32; M.8120 – Hapag-Lloyd/United Arab Shipping
    Company, paragraphs 22-24; M.7908 – CMA CGM/NOL, paragraph 18; M.7523 – CMA CGM/OPDR,
    paragraph 65; M.5450 – Kühne/HGV/TUI/Hapag-Lloyd, paragraph 16; and M.5066 – Eurogate/APMM,
    paragraphs 15-23.
                                                      9
 ---pagebreak--- 4.2.3. Conclusion
(51)    For the purposes of this Decision, it is not necessary to conclude on the exact
        product and geographic definition of the market for the provision of container
        terminal/stevedoring services, as the Transaction would not raise serious doubts as to
        its compatibility with the internal market under any alternative market definition.
5.      COMPETITIVE ASSESSMENT
(52)    Under Article 2(2) and (3) of the Merger Regulation, the Commission must assess
        whether a proposed concentration would significantly impede effective competition
        in the internal market or in a substantial part of it, in particular through the creation
        or strengthening of a dominant position.
(53)    In this respect, a merger may entail horizontal and/or non- horizontal effects.
(54)    In the present case, the Parties’ activities do not give rise to any horizontal overlaps
        but there is a vertical relationship between BF’s stevedoring activities and the
        activities of the Target.
5.1.    Horizontal relationships
(55)    While BF and Condor both provide passenger and freight ferry services, they do not
        operate on any overlapping routes. As indicated above, Condor only operates ferry
        services between the UK/France and the Channel Islands,32 while BF does not
        operate any services to and from the Channel Islands.
(56)    BF owns and operates 13 ships providing passenger and freight ferry services
        between France and the UK, France and Ireland, UK and Spain and between Ireland
        and Spain. BF has never operated any services to or from the Channel Islands and,
        based on the information provided by the Parties, does not intend to do so in the
        future. On the other hand, Condor has never offered [information provided by the
        Parties on Condor’s strategy] any services other than to and from the Channel
        Islands.
(57)    As indicated above, the Commission considers that the routes operated by BF and
        Condor do not (actually or potentially) overlap. Therefore, the Commission
        considers that the Parties’ activities in the provision of ferry services do not overlap.
        Therefore, the Transaction does not give rise to any horizontal relationships.
5.2.    Vertical relationships
(58)    As stated above, the Transaction may give rise to a vertical relationship between BF
        and the Target.
32  As noted in footnote 7, although Condor does not operate a service between the UK and France, a small
    number of passengers travel from Portsmouth to St Malo via the Channel Islands. In terms of Condor’s
    market share, it accounts for [0-5]% of passengers on the Portsmouth-St Malo route. Therefore, even if it
    was considered that Condor and BF operate on overlapping routes, the increment resulting from the
    Transaction is minimal and will not be further considered in this Decision.
                                                         10
 ---pagebreak--- (59)   A vertical merger may result in anti-competitive effects due to foreclosure.
       Foreclosure concerns a situation where actual or potential rivals' access to supplies
       or markets is hampered or eliminated as a result of the merger, thereby reducing
       these companies' ability and/or incentive to compete.33 Two forms of foreclosure can
       be distinguished in a vertical relationship: input and customer foreclosure. The first
       is where the merger is likely to raise the costs of downstream rivals by restricting
       their access to an important input (input foreclosure). The second is where the
       merger is likely to foreclose upstream rivals by restricting their access to a sufficient
       customer base (customer foreclosure).34
(60)   Input foreclosure arises where, post-merger, the new entity would be likely to restrict
       access to the products or services that it would have otherwise supplied absent the
       merger, thereby raising its downstream rivals' costs by making it harder for them to
       obtain supplies of the input under similar prices and conditions as absent the
       merger.35
(61)   Customer foreclosure may occur when a supplier integrates with an important
       customer in the downstream market. Because of this downstream presence, the
       merged entity may foreclose access to a sufficient customer base to its actual or
       potential rivals in the upstream market (the input market) and reduce their ability or
       incentive to compete. In turn, this may raise downstream rivals' costs by making it
       harder for them to obtain supplies of the input under similar prices and conditions as
       absent the merger.36
(62)   For an input or customer foreclosure scenario to raise competition concerns, three
       cumulative factors need to be taken into account: (i) the ability of the merged entity
       to engage in foreclosure; (ii) the incentives of the merged entity to do so; and (iii)
       whether a foreclosure strategy would have a significant detrimental effect on
       competition in the downstream market.37
(63)   The Transaction gives rise to vertically affected markets due to the provision by BF
       of stevedoring services which is an input to the provision of ferry services. Condor
       does not provide any stevedoring services.38
(64)   While BF’s stevedoring services are principally ‘self-supply’, BF also provides such
       services to a limited number of third parties, including Condor at the Port of
       Portsmouth (‘the port’ or ‘Portsmouth’). At the port, BF provides these services
       through its subsidiary, Portsmouth Handling Services Limited (‘PHS’).39 Therefore,
33 Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of
   concentrations between undertakings, OJ C 265, 18.10.2008, p. 6 (‘Non-Horizontal Guidelines’),
   paragraphs 29–30.
