CELEX: 32014M7270
Language: en
Date: 2014-12-18 00:00:00
Title: Commission Decision of 18/12/2014 declaring a concentration to be compatible with the common market (Case No COMP/M.7270 - CESKY AEROHOLDING / TRAVEL SERVICE / CESKE AEROLINIE) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 18.12.2014
C(2014) 10185 final

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|To the notifying parties:                                              |
|                                                                       |

Dear Sir/Madam,

Subject:    Case M.7270 - CESKY AEROHOLDING/ TRAVEL SERVICE/ CESKE AEROLINIE
Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1]

                                                                TABLE OF CONTENTS

1.    THE PARTIES      3
2.    THE OPERATION    3
3.    THE CONCENTRATION      3
4.    EU DIMENSION     4
5.    MARKET DEFINITION      4
5.1.  Overview of Parties' activities   4
5.1.1.      Air transport of passengers 4
5.1.2.      Air transport of cargo      5
5.1.3.      Other activities 5
5.2.  Air transport of passengers 5
5.2.1.      Origin and destination approach (O&D)  5
5.2.1.1.    Demand-side considerations  5
5.2.1.2.    Supply-side considerations  6
5.2.1.3.    Conclusion 6
5.2.2.      Distinction between groups of passengers     6
5.2.3.      Markets for direct flights and indirect flights   8
5.2.4.      Airport substitutability    9
5.2.4.1.    Framework of assessment     9
5.3.  Related ground services at Prague Airport    10
5.3.1.      Ground handling services    10
5.3.2.      Maintenance, repair and overhaul (MRO) 11
5.3.3.      Fuel supply      11
5.3.4.      Airport infrastructure services  12
6.    COMPETITIVE ASSESSMENT 12
6.1.  Air transport of passengers 12
6.1.1.      Share data for the air transport of passengers    13
6.1.2.      Overlapping Routes    13
6.1.2.1.    Prague–Rome (Fiumicino)     13
6.1.2.2.    Prague–Paris (Charles de Gaulle) 15
6.1.2.3.    Prague–Tel Aviv  17
6.1.2.4.    Prague–Barcelona 19
6.1.3.      Overlaps due to codeshares  20
6.1.3.1.    Codeshares 20
6.1.3.2.    Codeshares between CSA and Travel Service    21
6.2.  Related ground services at Prague Airport    26
6.2.1.      Ground handling services    26
6.2.2.      Fuel Supply      28
6.2.3.      Maintenance, repair and overhaul (MRO) 29
6.2.4.      Airport Infrastructure services  30
6.2.5.      Other effects    31
7.    CONCLUSION 31
 1) On 14 November 2014, the European Commission received a notification of a proposed  concentration  pursuant  to  Article  4  of  the  Merger
    Regulation by which Český Aeroholding, a.s. ("CAH", the Czech Republic) and Travel Service, a.s.  ("Travel  Service",  the  Czech  Republic)
    acquire joint control of České aerolinie a.s. ("CSA", the Czech Republic) (the "Transaction"). CAH, Travel Service, and CSA are collectively
    referred to as the "Parties".[2]

       THE PARTIES

 2) CAH is a state-owned company holding shares in companies engaged in air transport and related ground services at  the  international  Václav
    Havel Airport Prague ("Prague Airport"). The CAH group includes:

        a) Letiště Praha, a. s. ("LP"), the operator of Prague Airport;

        b) Czech Airlines Technics, a.s., a company active in the provision of technical aircraft maintenance, and repair and overhaul  services
           ("MRO") at Prague Airport; and

        c) Czech Airlines Handling, a.s., a provider of ground handling and fuel supply services at Prague Airport.

 3) Travel Service is a Czech carrier that provides scheduled air transport of passengers, charter transport, and to a very limited extent cargo
    transport. Travel Service operates scheduled flights under its low-cost brand "SmartWings". The company is based at Prague Airport and has a
    branch office in Slovakia and subsidiaries in Poland and Hungary.

 4) CSA is the Czech national carrier, with its hub at Prague Airport. The core business of CSA is scheduled air transport of passengers and air
    transport of cargo. CAH holds a 53.7% shareholding in CSA and is its controlling shareholder. Korean Air Lines Co., Ltd. ("Korean Air")  and
    Česká pojišťovna a.s., a Czech insurer, with shareholdings of 44% and 2.3% respectively, are CSA's other shareholders. CSA is  a  member  of
    the SkyTeam Alliance. CSA is not involved in any joint venture.

       THE OPERATION

 5) In the context of the Transaction, Travel Service will purchase 34% of CSA's share capital from Korean Air which will in turn purchase a 34%
    shareholding in CSA from CAH. Therefore, following the Transaction CSA's capital will be held by Korean Air (44%), Travel Service (34%), CAH
    (19.7%), and Česká pojišťovna a.s. (2.3%).[3]

       THE CONCENTRATION

 6) CSA is currently majority owned and controlled by CAH. In the context of the Transaction, CAH, Travel Service, and Korean  Airlines  entered
    on 3 April 2014 into a Restated Shareholders Agreement. Pursuant to the terms of the Restated Shareholders Agreement, CAH and Travel Service
    will always vote together at CSA's shareholder meeting on resolutions regarding CSA's business plan, fleet composition, and the  appointment
    of Directors.[4]

 7) [Composition of the Board of Directors of CSA and a list of veto rights of its controlling shareholders].[5]

 8) Furthermore, Korean Air will not enjoy any veto right over strategic decisions at CSA post-Transaction. [Description  of  option  rights  of
    CSA's shareholder][6] [Description of option rights of CSA's shareholder].[7]  [Description  of  option  rights  of  CSA's  shareholder].[8]
    [Description of option rights of CSA's shareholder].[9] [Description of option rights of CSA's shareholder].

 9) Therefore, CAH and Travel Service will jointly control CSA for the purposes of the EU Merger Regulation.[10]

       EU DIMENSION

10) The Transaction was referred to the Commission under Article 4(5) of the Merger Regulation and is therefore deemed to have an EU  dimension.
    The Transaction originally exceeded the filing thresholds in the Czech Republic, Cyprus, and Spain.

       MARKET DEFINITION

1 Overview of Parties' activities

11) The relevant product markets for the purpose of the assessment of the Transaction are air transport of passengers, air transport  of  cargo,
    ground handling and MRO services, as well as fuel supply and airport infrastructure services at Prague Airport.

1 Air transport of passengers

12) In the air transport of passengers sector, in the summer 2014 IATA season, Travel Service and CSA both operated  scheduled  flights  on  the
    following four routes: (i) Prague (PRG)–Tel Aviv (TLV), (ii) Prague (PRG)–Barcelona (BCN), (iii) Prague (PRG)–Rome (FCO),  and  (iv)  Prague
    (PRG)–Paris (CDG) (the "Overlapping Routes"). Moreover, the Parties' activities overlapped on 42 routes through unilateral codesharing.[11]

2  Air transport of cargo

13) Both CSA and Travel Service provide cargo  transport  services.  CSA  operates  in  the  cargo  transport  business  through  its  dedicated
    organisational unit, CSA CARGO. Travel Service offers cargo services on an ad hoc basis and this business represents less than [0-5]% of its
    yearly revenues. The Parties carry air freight in the belly-hold space of their passenger aircraft. In addition, CSA operates  full  freight
    ATR aircraft (based on "aircraft, complete crew, maintenance, and insurance" agreements with various partners) and also  relies  on  ad  hoc
    cargo charters operated by other carriers. Travel Service does not operate any full freight aircraft.

14) The overlap between the Parties' activities in the provision of air transport of cargo services does not lead to  any  affected  market  and
    will, therefore, not be discussed any further.[12]

3 Other activities

15) In addition to the air transport services, CAH is engaged in a number of additional activities that are  upstream  to  the  market  for  air
    transport services. Primarily, CAH provides ground-handling and MRO services as well as fuel supply and airport infrastructure  services  at
    Prague Airport where possible vertical relations with other Parties to the operation could be established (see Section 6.2. of this decision
    for the assessment of possible vertical relationships).

2 Air transport of passengers

1 Origin and destination approach (O&D)

1 Demand-side considerations

16) In its decisional practice, the Commission has traditionally defined the relevant market for scheduled air transport of  passenger  services
    on the basis of the "point of origin/point of destination" ("O&D") city-pair approach.[13] Such a market definition reflects the demand-side
    perspective whereby passengers consider all possible alternatives of travelling from a city of origin to a city of destination,  which  they
    do not consider substitutable for a different city pair. As a result, every combination of a point of origin and a point of  destination  is
    considered a separate market.

17) A large majority among all groups of respondents to the market investigation concur with the O&D approach for the purpose of  analysing  the
    competitive effects on the overlap routes.[14] The Parties do not object to this approach.[15]

2 Supply-side considerations

18) The Commission has in its practice taken into consideration the network competition between airlines.[16] This is particularly  relevant  on
    the supply-side, as network carriers build their network and decide to fly essentially on  routes  connecting  to  their  hubs.  While  some
    network carriers argued that competition between carriers takes place on the network level and that  therefore  competition  among  networks
    should also be taken into account,[17] in line with the Commission's  notice  on  market  definition  and  with  the  Commission's  decision
    practice,[18] the Commission has  given  pre-eminence  to  demand-side  substitution,  whereby  it  considered  that  customers  still  need
    transportation from one point to another and that competition still takes place on an O&D city-pair basis.

3 Conclusion

19) In light of the above, the Commission considers that the effects of the Transaction will be assessed on the  basis  of  the  city  pair  O&D
    approach, while all substitutable airports will be included in the respective points of origin  and  destination,  provided  that  they  are
    perceived as substitutable by travellers. The question of airport substitutability will be examined for relevant O&D routes in Section 6. of
    this decision.

2 Distinction between groups of passengers

20) The Commission has traditionally found that a distinction may be drawn between time sensitive ("TS") or  premium  passengers,  and  non-time
    sensitive ("NTS") or non-premium passengers.[19] TS passengers tend to travel for business purposes, require  significant  flexibility  with
    their tickets (such as cost-free cancellation and modification of the time of departure, etc.) and  tend  to  pay  higher  prices  for  this
    flexibility. NTS customers travel predominantly for leisure purposes or to visit friends and relatives, book long time in  advance,  do  not
    require flexibility with their booking and are generally more price-sensitive.

21) The Parties do not object to the Commission's approach but emphasise that the business models of CSA and Travel Service differ.[20] CSA is a
    traditional carrier, while Travel Service operates low-cost and charter flights. As  a  low-cost  carrier,  Travel  Service  does  not  sell
    business class tickets, and focuses primarily on NTS passengers. Furthermore, Travel Service considers that virtually all its passengers are
    NTS. CSA instead caters to both TS and NTS passengers. However, the vast majority of CSA’s passengers are NTS passengers.[21]

22) If one were to distinguish separate markets for TS and NTS passengers, Travel Service submits that it would not be present  on  any  of  the
    markets for time-sensitive passengers. Consequently, the Transaction would not lead to any overlap on these markets.

23) The Parties consider that it is not necessary to distinguish separate relevant markets for NTS and TS passengers for the  purposes  of  this
    decision[22] because (i) the distinction between TS and NTS passengers has diminished in recent  years,  (ii)  TS  passengers  form  only  a
    negligible part of CSA’s customers, and (iii) Travel Service only operates low-cost flights that are targeted at NTS passengers.

24) A large majority of respondents to the market investigation has found that the distinction between TS and NTS passengers is relevant for the
    assessment of the Transaction.[23] Some respondents consider nevertheless that the distinction between TS  and  NTS  passengers  has  become
    blurred.[24]

25) However, The Commission considers that, for the purpose of the assessment of the Transaction, the conclusion on whether  TS  passengers  and
    NTS passengers belong to the same relevant market can be left open, as the outcome of the  Commission's  competitive  assessment  would  not
    change under any alternative market definition.

3 Markets for direct flights and indirect flights

26) On a given O&D pair, passengers can travel either by way of a direct flight between the point of origin and the point of destination  or  by
    way of an "indirect" flight on the same O&D pair but via an intermediate destination.[25]

27) The level of substitutability of indirect flights for direct flights largely depends on the duration of the flight. As a general  rule,  the
    longer the flight, the higher the likelihood that indirect flights exert a competitive constraint on direct flights.[26]

28) When defining the relevant O&D markets for air transport services, the Commission has considered in previous decisions that with respect  to
    short-haul routes (generally below 6 hours flight duration), indirect flights do not generally provide a competitive  constraint  to  direct
    flights, absent exceptional circumstances (for example the direct connection does not allow for a  one-day  return  trip  or  the  share  of
    indirect flights in the overall market is significant).[27]

29) The Parties do not object to this approach but submit[28] that they only operate short-haul flights and that the Transaction does  not  give
    rise  to  overlaps  between  direct/indirect[29]  or  indirect/indirect[30]  flights  that  would  lead  to  affected  markets.   Therefore,
    direct/indirect and indirect/indirect overlaps will not be discussed any further in this decision.

30) As regards direct/direct overlaps, including indirect flights in the relevant market, the Commission considers that the  existence  of  such
    overlaps would not materially affect the assessment of these routes as the Parties only transport on indirect flights less  than  [0-5]%  of
    their total passengers on the relevant O&D pairs.[31] Indirect flights will therefore not be included in  the  assessment  of  direct/direct
    overlaps.

4 Airport substitutability

1 Framework of assessment

31) When defining the relevant O&D markets for air transport services, the Commission previously found that flights from or  to  airports  which
    have sufficiently overlapping catchment areas can be considered as substitutes in the eyes of passengers.

32) In order to correctly capture the competitive constraint that flights from and to two (or more) different airports exert on  each  other,  a
    detailed analysis is necessary by taking into consideration the specific characteristics of the  case  at  hand.[32]  Passengers  take  into
    account a number of elements like travel time, travel costs, flight times/schedules/frequencies and the quality of service when it comes  to
    choosing between air transport services to and from different airports. The passengers' choice for one or the  other  airline  service  will
    ultimately be driven by a combination of these elements.

33) Airport substitutability cannot be assessed in the abstract but can only be determined  taking  into  account  the  characteristics  of  the
    passengers travelling on the routes at stake. The evidence used to characterise airport substitutability includes inter alia a comparison of
    distances and travelling times to the indicative benchmark of 100 km/1 hour driving time,[33] the outcome of the market investigation (views
    of the airport managers, the competitors, and other market participants), the Parties' practices in  terms  of  monitoring,  and  any  other
    relevant element.

34) In the present case, airport substitutability is relevant only for the Prague–Paris route.[34] In previous decisions,[35] the Commission has
    held that Paris Roissy Charles de Gaulles ("CDG") and Paris Orly are substitutable. In the Commission's market investigation in the  present
    case, a majority of all respondents expressing a view were of the opinion that Paris CDG and Paris Orly were not substitutable for TS or NTS
    passengers.[36]

35) Given however that serious doubts do not arise on the Prague–Paris (CDG) route or on the Prague–Paris CDG and  Orly  route,  the  Commission
    considers that for the purpose of the assessment of the Transaction it is not necessary to conclude whether Paris CDG and  Paris  Orly  form
    part of the same relevant market.

3 Related ground services at Prague Airport

36) In addition to air transport services, CAH is engaged in a number of additional activities provided to third  parties  that  are  vertically
    related to the market for air transport services. Primarily, CAH (through its subsidiaries) provides ground-handling and  MRO  services,  as
    well as fuel supply and airport infrastructure services at Prague Airport.

1 Ground handling services

37) The Commission has concluded in previous cases that the relevant product market for ground handling services consist of ramp, passenger, and
    baggage handling services as well as airside cargo handling services with a geographic scope  for  the  provision  of  all  ground  handling
    services restricted to a specific airport.[37]

38) Ramp services include aircraft loading and unloading, marshalling, push back and towing, cleaning, toilet  and  water  servicing,  de-icing,
    airport transportation (for both crew and passengers), freight and baggage  transfer,  and  traffic  operations  (flight  documentation  and
    planning, crew briefing, weight and balance, load planning, ground to air communication, flight supervision).

39) Passenger handling services include reservation and ticketing, supervision management, check-in services, basic security  services,  arrival
    and departure services and boarding assistance.

40) Baggage handling comprises loading and unloading of baggage from an aircraft, handling baggage in the sorting area, sorting it, preparing it
    for departure, and transporting baggage from the sorting area to the reclaim area.

41) Airside cargo handling is the transportation of cargo between the airport and the cargo handler's warehouse.

42) A large majority of all queried respondents expressing a view confirmed the product and geographic  market  definition  of  ground  handling
    services as outlined in previous Commission decisions.[38] The Parties do not object to this approach.[39]

43) In the absence of horizontal overlap on this market, the Commission considers that for the purpose of the assessment of the Transaction  the
    precise scope of the product market definition for ground handling services can be left open since the Transaction would  not  significantly
    impede effective competition under any product or geographic market definition.

2 Maintenance, repair and overhaul (MRO)

44) With regard to the product market definition, the Commission distinguished in earlier  decisions  four  separate  segments  within  the  MRO
    market, namely (i) line maintenance, (ii) heavy maintenance, (iii) engine maintenance, and (iv) components' maintenance.[40] Geographically,
    these markets are deemed to be at least EEA-wide in scope, the only exception being line maintenance, which is deemed regional,  limited  to
    the airport where the services are provided.[41] A large majority of all queried respondents expressing a view  confirmed  the  product  and
    geographic market definition of ground handling services as outlined in previous Commission decisions.[42] The Parties do not object to this
    approach.[43]

45) In the absence of horizontal overlaps on this market, the Commission considers that for the purpose of the assessment of the Transaction the
    precise scope of the product market definition for MRO services can be left open  since  the  Transaction  would  not  significantly  impede
    effective competition under any product or geographic market definition.

3 Fuel supply

46) The Commission has distinguished separate markets for ex-refinery sales and into-plane sales of aviation fuels.[44] The  into-planes  supply
    includes supply of aviation fuel at the airport under contracts with the airlines and arrangements with servicing companies that operate the
    airport fuelling infrastructures and perform actual into plane fuelling services with tank trucks to  the  plane  for  a  fee  paid  by  the
    suppliers.[45] The relevant geographic market for into-plane supply is defined on an airport  basis,  due  to  the  airport-specific  supply
    contracts and fuelling infrastructures specific to each airport. [46]

47) The Parties do not object to this approach and note that CSA Handling acquired a non-exclusive license for fuel supply to  air  carriers  at
    Prague Airport and commenced providing these services as of January 1, 2014.[47] Travel Service is not active in this market.

48) A large majority of all queried respondents expressing a view confirmed the product and geographic  market  definition  of  ground  handling
    services as outlined in previous Commission decisions.[48]

49) In the absence of horizontal overlaps on this market, the Commission considers that for the purpose of the assessment of the Transaction the
    precise scope of the product market definition for fuel supply services can be left open  since  the  Transaction  would  not  significantly
    impede effective competition under any product or geographic market definition.

4 Airport infrastructure services

50) The Commission delineated a separate market for the provision of airport infrastructure services to airlines. In its most recent cases,  the
    Commission indicated that three activities can be distinguished in the management and operation of airports: (i) the  provision  of  airport
    infrastructure, (ii) the provision (or contracting) of ground-handling services, and (iii) the  provision  (or  contracting)  of  associated
    commercial services.[49] As for its geographical scope, the Commission defines the  market  for  the  provision  of  airport  infrastructure
    services as all airports within the same catchment area.[50]

51) A large majority of all queried respondents expressing a view confirmed the product and geographic  market  definition  of  ground  handling
    services as outlined in previous Commission decisions.[51] The Parties do not object to this approach.[52]

52) In the absence of horizontal overlap on this market and for the purposes of this decision, the Commission considers that the  precise  scope
    of the product market definition […] can be left open since the transaction would not significantly impede effective competition  under  any
    product or geographic market definition.