34 Non-Horizontal Guidelines, paragraphs 29–30.
35 Non-Horizontal Guidelines, paragraph 31.
36 Non-Horizontal Guidelines, paragraph 58.
37 Non-Horizontal Guidelines, paragraphs 32, 59.
38 Condor also owns […]% of Guernsey Stevedores Limited (“GSL”), which provides stevedoring services
   in Guernsey. However, the provision of such services is not an affected market as it is outside the EEA.
   See Form CO, paragraph 50.
39 Around 15 years ago, MMD (now Portico) provided such stevedoring services to Condor; see Form CO,
   paragraph 103.
                                                      11
 ---pagebreak---      as Condor is a customer of PHS at Portsmouth, there is a vertical relationship
     between BF and Condor.
(65) This vertical relationship between Condor and BF gives rise to vertically affected
     markets because Condor accounts for more than 30% of ferry services to and from
     the Channel Islands. More specifically, Condor’s share of freight ferry services
     between the UK and the Channel Islands amounted to around [70-80]% in 2018 and
     its share of freight ferry services between France and the Channel Islands amounted
     to around [80-90]%.
     Table 1: Volume market shares UK-CI freight ferry services
                          Volume (‘000 lane metres)
       UK-CI freight
       services
                          2018              2017         2016
                          […]               […]          […]
       Condor
                          ([70-80]%)        ([70-80]%)   ([70-80]%)
       Channel Seaways
                          ([20-30]%)*       ([20-30]%)*  ([20-30]%)*
                          combined          combined     combined
       Ronez
     Source: Form CO, paragraph 116.
     Table 2: Volume market shares France-CI freight ferry services
                          Volume (‘000 lane metres)
       France-CI freight
       services
                          2018               2017         2016
                          […]                […]          […]
       Condor
                          ([80-90]%)         ([80-90]%)   ([80-90]%)
       Normandy
                          ([10-20]%)         ([10-20]%)   ([10-20]%)
       Traders
     Source: Form CO, paragraph 118.
(66) According to the information provided by the Parties, BF accounts for around
     [10-20]% of stevedoring services at Portsmouth. Condor as a customer of these
     stevedoring services provided by BF at Portsmouth, accounts for around [>60]% of
     the demand of these stevedoring services provided by BF at Portsmouth, with the
     remaining [<40]% being self-supply by BF to its own vessels. In terms of vessel
     visits, however, Condor only accounts for around [<30]% of BF’s stevedoring
     business, with self-supply accounting for [>70]%. Furthermore, BF estimates its
     market shares for stevedoring services in each of Southern England (where it only
     operates at Portsmouth) and Northern France (where it provides stevedoring services
     at three ports, that is, Ouistreham, Roscoff and St Malo) to be significantly less than
     [0-10]%.
                                                   12
 ---pagebreak--- (67)    The Commission considers that this vertical relationship is unlikely to have any
        material impact on the market and is unlikely to raise any foreclosure concerns, as
        further analysed below.
5.2.1. Input foreclosure
(68)    The Commission considers that the Transaction will not lead to input foreclosure, as
        the merged entity would not have the ability or incentive post-Transaction not to
        provide stevedoring services to third parties or to raise the price for stevedoring
        services to third parties.
(69)    First, Condor has no actual competitors in the (downstream) provision of passenger
        and freight ferry/shipping services from Portsmouth to the Channel Islands who
        could potentially require the provision of stevedoring services at Portsmouth. There
        are no other RoRo ferry operators that sail to the Channel Islands from Portsmouth,
        so there is no incentive not to provide the types of stevedoring services supplied by
        PHS to third parties who could be operating on routes that do not compete with
        Condor.
(70)    More specifically, as the incentive to foreclose depends on the degree to which
        foreclosure would be profitable, the Commission notes that it would be counter-
        productive for BF/PHS not to provide stevedoring services to third party (RoRo)
        freight operators at Portsmouth because it would lose revenues and not gain any
        additional business by such refusal. BF/PHS already accounts for 100% of RoRo
        freight to and from the Channel Islands as it provides stevedoring services to
        Condor.