       COMPETITIVE ASSESSMENT

1 Air transport of passengers

53) In the air transport of passengers sector, in the summer 2014 IATA  season,  the  Parties  both  operated  scheduled  flights  on  the  four
    Overlapping Routes: (i) Prague (PRG)–Tel Aviv (TLV), (ii) Prague (PRG)–Barcelona (BCN), (iii)  Prague  (PRG)–Rome  (FCO),  and  (iv)  Prague
    (PRG)–Paris (CDG). Moreover, the Parties' activities overlapped on 42 routes where they operate unilateral codeshares.[53]

1 Share data for the air transport of passengers

54) The Parties based their share estimates for the air transport of passengers on statistical data  collected  by  Prague  Airport.[54]  Prague
    Airport tracks the number of passengers on flights to/from Prague Airport and distinguishes point-to-point and transfer passengers but  does
    not provide separate data on tickets sold by marketing carriers under codeshare agreements. The Prague Airport makes the  data  it  collects
    available to all carriers operating the respective flights. Neither CSA nor Travel Service purchase data from paid databases.

55) The Prague Airport is operated by LP, a subsidiary of CAH. The Parties submit that the statistical data collected by LP is objective and  as
    such it is normally relied on by carriers. Furthermore, in the context of the approval of the restructuring of its activities by  the  Czech
    Office for the Protection of Competition ("UOHS"), CAH committed to hold LP separate from CAH and its other subsidiaries  from  a  personal,
    legal, accounting, and operational perspective. The Parties consider that the separation of LP from the  rest  of  the  CAH  group  provides
    safeguards against the sharing of sensitive information and aims to ensure free and equal access to services  and  capacities  of  companies
    within the CAH holding structure for third parties.[55] Due to these reasons, the Parties maintain that CAH does not  have  the  ability  to
    influence contents of the Prague Airport statistics.

56) The Commission has confirmed the Parties' share estimates by collecting information from their main  competitors  on  the  four  Overlapping
    Routes where both Parties operate. The Commission therefore considers that  the  data  submitted  by  the  Parties  is  sufficient  for  the
    assessment of the Transaction.

2 Overlapping Routes

1 Prague–Rome (Fiumicino)

 57) On the Prague–Rome route, both CSA and Travel Service operate their own aircraft. Furthermore, CSA and Travel Service sell tickets for  each
     other's flights under a parallel hard block codeshare agreement.[56]

58) Rome is served by two airports, Rome Ciampino and Rome Fiumicino. Airport substitutability between airports in Rome could only  be  relevant
    for the assessment of entry projects by the Parties' potential competitors because the Parties and their actual competitors are  all  flying
    from Rome Fiumicino. However, the Parties' competitors that have responded to the market investigation have  indicated  that  they  have  no
    plans to enter on the route over the foreseeable future.[57] Therefore,  it  is  not  necessary  to  determine  whether  Rome  Fiumicino  is
    substitutable with Rome Ciampino.

59) During the winter 2013/2014 and the summer 2014 IATA seasons approximately [60 000 – 80 000] and [200 000 – 300 000] passengers respectively
    travelled on the Prague–Rome O&D route.[58] In the winter 2013/14 IATA season, the Parties  transported  a  total  of  [40  000  –  60  000]
    passengers, [0 – 20 000] of which were TS passengers transported by CSA. In the summer 2014 IATA season, the parties transported a total  of
    [60 000 – 80 000] passengers, [0 – 20 000] of which were TS passengers transported by CSA. Over the last two IATA  seasons,  Travel  Service
    did not transport TS passengers on the route.[59] The Parties' main competitors on the route, Wizz Air, EasyJet, and  Vueling,  focus  their
    activities on NTS passengers. Alitalia instead caters to both TS and NTS passengers. The Parties'  activities  do  not  overlap  on  the  TS
    passengers segment on the Prague–Rome route. Furthermore, considering the limited number of tickets sold to TS passengers, the  Parties  are
    of the view that the market structure for NTS passengers is similar to that for all passengers. Therefore, for the purpose of this  decision
    it is not necessary to distinguish TS from NTS passengers as this distinction would not affect the outcome of the  Commission's  competitive
    assessment.

60) The Parties were not able to provide estimates for the number of passengers travelling on indirect flights. However, indirect flights do not
    represent a material competitive constraint to the Parties' direct operation on the Prague–Rome route.

61) In the winter 2013/14 IATA season, CSA operated up to 6 weekly frequencies while Travel Service operated up to 6 weekly frequencies.[60]  In
    the summer 2014 IATA season, CSA operated up to 5 weekly frequencies while Travel Service operated up to 4 weekly frequencies. In  addition,
    each of the Parties sold tickets for the other party's flights. In the summer 2014  IATA  season,  easyJet  and  Vueling  offered  7  weekly
    frequencies each, while Wizz Air offered 3 weekly frequencies in each of the last two IATA seasons.

62) Table 1 below illustrates the market position of the Parties and their competitors on the Prague-Rome route  in  the  winter  2013/2014  and
    summer 2014 IATA seasons.

    Table 1: Prague–Rome Fiumicino

|Carrier                  |Winter 2013/2014                               |Summer 2014                                    |
|                         |Passengers                |Share               |Passengers                |Share               |
|CSA                      |[20 000-40 000]           |[40-50]%            |[40 000-60 000]           |[20-30]%            |
|Travel Service           |[0 - 20 000]              |[20-30]%            |[20 000-40 000]           |[10-20]%            |
|Combined                 |[40 000-60 000]           |[60-70]%            |[60 000-80 000]           |[30-40]%            |
|easyJet                  |0                         |0%                  |[40 000-60 000]           |[20-30]%            |
|Vueling                  |0                         |0%                  |[40 000-60 000]           |[20-30]%            |
|Wizz Air                 |[0-20 000]                |[20-30]%            |[20 000-40 000]           |[10-20]%            |

    Source: Form CO: Annex 7.5.1.A

63) During the winter 2013/2014 IATA season, the Parties held a combined share of [60-70]% and faced competition from Wizz  Air  ([20-30]%)  and
    Alitalia ([10-20]%). In the summer 2014 IATA season, new entry occurred. Two  leading  low  cost  carriers,  easyJet  and  Vueling,  started
    operating on the route with one daily frequency each, i.e. a higher frequency than either CSA or Travel Service.

64) Already in their first season, easyJet and Vueling were able to seize a significant share of the market, [20-30]% and [20-30]% respectively,
    which is equal to or higher than each of the merging parties. EasyJet and Vueling mainly acquired passengers at the expense of  the  Parties
    which have seen their combined share decline to [30-40]%, whereas Alitalia could keep its share of the market roughly stable. The  entry  of
    these two carriers is not seasonal. Both easyJet and Vueling are offering a year-round service.

65) Moreover, a majority of respondents to the market investigation that expressed a view on the degree of competition that would remain on this
    route post-Transaction indicated that there would be sufficient constraints to prevent the merged entity from raising prices.[61]

66) Therefore, the Commission considers that, in particular because of the new  entrants  in  the  market  post-Transaction  the  Parties,  will
    continue to face sufficient competitive pressure from strong competitors, two of which hold shares larger than the increment  brought  about
    by the Transaction.

67) In light of the above, the Commission concludes that the Transaction does not raise any serious doubts as  to  its  compatibility  with  the
    internal market under all possible market definitions on the Prague–Rome (Fiumicino) route.

2 Prague–Paris (Charles de Gaulle)

68) On the Prague–Paris route, both CSA and Travel Service operate their own aircraft. Furthermore, Travel Service  sells  tickets  for  flights
    operated by CSA under a unilateral hard block codeshare agreement.[62]

69) Paris is served by three main airports, Paris CDG, Paris Orly, and Paris Le Bourget. As explained above in Section 5.2.4. of this  decision,
    the Parties submit that Paris CDG and Paris Orly are substitutable for both TS and NTS passengers. The Parties and  their  main  competitors
    operate flights to Paris CDG, the sole exception being Transavia that flies instead to Paris Orly. Therefore, including Paris  Orly  in  the
    same relevant market as Paris CDG would have the effect of diluting the Parties' shares. However, because the  Transaction  does  not  raise
    serious doubts on the Prague–Paris Charles de Gaulle route, it is  not  necessary  to  determine  whether  Paris  CDG  and  Paris  Orly  are
    substitutable for the purpose of the assessment of the Transaction.

70) During the winter 2013/2014 and the summer 2014 IATA seasons approximately [200  000  –  300  000]  and  [300  000  –  400  000]  passengers
    respectively travelled on the Prague–Paris CDG O&D route.[63] In the winter 2013/14 IATA season, the Parties transported a total of [100 000
    – 200 000] passengers, about [0 - 20 000] of which were TS passengers transported by CSA. In  the  summer  2014  IATA  season,  the  parties
    transported a total of [100 000 -200 000] passengers, about [0 - 20 000] of which were TS passengers transported by CSA. Over the  last  two
    IATA seasons, Travel Service did not transport TS passengers on the route.[64] Air France caters to  both  TS  and  NTS  passengers  whereas
    easyJet focuses its activities on NTS passengers. The Parties' activities do not overlap on the TS passengers segment  on  the  Prague–Paris
    CDG route. Furthermore, considering the limited number of tickets sold to TS passengers, the  Parties  are  of  the  view  that  the  market
    structure for NTS passengers is similar to that for all passengers. Therefore, for the purpose of this  decision  it  is  not  necessary  to
    distinguish TS from NTS passengers as this distinction would not affect the outcome of the Commission's competitive assessment.

71) The Parties were not able to provide estimates for the number of passengers travelling on indirect flights. However, indirect flights do not
    represent a material competitive constraint to the Parties' direct operation on the Prague–Paris CDG route.[65]

72) In the winter 2013/14 IATA season, CSA operated up to 21 weekly frequencies while Travel Service operated up to 7 weekly frequencies.[66] In
    the summer 2014 IATA season, CSA operated up to 20 weekly frequencies while Travel Service up to 2 weekly frequencies. In  addition,  Travel
    Service sold tickets for the CSA's flights. Air France offered 21 weekly frequencies while EasyJet offered up to  7  weekly  frequencies  in
    each of the last two IATA seasons.

73) Table 2 below illustrates the market position of the Parties and their competitors on the Prague–Paris CDG route in the winter 2013/2014 and
    summer 2014 IATA seasons.

    Table 2: Prague–Paris-CDG

|Carrier             |Winter 2013/2014                                    |Summer 2014                                         |
|                    |Passengers                     |Share               |Passengers                       |Share             |
|Travel              |[20 000-40 000]                |[10-20]%            |[20 000-40 000]                  |[5-10]%           |
|Service             |                               |                    |                                 |                  |
|Combined            |[100 000-200 000]              |[40-50]%            |[100 000-200 000]                |[40-50]%          |
|easyJet             |[20 000-40 000]                |[10-20]%            |[60 000-80 000]                  |[20-30]%          |

    Source: Form CO: Annex 7.5.1.A

74) During the winter 2013/2014 IATA season, the Parties held a combined share of [40-50]% and faced competition from easyJet ([10-20]%) and Air
    France ([40-50]%). In the summer 2014 IATA season, CSA and Travel Service have seen their combined share decline to [40-50]%  from  [40-50]%
    in the summer 2013 IATA season. EasyJet's share has doubled when compared with the previous IATA season. Both easyJet  and  Air  France  are
    offering a year-round service.

75) A majority of respondents to the market investigation that expressed a  view  on  the  degree  of  competition  that  would  remain  on  the
    Prague–Paris-CDG route post-Transaction indicated that there would be sufficient constraints to  prevent  the  merged  entity  from  raising
    prices.[67]

76) The Commission accordingly considers that because of the year-round high market  shares  of  two  strong  competitors  post-Transaction  the
    Parties will continue to face sufficient competitive pressure, especially since competitors hold shares larger than  the  increment  brought
    about by the Transaction.

77) In the light of the above, the Commission concludes that the Transaction does not raise serious doubts as  to  its  compatibility  with  the
    internal market with respect to the Prague–Paris (Charles de Gaulle) route under any possible market definition.

3 Prague–Tel Aviv

78) On the Prague–Tel Aviv route, both CSA and Travel Service operate their own aircraft. Furthermore, CSA and Travel Service sell  tickets  for
    each other's flights under a parallel hard block codeshare agreement.[68]

79) During the winter 2013/2014 and the summer 2014 IATA seasons approximately [40 000 – 60 000] and [100 000 – 200 000] passengers travelled on
    the Prague–Tel Aviv O&D route.[69] In the winter 2013/14 IATA season, the Parties transported a total of [20 000 – 40 000] passengers, [0  –
    20 000] of which were TS passengers transported by CSA. In the summer 2014 IATA season, the Parties transported a total of  [80  000  –  100
    000] passengers, [0 – 20 000] of which were TS passengers transported by CSA. Over the  last  two  IATA  seasons,  Travel  Service  did  not
    transport TS passengers on the route.[70] On this route, the Parties compete with Wizz Air, which focuses its activities on NTS  passengers,
    and El Al, which instead caters both TS and NTS passengers. The Parties' activities do not overlap on  the  TS  passengers  segment  on  the
    Prague–Tel Aviv route. Furthermore, considering the limited number of tickets sold to TS passengers, the Parties are of the  view  that  the
    market structure for NTS passengers is similar to that for all passengers. Therefore, for the purpose of this decision it is  not  necessary
    to distinguish TS from NTS passengers as this distinction would not affect the outcome of the Commission's competitive assessment.

80) The Parties were not able to provide estimates for the number of passengers travelling on indirect flights. However, indirect flights do not
    represent a material competitive constraint to the Parties' direct operation on the Prague–Tel Aviv route.

81) In the winter 2013/14 IATA season, CSA and Travel Service operated up to 3 weekly frequencies each.[71] In the summer 2014 IATA season,  CSA
    operated up to 7 weekly frequencies while Travel Service operated up to 6 weekly frequencies. In addition, each of the Parties sold  tickets
    for the other party's flights. El Al offered 4 and 11  weekly  frequencies  in  the  winter  2013/14  and  the  summer  2014  IATA  seasons,
    respectively. Wizz Air offered 3 weekly frequencies in the summer 2014 IATA season.

82) Table 3 below illustrates the market position of the Parties and their competitors on the Prague-Tel Aviv route in the winter 2013/2014  and
    summer 2014 IATA seasons.

    Table 3: Prague–Tel Aviv

|Carrier                  |Winter 2013/2014                               |Summer 2014                                    |
|                         |Passengers                |Share                |Passengers                  |Share             |
|Travel Service           |[0-20 000]                |[20-30]%             |[40 000-60 000]             |[20-30]%          |
|Combined                 |[20 000-40 000]           |[60-70]%             |[60 000-80 000]             |[40-50]%          |
|Wizz Air                 |-                         |-                    |[20 000-40 000]             |[10-20]%          |

    Source: Form CO, Annex 7.5.1.A

83) During the winter 2013/2014 IATA season, the Parties held a combined share of [60-70]% and the only other carrier active on the route was EL
    Al ([30-40]%). This duopolistic market structure has, however, changed with the entry of Wizz Air in the summer season  2014.  Wizz  Air,  a
    well-established low cost carrier, started operating on the route with three weekly frequencies.

84) Already in its first season, Wizz Air was able to seize a significant share of the market, [10-20]%, which comes close to CSA’s market share
    and falls only [0 – 20 000] passengers short of CSA. Wizz Air mainly acquired passengers at the expense of the Parties which have seen their
    combined share decline to [40-50]% from [70-80]% in summer season 2013. Wizz Air offers a year-round service.[72]

85) A majority of respondents to the market investigation that expressed a view on the degree of competition that would  remain  on  this  route
    post-Transaction indicated that there would be sufficient constraints to prevent the merged entity from raising prices.[73]

86) The Commission considers that because of the presence of a strong competitor and a recent entry of  another  carrier  on  the  route,  post-
    Transaction the Parties will continue to face sufficient competitive pressure especially since one of the competitors holds a  share  larger
    than the increment brought about by the Transaction.

87) In light of the above, the Commission concludes that the Transaction does not raise any serious doubts as  to  its  compatibility  with  the
    internal market under all possible market definitions on the Prague–Tel Aviv route.

4 Prague–Barcelona

88) On the Prague–Barcelona route, both CSA and Travel Service operate their own aircraft. Furthermore, CSA and Travel Service sell tickets  for
    each other's flights under a parallel hard block codeshare agreement.[74] On this route,  CSA  offers  a  year-round  service  while  Travel
    Service only operates in the summer IATA seasons.

89) During the winter 2013/2014 and the summer 2014 IATA seasons approximately [60 000 – 80 000] and [100 000 – 200 000] passengers respectively
    travelled on the Prague–Barcelona O&D route.[75] In the winter 2013/14 IATA season, CSA transported a total of [20 000 – 40 000] passengers,
    [0 – 20 000] of which were TS passengers. In the summer 2014 IATA season, the Parties transported a total of [40 000 – 60  000]  passengers,
    [0 – 20 000] of which were TS passengers transported by CSA. Over the last two IATA seasons, Travel Service did not transport TS  passengers
    on the route.[76] On this route, the Parties compete with Vueling, which focuses its activities on NTS passengers. The  Parties'  activities
    do not overlap on the TS passengers segment on the Prague–Barcelona route. Furthermore, considering the limited number of tickets sold to TS
    passengers, the Parties are of the view that the market structure for NTS passengers is similar to that for all passengers.  Therefore,  for
    the purpose of this decision it is not necessary to distinguish TS from NTS passengers as this distinction would not affect the  outcome  of
    the Commission's competitive assessment.

90) The Parties were not able to provide estimates for the number of passengers travelling on indirect flights. However, indirect flights do not
    represent a material competitive constraint to the Parties' direct operation on the Prague–Barcelona route.

91) In the winter 2013/14 IATA season, CSA operated up to 7 weekly frequencies.[77] In the summer 2014 IATA season, CSA operated up to 7  weekly
    frequencies while Travel Service operated up to 2 weekly frequencies. In addition, each of the Parties sold tickets for  the  other  party's
    flights. Vueling offered 7 and 12 weekly frequencies in the winter 2013/14 and the summer 2014 IATA seasons, respectively.

92) Table 4 below illustrates the market position of the Parties and their competitors on the Prague-Barcelona route in the winter 2013/2014 and
    summer 2014 IATA seasons.

    Table 4: Prague–Barcelona

|Carrier                  |Winter 2013/2014                               |Summer 2014                                    |
|                         |Passengers                |Share                |Passengers                  |Share             |
|Travel Service           |-                         |-                    |[0-20 000]                  |[5-10]%           |
|Combined                 |[20 000-40 000]           |[30-40]%             |[40 000-60 000]             |[40-50]%          |

    Source: Form CO: Annex 7.5.1.A

93) During the winter 2013/2014 IATA season the activities of the Parties do not overlap on the Prague-Barcelona route. Over the last two summer
    IATA seasons, the Parties' combined share decreased from [40-50]% to [40-50]%. In the  same  period,  Vueling,  which  offers  a  year-round
    service and which, like the Parties, operates from the Barcelona El Prat Airport, was by far the largest carrier active on  the  route  with
    shares of [50-60]% and [60-70]% respectively for the summer 2013 and 2014 IATA seasons.

94) A majority of respondents to the market investigation that expressed a view on the degree of competition that would  remain  on  this  route
    post-Transaction indicated that there would be sufficient constraints to prevent the merged entity from raising prices.[78]

95) The Commission considers that because of the year-round high market shares of a strong competitor post-Transaction the Parties will continue
    to face sufficient competitive pressure especially since the competitor holds a share larger than that of the Parties combined.