(71)    Second, probability of entry of a competitor to Condor is low due to (i) the stringent
        obligations under the Operating Agreement of the Harbour Master of Jersey and the
        Memorandum of Understanding of the States of Guernsey And (ii) the logistical
        issues in finding suitable vessels to operate these Ports.40
(72)    Regarding the suitable vessels, a new operator would have to overcome the Channel
        topography issues (with some of the largest tidal movements in the world) and
        provide the specific vessels required in the agreements. According to the information
        provided by the Parties, there are only around [<30] vessels in the world capable of
        operating in the sea conditions around the Channel Islands and there is no other ferry
        operator who owns a comparable fleet or has sufficient vessels capable to operate
        this route and service.41
(73)    Third, the Transaction internalises a contractual relationship but does not change the
        current competitive situation. No third party could be disadvantaged by the
        Transaction, since BF/PHS does not currently provide such services to any third
        party other than Condor. PHS’ only customers are BF (that is, self-supply) and
        Condor to which it provides all its RoRo stevedoring services at Portsmouth.
        Therefore, the Commission considers, as also confirmed by the market investigation,
        that the Transaction would not lead to any material changes at Portsmouth.42
40  See Form CO, paragraphs 147 and the Parties’ reply to question 1 of RFI 1.
41  See Form CO, paragraphs 90-91 and the Parties’ reply to question 1 of RFI 1.
42 See, for instance, the minutes of the call with [a market participant].
                                                          13
 ---pagebreak--- (74)    Fourth, there are other providers of stevedoring services at Portsmouth such as the
        Port of Portsmouth itself, through Portico as well as Southern Maritime Services
        (SMS) or Portsmouth International Port which could provide such stevedoring
        services to any potential customer at the port. More specifically, Portsmouth
        International Port already provides RoRo services at the port and all stevedoring
        service providers currently operating at the port are able to provide both RoRo and
        LoLo stevedoring services, should this be required in the future. For instance, as BF
        does not provide a ‘full service’ stevedoring operation and given the limited
        equipment needed to provide the types of services it performs, these services could
        be offered by any third party, especially if they already operate at the port. As
        indicated, Portico already provided such services to Condor in the past and could
        easily provide such services to any third party using its existing equipment.
        Similarly, SMS, which services cruise vessels at the port, could provide stevedoring
        services to move unaccompanied trailers with any engines/trucks it operates.43
(75)    Lastly, given the limited stevedoring services that BF provides to its vessels and to
        Condor, there are other stevedoring service providers, which operate at other ports in
        Southern England, which could provide such services to any potential customer at
        Portsmouth. This could be done by either moving engines/trucks (“tugs” to carry the
        unaccompanied trailers) from other locations, such as Southampton or by acquiring
        such tugs (second hand) or renting them which requires very little investment or
        infrastructure. BF undertakes only a limited number of unaccompanied trailer
        movements per day; any third party with a small number of tugs/investment could do
        this.
(76)    Based on the above considerations and the evidence available to it, the Commission
        concludes that a post-Transaction input (stevedoring services) foreclosure strategy
        by BF/PHS in order to exclude Condor’s competitors is unlikely.
5.2.2. Customer foreclosure
(77)    Any customer foreclosure strategy of the merged entity would also be unlikely. For
        customer foreclosure to be a concern, the merger must involve a company which is
        an important customer in the downstream market.44
(78)    In this case, BF/PHS is already the only supplier of stevedoring services to Condor
        at Portsmouth; the Transaction would, therefore, not lead to any material changes at
        the port and there can be no customer foreclosure as competing providers of
        stevedoring services are not affected by the Transaction. The Transaction will simply
        result in the internalisation of a pre-existing contract-based situation. This was also
        confirmed by the authorities at the Port of Portsmouth.45 Therefore, the Transaction
        would not raise any customer foreclosure concerns for providers of the (upstream)
        stevedoring services.
43  See the Parties’ reply to question 3 of RFI 1 as well as the minutes of the call with [a market participant].
44  Non-Horizontal Merger Guidelines, paragraph 58.
45 See, among others, the minutes of the call with [a market participant].
                                                           14
 ---pagebreak--- 5.2.3. Conclusion
(79)   Based on the above considerations and on all the evidence available to it, the
       Commission therefore concludes that the Transaction does not raise serious doubts
       as to its compatibility with the internal market due to vertical effects.
6.     CONCLUSION
(80)   For the above reasons, the European Commission has decided not to oppose the
       notified operation and to declare it compatible with the internal market and with the
       EEA Agreement. This Decision is adopted in application of Article 6(1)(b) of the
       Merger Regulation and Article 57 of the EEA Agreement.
                                                      For the Commission
                                                      (Signed)
                                                      Margrethe VESTAGER
                                                      Executive Vice-President
                                                  15