96) In light of the above, the Commission concludes that the Transaction does not raise any serious doubts as  to  its  compatibility  with  the
    internal market under all possible market definitions on the Prague–Barcelona route.

3 Overlaps due to codeshares

1 Codeshares

97) In computer reservation systems, each airline is identified by a two-letter "airline designator code". Codeshare  agreements  allow  flights
    operated by one airline to be marketed by its codeshare partner under its own code. In a codeshare, the marketing carrier places its code on
    flights operated by the operating carrier and markets them via its distribution network.

98) Codeshares can be unilateral or parallel. The codeshare is unilateral if only one codeshare  partner  is  operating  on  the  route;  it  is
    parallel when both codeshare partners fly on the route and codeshare on each other's flights.  Unilateral  codeshare  allows  the  marketing
    carrier to expand its network by allowing it to reach destinations to which it does not fly its own aircraft.  Through  parallel  codeshare,
    carriers can increase frequencies without deploying additional aircraft. Parallel codeshare normally allows  for  fare  combinability  which
    enables passengers to fly on each leg of a roundtrip with different carriers. In both unilateral  and  parallel  codeshares,  the  operating
    carrier receives indirect access to the distribution network and customer base of the marketing carrier(s).

99) Seats on flights operated by a codeshare partner can be sold on a "free flow" (also known as "free-sell") or "blocked  space"  basis.  In  a
    free-flow codeshare, the marketing carrier can sell codeshare seats as long  as  there  are  seats  available  in  the  operating  carrier's
    inventory. Therefore, the commercial risk of unsold seats remains with the operating carrier. The marketing carrier has access to  real-time
    information on seat availability in each booking class covered by the codeshare agreement. In  a  blocked  space  codeshare,  the  marketing
    carrier can purchase a block of seats in advance and resell them under its own code. Blocked space codeshares can be  further  distinguished
    in "soft" and "hard" block. In a "soft block" codeshare, the marketing carrier has an option to return some or all of the unsold seats at an
    agreed number of days before departure. Under this system, the economic risk can lay mainly  on  the  marketing  carrier  or  the  operating
    carrier depending on the specific features of the agreement. In a "hard block" codeshare, the marketing carrier cannot in  principle  return
    the tickets it has purchased and therefore the economic risk lies on it.

2 Codeshares between CSA and Travel Service

100) Codeshare agreements are a common feature of the air passenger transport industry and it is not unusual for carriers to  have  in  place  at
    any given time a substantial number of agreements with multiple carriers. CSA in this respect is no exception and it currently has codeshare
    agreements with Travel Service as well as with several other carriers.[79]

101) Based on share data for the last two IATA seasons, the Transaction gives rise to 42 affected markets which are due to  unilateral  free-flow
    codeshares between CSA and Travel Service. CSA and Travel Service also operate blocked-space  codeshares  on  the  Overlapping  Routes,  the
    effects of the Transaction on these routes are assessed in Section 6.1.2. of this decision.[80] Tables 5 and 6  below  list  the  routes  on
    which the Parties operate a unilateral free-flow codeshare.

    Table 5: Routes operated year round

|Routes            |Total pax       |Shares                                                                                               |
|                                           |                  |CSA                                                              |
|                                           |                  |CSA                 |Travel Service    |Parties combined        |
|                                           |S 2014            |S 2014              |S 2014            |S 2014                  |
|Prague (PRG)–Amsterdam (AMS)               |[200 000-300 000] |[20-30]%            |[0-5]%            |[20-30]%                |
|                                           |                  |O                   |M                 |                        |
|Prague (PRG)–Brussels (BRU)                |[100 000-200 000] |[40-50]%            |[0-5]%            |[40-50]%                |
|                                           |                  |O                   |M                 |                        |
|Prague (PRG)–Kiev (KBP)                    |[40 000-          |[40-50]%            |[0-5]%            |[40-50]%                |
|                                           |60 000]           |O                   |M                 |                        |
|Prague (PRG)–Madrid (MAD)                  |[80 000-100 000]  |[40-50]%            |[0-5]%            |[40-50]%                |
|                                           |                  |O                   |M                 |                        |
|Prague (PRG)–Milan (MXP)                   |[100 000-200 000] |[30-40]%            |[0-5]%            |[30-40]%                |
|                                           |                  |O                   |M                 |                        |
|Prague (PRG)–Nice (NCE)                    |[20 000-          |[90-100]%           |[0-5]%            |[90-100]%               |
|                                           |40 000]           |O                   |M                 |                        |
|Prague (PRG)–Burgas (BOJ)                  |[40 000-          |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |60 000]           |M                   |O                 |                        |
|Prague (PRG)–Cagliari (CAG)                |[0-20 000]        |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Catania (CTA)                 |[0-20 000]        |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Chania (CHQ)                  |[0-20 000]        |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Corfu (CFU)                   |[40 000-          |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |60 000]           |M                   |O                 |                        |
|Prague (PRG)–Dubrovnik (DBV)               |[0-20 000]        |[10-20]%            |[80-90]%          |[90-100]%               |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Heraklion (HER)               |[80 000-100 000]  |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Ibiza (IBZ)                   |[0-20 000]        |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Kos (KGS)                     |[40 000-          |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |60 000]           |M                   |O                 |                        |
|Prague (PRG)–Larnaca (LCA)                 |[0-20 000]        |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Lamezia Terme (SUF)           |[0-20 000]        |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Las Palmas (LPA)              |[0-20 000]        |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Malta (MLA)                   |[0-20 000]        |[0-5]%              |[20-30]%          |[20-30]%                |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Naples (NAP)                  |[20 000-          |[0-5]%              |[20-30]%          |[20-30]%                |
|                                           |40 000]           |M                   |O                 |                        |
|Prague (PRG)–Olbia (OLB)                   |[0-20 000]        |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Palma de Mallorca (PMI)       |[20 000-          |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |40 000]           |M                   |O                 |                        |
|Ostrava (OSR)–Paris (CDG)                  |[0-20 000]        |[10-20]%            |[80-90]%          |[90-100]%               |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Pula (PUY)                    |[0-20 000]        |[10-20]%            |[80-90]%          |[90-100]%               |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Rhodes (RHO)                  |[60 000-          |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |80 000]           |M                   |O                 |                        |
|Prague (PRG)–Seville (SVQ)                 |[0-20 000]        |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Split (SPU)                   |[20 000-          |[10-20]%            |[80-90]%          |[90-100]%               |
|                                           |40 000]           |M                   |O                 |                        |
|Prague (PRG)–Thessaloniki (SKG)            |[0-20 000]        |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |                  |M                   |O                 |                        |
|Prague (PRG)–Valencia (VLC)                |[20 000-          |[5-10]%             |[90-100]%         |[90-100]%               |
|                                           |40 000]           |M                   |O                 |                        |
|Prague (PRG)–Zakynthos (ZTH)               |[20 000-          |[0-5]%              |[90-100]%         |[90-100]%               |
|                                           |40 000]           |M                   |O                 |                        |

 Source: Form CO, Annex 7.5.1.A.

102) On the routes on which the activities of CSA and Travel Service overlap due to a unilateral codeshare, the Transaction could  give  rise  to
    serious doubts as to its compatibility with the internal market[81] only if (i) despite the codeshare agreements, the operating carrier  and
    the marketing carrier exert a significant constraint on each other as actual competitors for the sales of seats on the  operating  carrier's
    flights; or (ii) there is a significant likelihood that the marketing carrier would grow  into  an  effective  competitive  force,  e.g.  by
    starting to operate on the route with its own aircraft.[82] In particular, anti-competitive effects may occur where the marketing carrier is
    very likely to incur the necessary sunk costs to enter the  relevant  codeshare  route  as  an  operating  carrier  in  a  relatively  short
    period.[83]

103) On all of the routes on which CSA operates a free-flow codeshare with Travel Service only one of the codeshare partners operates. Under  the
    codeshare agreements between CSA and Travel Service, the marketing carrier receives a commission for each of the tickets it sells.[84]

104) Pursuant to the codeshare agreements between CSA and Travel Service, the marketing carrier is free to set prices for the tickets  it  sells.
    Furthermore, no provision in the agreements limits the marketing carrier's ability to sell  tickets  at  a  fare  lower  than  that  of  the
    operating carrier.

105) However, incentives for the marketing carrier to price aggressively are limited. In a free flow codeshare, the commission received from  the
    marketing carrier is normally a percentage of the fare it charges for the tickets it sells. Therefore, the higher the  price  at  which  the
    marketing carrier sells tickets the greater his commission will be.

106) In the circumstances in which the Parties to the Transaction operate, the likelihood that the marketing carrier would represent  a  material
    competitive constraint for the operating carrier is further limited by the operating carrier's ability to terminate the codeshare  agreement
    if the marketing carrier started to offer fares substantially lower than the operating carrier, thus depriving the marketing carrier of  any
    benefit of an aggressive pricing policy.[85] This is reflected in the relatively low market shares held by the marketing carriers which,  in
    the vast majority of routes on which the Parties operate a unilateral codeshare, does not exceed [0-5]%. On those  five  routes,  where  the
    “overlap” is more than [0-5]%, the number of passengers is very small. This is particularly pertinent in the case of the route  Prague-Pula,
    where the marketing carrier reaches almost [20-30]%: the number of passengers is [0 – 20 000].

107) Furthermore, a majority of respondents to the market investigation have indicated that indeed competition between CSA and Travel Service  on
    the routes on which they are present through a unilateral codeshare is limited, very limited, or nil.[86]

108) Based on the foregoing, the Commission has come to the view that in the unilateral codeshares between CSA and Travel Service  the  marketing
    carrier does not exert a substantive constraint on the operating carrier.

109) Furthermore, CSA and Travel Service do not appear to be potential entrants on the routes on  which  they  operate  a  unilateral  codeshare.
    [Strategic decision of the Parties].

110) Therefore, on the routes on which the activities of CSA, Travel  Service  overlap  only  due  to  a  unilateral  codeshare,  the  Commission
    considers that because the marketing carrier does not exert a substantive constraint on the operating carrier and CSA and Travel Service  do
    not appear to be potential entrants on the routes on which they operate a unilateral codeshare,  the  Transaction  does  not  raise  serious
    doubts as to its compatibility with the internal market in respect of the elimination of actual or potential competition in  the  codeshares
    between CSA and Travel Service.

2 Related ground services at Prague Airport

111) In addition to the air transport services, CAH is engaged in a number of additional activities that are  upstream  to  the  market  for  air
    transport services. Primarily, CAH provides ground-handling and MRO services as well as fuel supply and airport infrastructure  services  at
    Prague Airport. Travel Service is also active in the MRO sector at Prague Airport. It services its own aircraft but does not  sell  any  MRO
    services to third parties. Travel Service therefore is not commercially active and no horizontal  overlap  can  be  identified  between  the
    Parties' activities in any of these markets.

112) However, pursuant to the Commission's non-horizontal Guidelines, the vertical  relationships  created  by  the  Transaction  could  lead  to
    serious doubts only if, as a result of the merger, access to inputs or customers is hampered or eliminated.[87] In examining the  likelihood
    of both scenarios, the Commission analyses the ability of the Parties to foreclose their rivals,  the  economic  incentives  to  do  so  and
    whether such foreclosure would have a significant detrimental effect on competition.[88]

1 Ground handling services

113) CAH provides through its subsidiary, CSA Handling, the entire portfolio of ground handling services,  with  the  exception  of  handling  of
    oversized items, which is subcontracted, at Prague Airport. CSA purchases its ground handling services at Prague Airport from CAH at  market
    prices. Travel Service purchases its ground handling services at Prague Airport from Menzies Aviation.

114) The Parties estimate that the market shares of ground-handling services providers at Prague Airport, calculated on the basis of  the  number
    of aircraft movements in 2013, amounted to [50-60]% for CSA Handling, [30-40]% for Menzies Aviation and  its  subsidiary  Czech  GH,  s.r.o.
    ("Menzies") and the remaining [5-10]% was dispersed among ABS JETS, Aviation Service a.s. (now Bell  Helicopter  a.s.),  Maid  Pro  and  NAV
    Flight.[89]

    Input foreclosure

115) Input foreclosure would arise if, post-Transaction, CSA Handling would decide to restrict access to its ground services for  competitors  of
    CSA and Travel Service, thereby benefiting from a raise in prices in the downstream market  for  air  transport  of  passengers.  Such  non-
    coordinated effect would be anti-competitive to the extent that it leads to consumer harm.[90]

116) However, the Commission considers that the Transaction is unlikely to lead to an input foreclosure strategy by CAH on the market for  ground
    handling services at Prague airport for the following reasons.

117) Firstly, the vertical relationship between CSA Handling and CSA at Prague Airport pre-exists the Transaction and, as such, it is not merger-
    specific. Indeed, the majority of CSA and Travel Service's competitors stated during the market investigation that they  did  not  encounter
    any difficulties in sourcing ground handling services at Prague Airport in the past, do not expect any post-Transaction and think  that  the
    Transaction will have a neutral impact on the market for ground handling services at Prague Airport.[91]

118) Secondly, the Transaction will lead to a reduction of CAH's participation in CSA and of its share in any additional profits that  CSA  might
    generate in the downstream market for air transport of passengers as a result of  a  behaviour  aimed  at  increasing  the  costs  of  CSA's
    competitors.

119) Thirdly, even if such strategy were adopted, it would most probably have limited effects, as CSA  Handling's  competitors  are  expected  to
    continue exerting competitive constraint on CSA Handling in the ground  handling  market  and  thus  constitute  alternative  providers  for
    carriers at Prague Airport. In addition, the Prague Airport is fully liberalised, there is therefore no limited amount of licenses available
    for the provision of these services and entry of further ground handling providers is possible.[92]

    Customer foreclosure

120) Customer foreclosure would arise if, post-Transaction, Travel Service decides to start sourcing ground handling services from  CSA  Handling
    and thus foreclose CSA Handling's competitors in these markets from sufficient customer base with the aim of ultimately raising  the  ground
    handling services' costs of other carriers at Prague Airport. Such strategy would be anti-competitive  in  case  it  ultimately  results  in
    overall higher prices for consumers.[93]

121) However, the Commission considers that Travel Service would not have the incentive to engage in such a strategy. As it is not active in  the
    provision of services vertically related to the air transport of passengers to third parties and does not hold a participation  in  CAH,  it
    would not benefit from a lessening of competition on the upstream market for ground handling services. On the contrary, Travel  Service  has
    an interest in ensuring competitive prices in all markets related to the provision of air transport of passengers' services.

122) Moreover, the careful management of its cost structure is of critical importance for Travel Service's low cost  operations  business  model.
    Travel Service would therefore not be likely to adopt a strategy that would lead to a selection of its suppliers disregarding  the  cost  of
    the services sourced. Travel  Service  usually  chooses  suppliers  through  competitive  tenders  on  the  basis  of  commercial  and  cost
    considerations and is expected to continue doing so also in the future.[94] It would therefore not likely forsake this practice in order  to
    engage into a long-term cooperation with CSA Handling on ground handling, if not cost-effective, merely  aiming  at  increasing  the  ground
    handling costs of competing air carriers.

123) Travel Service has rather moderate power as a purchaser of ground handling services, as its sales amount to [10-20]% of the total  sales  at
    Prague Airport. Even if this share were added to the [20-30]% of CSA[95], more than [60-70]% of the market would still be contestable.

124) In any event, CSA Handling would continue to face a credible competitor  in  that  market  namely  Menzies.[96]  Indeed,  Menzies  has  been
    offering ground handling services at Prague Airport since 23 years and only started serving Travel  Service  […]  years  ago.  It  currently
    supplies a number of other carriers and its market share has been steadily increasing, currently amounting to [30-40]%. Menzies is therefore
    expected to continue exerting a competitive constraint on CSA Handling also post-Transaction, even if a change as to  its  present  contract
    with Travel Service occurs during the upcoming tender and to continue constituting an alternative provider to CSA Handling for air  carriers
    at Prague Airport.

125) Therefore, on the basis of the above and of all the other available evidence, the Commission considers that the Transaction does  not  raise
    serious doubts as to its compatibility with the internal market on a market for ground handling services at Prague Airport.

2 Fuel Supply

126) CSA Handling is also active in the market for fuel supply at Prague Airport. CSA purchases approximately  [50-60]%  of  its  fuel  from  its
    sister company CSA Handling and another [50-60]% from […]. Travel Service covers its […] fuel supply needs through […].

127) CSA Handling acquired a license for fuel supply to air carriers on 1 January 2014. The Parties estimate  that  the  market  shares  of  fuel
    suppliers at Prague Airport in April 2014[97] were [30-40]% for Lukoil, [20-30]% for Total, [20-30]% for CSA Handling and [10-20]% for  Eni,
    calculated on the basis of supplied fuel's volume.[98]

128) The Commission considers that the Transaction is unlikely to lead to any input foreclosure situation, as the relationship  between  CSA  and
    CSA Handling pre-dates the Transaction and CSA already purchases in-plane fuel from  both  CSA  Handling  and  […].  Moreover,  through  the
    decrease of its shareholding in CSA post-Transaction, CAH would have no incentive to engage in such strategy. Lastly,  irrespective  of  any
    anti-competitive strategy adopted by the Parties, there are three credible competitors  to  CSA  Handling  that  are  expected  to  continue
    competing also after the Transaction.

129) In addition, CAH including its subsidiary CSA Handling is bound by the terms and  conditions  of  the  decision  of  the  Czech  Competition
    Authority ("UOHS Decision"), by which its creation was approved. According to this decision, fuel supply services  must  be  made  available
    under transparent, non-discriminatory and commercially reasonable terms  to  all  carriers  at  Prague  Airport,  subject  to  a  monitoring
    mechanism; any input foreclosure strategy adopted by CSA Handling would therefore infringe this decision.[99]

130) Travel Service purchases approximately [20-30]% of the into-plane fuel supplies at Prague Airport, CSA [30-40]%. Even if  this  volume  were
    allocated entirely to CSA Handling, competing airlines would continue having credible alternatives, and competing fuel suppliers would  find
    a contestable part of the market of almost [50-60]%.[100] Further, for the reasons explained  in  the  Section  on  ground  handling  above,
    incentives for Travel Service would also militate against any customer foreclosure strategy, as Travel Service would be unlikely to enter in
    supply contracts on non-competitive terms.

131) Therefore, on the basis of the above and of all the other available evidence, the Commission considers that the Transaction  therefore  does
    not raise serious doubts as to its compatibility with the internal market in relation to the market for fuel supply at Prague Airport.

3 Maintenance, repair and overhaul (MRO)

132) In the MRO market at Prague Airport, CAH operates through its subsidiary CSA Technics, which provides base, line and component  maintenance,
    as well as engineering and landing gear overhaul/repair. Travel Service has its MRO own organisational unit providing such services in-house
    and therefore does not purchase MRO services at Prague Airport. Travel Service does not offer its MRO services to third parties and does not
    appear to intend doing so in the future.

133) In any event, airlines have other options for most MRO services for which the geographic market is not limited to Prague  airport,  such  as
    heavy maintenance, component maintenance and landing gear overhaul/repair. For line maintenance, there are several small competitors  active
    at Prague airport (Aerotech, ABS Jets and Farnair).[101] The majority of carriers responding to the market investigation indicated that they
    have not experienced any problems in sourcing MRO services in the past and do not expect any in the future either.[102]

134) Moreover, CSA Technics is also bound by the UOHS Decision and must therefore provide its services under transparent, non-discriminatory  and
    commercially reasonable terms to all interested carriers and may only refuse to supply a carrier  on  the  basis  of  objectively  justified
    reasons.[103]

135) In light of the above, there is no change brought about by the Transaction  to  a  market  for  MRO  services  at  Prague  Airport,  as  the
    relationship between CSA Technics and CSA pre-exists the Transaction and therefore is not merger-specific and Travel Service is  not  active
    in any of the upstream and downstream markets. Therefore, the Parties would not be likely to  engage  in  any  anti-competitive  foreclosure
    strategy post-Transaction.

136) Therefore, on the basis of the above and of all the other available evidence, the Commission considers that the Transaction does  not  raise
    serious doubts as to its compatibility with the internal market in relation to the market for MRO services at Prague Airport.

4 Airport Infrastructure services

137) LP, a subsidiary of CAH, is the single operator and asset manager of Prague Airport  and  operates  infrastructure  comprising  all  support
    buildings, utilities and other equipment necessary for the handling of aircraft, passengers, luggage and cargo. Therefore, already prior  to
    the Transaction LP provides CSA, Travel Service and all other carriers operating at Prague Airport with access to the airport infrastructure
    and related services.

138) In addition, further to the obligation to ensure open and equal access under transparent,  non-discriminatory  and  commercially  reasonable
    terms to the airport infrastructure and other related services at Prague Airport, CAH is bound by the  terms  and  conditions  of  the  UOHS
    Decision regarding slot allocation. According to the latter, slot allocation at Prague Airport is not the responsibility of LP, but of  Slot
    Coordinator CR, an independent slot coordinator that operates in line with principles set out in Council  Regulation  No.  95/93  on  common
    rules for the allocation of slots at Community Airports.[104]

139) Furthermore, CSA and Travel Service's competitors stated during the market investigation that they did not  encounter  any  difficulties  in
    sourcing airport infrastructure services at Prague Airport in the past nor do they expect any post-Transaction.[105]

140) In light of the above and since the relationship between LP and CSA and LP and Travel Service  is  pre-existing,  the  Commission  considers
    that the Parties are not likely to engage in any anti-competitive foreclosure strategy in this market.

141) Therefore, on the basis of the above and of all the other available evidence, the Commission considers that the Transaction  therefore  does
    not raise serious doubts as to its compatibility with the internal market in relation to the market for airport infrastructure  services  at
    Prague airport.

5 Other effects

142) Through the Transaction, the Parties will cooperate in view of ensuring the efficient operation of CSA; however this  cooperation  will  not
    enable them as such to also coordinate the activities of CAH with that of Travel Service. Indeed,  CAH  will  remain  separate  from  Travel
    Service. Information on Travel Service's activities would therefore not be  made  available  to  CAH  through  the  joint  control  of  CSA.
    Similarly, LP, CSA Handling and CSA Technics are subsidiaries of CAH active on a different market than CSA; information on  their  operation
    is therefore unlikely to become available to Travel Service due to its joint control of CSA.

143) Therefore, on the basis of the above and of all the other available evidence, the Commission considers that the Transaction does  not  raise
    serious doubts as to its compatibility with the internal market due to the coordination resulting from the joint control of CSA by  CAH  and
    Travel Service.

       CONCLUSION

144) 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.

For the Commission

(signed)
Margrethe VESTAGER
Member of the Commission

-----------------------
[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 C 417, 21.11.2014, p. 12.

[3]   Voting rights at CSA's shareholder meeting correspond to the shareholding held by each shareholder.

[4]   Where CAH and Travel Service cannot agree on how to exercise their voting rights in CSA, the matter will  be  deferred  to  the  Escalation
Committee whose decisions will be binding on CAH and Travel Service. [Composition and decision-making of the  Escalation  Committee].  Escalation
Committee decisions are adopted with the favourable vote of at least two of its members.  Restated Shareholders' Agreement, Schedule 7.

[5]   Restated Shareholders' Agreement, Clauses 4.2.3 and 4.2.6.

[6]   […].

[7]   […].

[8]   […].

[9]   […].

[10]  The Commission recalls that, regarding the EU air transport licensing provisions, pursuant to paragraph 23 of  the  Jurisdictional  Notice,
"the concept of control under the Merger Regulation may be different from that applied in specific areas of Community  and  national  legislation
concerning, for example, prudential rules, taxation, air transport or the media. The interpretation of ‘control' in other areas is therefore  not
necessarily decisive for the concept of control under the Merger Regulation." [emphasis added].

[11]  See Section 6.1.3. of this decision.

[12]  In its case law, the Commission established that the relevant markets  for  cargo  are  much  broader  than  those  for  air  transport  of
passengers as freight transport is less time sensitive than passengers and may involve various means of transport. In summary: (i)  Any  indirect
(one-stop) route is substitutable with a direct (non-stop) route; (ii) cargo airlines with dedicated freighter planes, airlines with only  belly-
hold space capacity, and combination airlines with both dedicated freighter airplanes  and  belly  space  cargo  capacity  (e.g.  Lufthansa)  and
integrators (e.g. DHL, UPS, or FedEx) compete in the same market; and (iii) the Commission left open whether the market can  be  further  divided
based on the nature of the freight transported (see, among others, M.5440 – Lufthansa/Austrian, recital 28 and following).  CSA’s  share  in  the
market air transport of cargo on intra-European routes (comprising all of Europe) is negligible; CSA estimates its share at  [0-5]%.  The  market
share of Travel Service is also negligible and estimated at less than [0-5]%; Form CO, paragraph 138.

[13]  M.7333 – Alitalia/Etihad, recital 63 and following; M.6663 – Ryanair/Aer Lingus III, recital 50; M.6447 – IAG/bmi, recital 31; M.6607 –  US
Airways/American Airlines, recital 8; M.5889 – United Air Lines/Continental Airlines, recital 9; M.5440 –  Lufthansa/Austrian  Airlines,  recital
11; M.5335 – Lufthansa/SN Airholding, recital 12.

[14]  Replies to Q1 – Questionnaire to competitors, question 4; Replies to Q2 – Corporate customers, question 4; Replies to  Q3  –  Questionnaire
to travel agents, question 4; Replies to Q4 – Questionnaire to airport managers, question 5; Replies to Q4b – Questionnaire to  airport  managers
(Prague), question 5; Replies to Q7 – Questionnaire to Civil aviation authorities, question 4.

[15]  Form CO, paragraph 87 and following.

[16]  M.7333 – Alitalia/Etihad, recital 67 and following; M.6607 – US Airways/American Airlines, recital 10; M.6447 – IAG/bmi, recital 31.

[17]  Replies to Q1 – Questionnaire to competitors, question 4.

[18]  M.7333 – Alitalia/Etihad, recital  67;  M.6663  –  Ryanair/Aer  Lingus III,  recital  50;  M.6447  –  IAG/bmi,  recital  31;  M.6607  –  US
Airways/American Airlines, recital 8; M.5889 – United Air Lines/Continental Airlines, recital 9; M.5440 –  Lufthansa/Austrian  Airlines,  recital
11; M.5335 – Lufthansa/SN Airholding, recital 12.

[19]  M.7333 – Alitalia/Etihad, recital 70 and following; M.6663 – Ryanair/Aer Lingus III, recital 382; M.6607 –  US  Airways/American  Airlines,
recital 8; M.6447 – IAG/bmi, recital 36; M.6607 – US Airways/American Airlines, recital 8.

[20]  Form CO, paragraph 96 and following.

[21]  The share of passengers traveling on fully flexible (unrestricted) tickets operated or marketed by CSA is approximately as follows  on  the
four routes operated by both Parties: (i) Prague–Tel Aviv [0-5]%, (ii) Prague–Paris [0-5]%, (iii) Prague–Rome [0-5]%, and  (iv)  Prague–Barcelona
[0-5]% (year 2013).

[22]  Form CO, paragraph 99.

[23]  Replies Q1 – Questionnaire to competitors, question 5; Replies to Q2 - Questionnaire to corporate customers, question 5; Replies  to  Q3  –
Questionnaire to travel agents, question 5; Replies to Q4 – Questionnaire to airport managers, question 6; Replies  to  Q4b  –  Questionnaire  to
airport managers (Prague), question 6; Replies to Q7 – Questionnaire to civil aviation authorities, question 5.

[24]  E.g. Iberia’s reply to Q1 – Questionnaire to competitors, question 5.

[25]  "Non-stop" flights are flights that take off at airport A and land at airport B where  they  load  off  passengers  without  any  stops  in
between. By contrast, "direct" flights may entail a refuelling stop and/or a disembarking/re-embarking stop, but  are  marketed  under  a  single
flight code and are flown with a single aircraft. "One-stop" flights include direct flights that  do  not  qualify  as  "non-stop",  as  well  as
indirect flights which are journeys that require a change of aircraft or a change of flight code.

[26]  M.7333 – Alitalia/Etihad, recital 76; M.6663 – Ryanair/Aer Lingus III, recital 374; M.6447 – IAG/bmi, recital 68.

[27]  M.7333 – Alitalia/Etihad, recitals 75 and following; M.6663 – Ryanair/Aer Lingus III, recital 375; M.5440  –  Lufthansa/Austrian  Airlines,
recital 25 and following; M.5403 – Lufthansa/bmi, recital 17; M.5335 – Lufthansa/SN Airholding, recital 37 and following.

[28]  Form CO, paragraphs 100-107.

[29]  As regards the Parties’ overlaps on direct/indirect routes, i.e. the situation when one Party operates (or markets)  a  direct  flight  and
the other operates (and/or markets) a one-stop flight connecting the same city pair, the Parties do not compete  with  each  other  on  any  such
route for the following reasons: (i) both Parties have their hub at Prague Airport (therefore, all indirect flights operated by  the  Parties  go
through Prague); (ii) further to the flights it operates, Travel Service only codeshares with CSA; and (iii) there are no routes  for  which  CSA
acts as a marketing carrier based on a codesharing agreement with any other carrier that would be at the same time operated  by  Travel  Service;
Form CO, paragraph 101.

[30]  As regards competition of the Parties on indirect/indirect routes, i.e. the situation when both Parties operate  (and/or  market)  one-stop
flights connecting the same city pair, the Parties compete on the following indirect mid-haul routes: Paris (CDG)–Tel Aviv (TLV), Rome  (FCO)–Tel
Aviv (TLV) and Barcelona (BCN)–Tel Aviv (TLV). Indirect flights Paris (CDG)–Rome (FCO), Barcelona  (BCN)–Rome  (FCO)  and  Barcelona  (BCN)–Paris
(CDG) operated through Prague are not economically viable. The number of passengers carried on these routes  is  close  to  [0  –  20  000].  The
Parties’ individual market shares on such routes over the past 4 IATA seasons for all passenger segments did not exceed [0-5]%. Similarly,  given
the limited overlaps of the Parties activities on codeshared routes, the  Parties  have  not  provided  details  of  competing  indirect/indirect
flights that would be based on their codesharing (e.g. Valencia (VLC)–Tel Aviv (TLV) route, or Frankfurt (FRA)–Tel Aviv (TLV) route).  Since  the
market share attained by the marketing carrier on codeshared routes in most cases does not exceed [0-5]%, overlaps on  indirect  flights  defined
as a combination of two codeshared flights or one codeshared  flight  and  one  flight  operated  (marketed)  by  the  relevant  Party  would  be
negligible; Form CO, paragraphs 102 and following.

[31]  Form CO, paragraph 108.

[32]  M.7333 – Alitalia/Etihad, recital 83; M.6663 – Ryanair/Aer Lingus III, recital 65 and following; M.4439 – Ryanair/Aer  Lingus,  recital  73
and following.

[33]  M.7333 – Alitalia/Etihad, recital 85; M.6663 – Ryanair/Aer Lingus III, recital 56.

[34]  This is because on the overlapping routes CSA and Travel Service fly from/to the same airports and there are no O&D city pairs which  would
the Parties operate alongside each other from different airports. However, Transavia operates Prague–Paris-Orly and may be taken into account  as
exerting additional competitive pressure on airlines operating Prague–Paris-CDG on a market containing both Paris-CDG and Paris-Orly.

[35]  M.5830 – Olympic/Aegean I, recital 1671; M.3280 – Air France/KLM, recitals 27-30.

[36]  Replies Q1 – Questionnaire to competitors, question 6; Replies to Q2 - Questionnaire to corporate customers, question 6; Replies  to  Q3  –
Questionnaire to travel agents, question 6; Replies to Q4 – Questionnaire to airport managers, question 6; Replies  to  Q4b  –  Questionnaire  to
airport managers (Prague), question 6; Replies to Q7 – Questionnaire to civil aviation authorities, question 6.

[37]  See, among others, M.7021 – Swissport/Servisair, recitals 7-18.

[38]  Replies to Q1 – Questionnaire to competitors, question 7.

[39]  Form CO, paragraphs 152 and following.

[40]  See, among others, M.5830 – Olympic/Aegean I, recital 320.

[41]  See, among others, M.5830 – Olympic/Aegean I, recital 323.

[42]  Replies to Q1 – Questionnaire to competitors, question 8.

[43]  Form CO, paragraphs 159 and following.

[44]  See, among others, M.5880 – Shell/Topaz/JV, recital 11 and following.

[45]  See, among others, M.5880 – Shell/Topaz/JV, recital 17.

[46]  See, among others, M.5880 – Shell/Topaz/JV, recital 22.

[47]  Form CO, paragraph 172 and following.

[48]  Replies to Q1 – Questionnaire to competitors, question 9.

[49]  See, among others, M.7008 – Aena International/Axa Pe/Llagl, recital 12,; M.6862 – Vinci/Aeroports De Portugal, recital 16.

[50]  See, among others, M.7008 – Aena International/Axa Pe/Llagl, recital 14; M.6862 – Vinci/Aeroports De Portugal, recital 19.

[51]  Replies to Q1 – Questionnaire to competitors, question 10.

[52]  Form CO, paragraph 172 and following.

[53]  See Section 6.1.3. of this decision.

[54]  Form CO, Annex 7.5.1.B.

[55]  Decision Ref. No. ÚOHS-S178/2011/KS of 25 October 2011.

[56]  Form CO, paragraph 233. See Section 6.1.3. of this decision for a definition of hard block codeshare agreement.

[57]  Replies to Q1 – Questionnaire to competitors, questions 17-18.

[58]  Form CO, Annex 7.5.1.A.

[59]  Form CO, Annex 7.5.1.A.

[60]  Form CO, Annex 7.5.1.A.

[61]  Replies to Q1 – Questionnaire to competitors, question 11; Replies to Q2 – Questionnaire to corporate customers, question 7; Replies to  Q3
– Questionnaire to travel agencies, question 7.

[62]  Form CO, paragraph 90.

[63]  Form CO, Table 10.

[64]  Form CO, Annex 7.5.1.A.

[65]  Paragraph 28 et seq. of the present Decision.

[66]  Form CO, Table 17.

[67]  Replies to Q1 – Questionnaire to competitors, question 11; Replies to Q2 – Questionnaire to corporate customers, question 7; Replies to  Q3
– Questionnaire to travel agencies, question 7.

[68]  Form CO, paragraph  233.

[69]  Form CO, Annex 7.5.1.A.

[70]  Form CO, Annex 7.5.1.A.

[71]  Form CO, Table 25.

[72]  Wizz Air recently suspended its service but its operations on the Prague–Tel Aviv route will resume in March 2015.

[73]  Replies to Q1 – Questionnaire to competitors, question 11, Replies to Q2 – Questionnaire to corporate customers, question 7; Replies to  Q3
– Questionnaire to travel agencies, question 7.

[74]  Form CO, paragraph 233.

[75]  Form CO, Annex 7.5.1.A.

[76]  Form CO, Annex 7.5.1.A.

[77]  Form CO, Table 14.

[78]  Replies to Q1 – Questionnaire to competitors, question 11; Replies to Q2 – Questionnaire to corporate customers, question 7; Replies to  Q3
– Questionnaire to travel agencies, question 7.

[79]  CSA's codeshare partners include Air France/KLM, Delta, Korean Air, Vietnam Airlines, China Airlines, China Southern,  Tarom,  Air  Europa,
Aeroflot, and Aeromexico.

[80]   These  following  routes  have  been  discontinued:  Prague–Berlin,  Prague–Frankfurt,  Prague–Munich,  Prague–Bratislava,  Prague–Geneva,
Prague–Zurich, Prague–Antalya, Prague–Dubai.

[81]  For the purpose of the assessment of the Transaction, the relevant framework of assessment is a situation in which  the  parties  cooperate
under the described codeshare agreements.

[82]  M.7333 – Alitalia/Etihad, recital 160; M.5403, Lufthansa/bmi, recital 43.

[83]  Guidelines on the assessment of horizontal mergers under the Council Regulation on  the  control  of  concentrations  between  undertakings
("Horizontal Mergers Guidelines"), OJ C 31, 05.02.2004, paragraph 59.

[84]  Form CO, paragraph 92.

[85]  The codeshare agreements between CSA and Travel Service can be terminated with [….] prior notice.

[86]  Replies to Q1 – Questionnaire to competitors, question 13; Replies to Q2 – Questionnaire to corporate customers, question  10;  Replies  to
Q3 – Questionnaire to travel agencies, question 10.

[87]  Paragraph 29-30 of the  Guidelines  on  the  assessment  of  non-horizontal  mergers  under  the  Council  Regulation  on  the  control  of
concentrations between undertakings ("Non-horizontal merger guidelines"), OJ C 265, 18.10.2008.

[88]  Non-horizontal merger guidelines, paragraph 18.

[89]  Form CO, paragraph 238, The Notifying Parties' reply to RFI 4 of 1 December 2014, questions 1 and 4.

[90]  Paragraph 31, Non-horizontal Merger Guidelines.

[91]  Replies to Q1 – Questionnaire to competitors, questions 25, 26 and 28.

[92]  Form CO, paragraph 408.

[93]  Paragraph 58, Non-horizontal Merger Guidelines.

[94]  Travel Service's contracts with its suppliers usually have […], after which new tenders are in principle organised. Indeed, Travel  Service
indicated that also post-Transaction, it intends to continue organising tenders for ground services. E.g. Travel Service […]  contract  with  […]
will end […] and Travel Service confirmed that they are planning on organising a new tender for ground handling at Prague Airport  […],  Minutes,
Conference call of 2 December 2014.

[95]  Response to question 1 of RFI 4 of 1 December 2014.

[96]  There are few further competitors active at Prague Airport, which however do not offer the full range of ground  handling  services.  Their
combined market share on a market for all ground handling services at Prague Airport amounts to approximately [5-10]%, Response to question 4  of
RFI 4 of 1 December 2014.

[97]  April 2014 is taken as reference month, because Shell Czech Republic a.s. and OMV

[pic]eská republica, s.r.o. ceased operating at Prague Airport on 1 April 2014.

[98]  Form CO, paraČeská republica, s.r.o. ceased operating at Prague Airport on 1 April 2014.

[99]  Form CO, paragraph 176.

[100]       Form CO, paragraph 303.

[101]       CSA Handling's main competitor, Lukoil, confirmed during the  market  investigation  that  the  market  for  fuel  supply  is  highly
competitive and that the Transaction is not expected to have any impact on that, Responses to the RFI to Lukoil of 2 December 2014.

[102]       The Parties estimate the market share of CSA Technics in a market for line maintenance at Prague Airport at  approximately  [90-100]%
or [60-70]%, if self-handling is included, Form CO, paragraph 163-164.

[103]       Replies to Q1 – Questionnaire to competitors, questions 25, 26, and 27.2.

[104]       Form CO, paragraph 303.

[105]       CAH further undertook to allow all carriers using Prague Airport to join Slot Coordination CR; consequently any carrier operating  at
Prague Airport can in its sole discretion join the association responsible for slot allocation and effectively influence  all  related  decisions
at Prague Airport, Form CO, paragraph 302.

[106]       Replies to Q1 – Questionnaire to competitors, questions 25-26.

-----------------------
 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.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE