CELEX: 32019M8964
Language: en
Date: 2019-02-12 00:00:00
Title: Commission Decision of 12/02/2019 declaring a concentration to be compatible with the common market (Case No COMP/M.8964 - DELTA / AIR FRANCE-KLM / VIRGIN GROUP / VIRGIN ATLANTIC ) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                                 Brussels, 12.02.2019
                                                                 C(2019) 1325 final
                                                                               PUBLIC VERSION
                                                                  In the published version of this decision,
                                                                  some information has been omitted
                                                                  pursuant to Article 17(2) of Council
                                                                  Regulation (EC) No 139/2004 concerning
                                                                  non-disclosure of business secrets and
                                                                  other confidential information. The
                                                                  omissions are shown thus […]. Where
                                                                  possible the information omitted has been
                                                                  replaced by ranges of figures or a general
                                                                  description.
                                                                 To the notifying parties
Subject:             Case M.8964 - DELTA / AIR FRANCE-KLM / VIRGIN GROUP /
                     VIRGIN ATLANTIC
                     Commission decision pursuant to Article 6(1)(b) of Council
                     Regulation No 139/20041 and Article 57 of the Agreement on the
                     European Economic Area2
Dear Sir or Madam,
(1)       On 08 January 2019, the European Commission received notification of a
          proposed concentration pursuant to Article 4 of the Merger Regulation by which
          Air France-KLM S.A. (“AFKL”, France), Delta Air Lines, Inc. (“Delta”, the
          United States of America) and Virgin Group (the British Virgin Islands) acquire
          within the meaning of Article 3(1)(b) and 3(4) of the Merger Regulation joint
          control of the whole of Virgin Atlantic Limited (“VAL”, the United Kingdom) by
          way of purchase of shares (“the Transaction”).3 AFKL, Delta, Virgin Group and
          VAL are designated hereinafter as the “Parties”.
1     OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation'). With effect from 1 December 2009, the Treaty on
      the Functioning of the European Union ('TFEU') has introduced certain changes, such as the
      replacement of 'Community' by 'Union' and 'common market' by 'internal market'. The terminology of
      the TFEU will be used throughout this decision.
2     OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement').
3     Publication in the Official Journal of the European Union No C 020, 16.01.2019, p. 6.
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak--- 1.   THE PARTIES
(2)     AFKL is a French company and is the holding company of Société Air France
        (“AF”), the French national carrier airline, and Koninklijke Luchtvaart
        Maatschappij N.V. (“KL”), the Dutch national carrier airline.4 AFKL provides
        passenger air transport services, cargo air transport services and maintenance,
        repair and overhaul services (“MRO”). In 2017, AFKL carried 99 million
        passengers to 314 destinations in 116 countries with a fleet of 537 aircraft in
        operation.
(3)     Delta is an international airline with headquarters in the United States. Delta
        provides passenger air transport services and cargo air transport services, using
        belly space on its passenger aircraft, as well as MRO services. Delta carries
        approximately 180 million passengers a year to more than 300 destinations in
        over 50 countries with a fleet of more than 800 aircraft.
(4)     Virgin Group is the holding company of a group of companies, including VAL,
        active in a wide range of products and services worldwide. The Virgin Group
        holding company, Virgin Group Holdings Limited, is wholly-owned by Sir
        Richard Branson.
(5)     VAL is the holding company of Virgin Atlantic Airways Limited (“Virgin
        Atlantic”) and Virgin Holidays Limited (“Virgin Holidays”). Virgin Atlantic is an
        international airline with headquarters in the United Kingdom (“UK”), providing
        passenger air transport services and cargo air transport services, using belly space
        on its passenger aircraft, as well as MRO services. Virgin Atlantic flies to 34
        destinations worldwide. Virgin Holidays is a UK tour operator which supplies and
        distributes package holidays and ancillary products.
          Pre-existing corporate and commercial relationships between the parties
(6)     Delta is a shareholder of both AFKL and VAL, and the Parties have existing
        alliance and joint venture relationships:
             -   AF and Delta were founding members of the SkyTeam alliance in 2001.
                 Since 2004 (shortly after the merger of AF and KL), KL has also been a
                 full member of the SkyTeam alliance.
             -   AFKL and Delta are also members of SkyTeam Cargo, a global airline
                 cargo alliance, started in 2000.
             -   Delta, AF, KL and Alitalia Compagnia Aerea Italiana S.P.A. (“Alitalia”)
                 are parties to the TATL Joint Venture, a metal neutral joint venture
                 arrangement covering various routes between Europe and North America,
                 and other geographic regions.5
4   Delta holds an 8.8% (non-controlling) stake in AFKL.
5   See paragraph (11).
                                                      2
 ---pagebreak---               -   Delta and Virgin Atlantic are parties to the Delta-Virgin Atlantic Joint
                  Venture, a metal neutral joint venture arrangement covering non-stop
                  routes between the UK and North America.6
              -   Delta, AF, KL, Alitalia and Virgin Atlantic are also parties to a
                  coordination agreement dated 8 April 2013 (the “5-Way Coordination
                  Agreement”), pursuant to which these parties established a framework for
                  coordination of commercial activities covering city pair routings between
                  the UK and North America.7
2.         THE CONCENTRATION
(7)      The Transaction concerns the proposed acquisition by AFKL of a 31% joint-
         controlling interest in VAL. In addition, the Parties intend to implement a (new)
         transatlantic joint venture agreement (“JVA”)8 between AFKL, AF, KL, Delta
         and Virgin Atlantic and the Enhanced Strategic Cooperation Agreement
         (“ESCA”) described in the ESCA memorandum of understanding (“ESCA
         MOU”)9 between Virgin Atlantic, AFKL, AF and KL.
           AFKL entering as a new shareholder
(8)      Pre-Transaction, Virgin Group and Delta respectively own 51% and 49% of the
         shares in VAL and have joint control over VAL.10
(9)      Pursuant to a Sale and Purchase Agreement (“SPA”)11, executed on 15 May 2018,
         AFKL will acquire a 31% equity interest in VAL from Virgin Group.
(10)     Post-Transaction, AFKL will therefore own 31%, Virgin Group 20% and
         Delta 49% of the shares in VAL.
         Implementation of a transatlantic joint venture agreement and the ESCA MOU
(11)     Pursuant to the JVA between AFKL, AF, KL, Delta and Virgin Atlantic, the
         Parties intend to establish a new transatlantic joint venture agreement combining
         (i) [details of cooperation arrangement]12 and (ii) the metal neutral joint venture
6   See paragraph (11).
7   By final order issued on 23 September 2013, the DOT granted antitrust immunity with respect to the
    activities contemplated under the DL-VS Joint Venture and to the 5-Way Coordination Agreement.
8   Amended and Restated Transatlantic Joint Venture Agreement, dated 15 May 2018. Form CO, Annex
    A.09e.
9   Memorandum of Understanding in respect of the Enhanced Strategic Cooperation Agreement
    (“ESCA”), dated 5 October 2018. Form CO, Annex A.09f.
10  See M.6828 – Delta Airlines/Virgin Group/Virgin Atlantic Limited.
11  Sale and Purchase Agreement in respect of 31 per cent equity interest in Virgin Atlantic Limited, dated
    15 May 2018. Form CO, Annex A.09b.
12  [Details on potential parties to new transatlantic joint venture agreement].
                                                           3
 ---pagebreak---        arrangement between Delta and Virgin Atlantic (the “Delta-Virgin Atlantic Joint
       Venture”13). This expanded joint venture will cover the Parties [details on
       potential parties to new transatlantic joint venture agreement]14 [further details on
       the joint venture agreement].
(12)   In addition to the JVA, Virgin Atlantic, AFKL, AF and KL have concluded an
       ESCA MOU which regulates how AFKL and Virgin Atlantic intend to organise
       and implement bilateral cooperation on certain routes between Europe (including
       the UK) and the rest of the world (excluding North America).15
        Scope of this Decision
(13)   This Decision only assesses the impact on competition resulting from the
       acquisition by AFKL of a joint-controlling interest in VAL. The Commission
       does not assess the impact on competition resulting from the pre-existing
       relationships between AFKL and Delta as these have been assessed in the
       Commission’s Decision in case AT.39964 – Air France/KLM/Alitalia/Delta.16 In
       that respect, the Parties have notified the Transaction based on the assumption
       that the TATL Joint Venture and Delta-Virgin Atlantic Joint Venture are in place.
       However, this decision is without prejudice to the application of Article 101
       TFEU to any existing or envisaged agreement between the Parties, including
       without limitation the TATL Joint Venture, the DL-VS Joint Venture, the JVA
       and the 5-Way Coordination Agreement.
          Joint control
(14)   The Board of Directors of VAL will consist of [details about composition of the
       Board of Directors].17 [Details about appointment of the Chairman].18 [Further
       details about appointment of the Chairman]. [Details about appointment of
       executive director].19
(15)   [Details about voting mechanism]20; [further details about voting mechanism].21
13 A metal neutral joint venture arrangement covering non-stop routes between the UK and North
   America.
14 Alitalia is not a party to the JVA. [Details about implementing the JVA] (Form CO, footnote 6).
15 [Details about implementation of cooperation].
16 Commission’s Decision of 12 May 2015 under Article 9(1) of Council Regulation 1/2003 in case
   AT.39964 – Air France/KLM/Alitalia/Delta.
17 See [reference to confidential document], Form CO, Annex A.09g.
18 See [reference to clause] of the Shareholders’ Agreement, Form CO, Annex A.09c.
19 See [reference to clause] of the Shareholders’ Agreement, Form CO, Annex A.09c.
20 See [reference to clause] of the Shareholders’ Agreement, Form CO, Annex A.09c.
21 See [reference to confidential document], Form CO, Annex A.09g.
                                                         4
 ---pagebreak--- (16)   The approval of strategic business plans, annual budgets, borrowings beyond the
       current annual budget, capital expenditure beyond the current annual budget, and
       any material contract not authorised by the current annual budget (each a “Special
       Matter”), will be subject to a special approval process, [details about voting
       mechanism and veto rights].22 [Further details about voting mechanism and veto
       rights].
(17)   In addition, each of Delta, AFKL and Virgin Group has a veto right over [details
       about veto rights].23
(18)   Besides, for the sake of completeness, the Shareholders Agreement provides that,
       upon implementation of the JVA, which is conditional upon all necessary
       regulatory approvals having been obtained,24 [details about veto rights].25
(19)   According to paragraphs 62 and 69 of the Consolidated Jurisdictional Notice, the
       power to co-determine the structure of the senior management, such as the
       members of the board and the power to block actions which determine the
       strategic commercial behaviour of an undertaking, usually confers upon the
       holder the power to exercise decisive influence on the commercial policy of an
       undertaking.
(20)   As a result, post-Transaction, Delta, AFKL and Virgin Group will jointly control
       VAL and its subsidiaries (notably Virgin Atlantic and Virgin Holidays).26
         Full-functionality
(21)   VAL has sufficient own staff, financial resources and dedicated management for
       its operation and for the management of its portfolio and business interests.
       Furthermore, VAL will not be limited to exercising a specific function for its
       parents as it will continue to have a market presence. It also does not have
       significant sale or purchase relationships with its parents. Finally, VAL is
       intended to operate on a lasting basis. Therefore, VAL is a full-functional joint
       venture.
22 See [reference to clause] of the Shareholders’ Agreement, Form CO, Annex A.09c, and [reference to
   confidential document], Form CO, Annex A.09g.
23 See [reference to clause], Form CO, Annex A.09c.
24 See [reference to clause] of the JVA, Form CO, Annex A.09c.
25 See [reference to clause] of the Shareholders’ Agreement, Form CO, Annex A.09c.
26 The Commission recalls that, regarding the EU air transport licensing provisions, pursuant to
   paragraph 23 of the Consolidated 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."
                                                       5
 ---pagebreak--- 3.    EU DIMENSION
(22)     The undertakings concerned have a combined aggregate worldwide turnover of
         more than EUR 5 000 million27 (AFKL: EUR 25 781 million, Delta: EUR 36 499
         million, Virgin Group: EUR […] and VAL: EUR 3 038 million). Each of them
         has an EU-wide turnover in excess of EUR 250 million (AFKL: EUR […],
         Delta: EUR: […], Virgin Group: EUR […] and VAL: EUR […]), and they do not
         achieve more than two-thirds of their aggregate EU-wide turnover within one and
         the same Member State.28 The notified operation therefore has an EU dimension.
4.         RELEVANT PRODUCT AND GEOGRAPHIC MARKETS
(23)     The Parties' activities overlap in (i) passenger air transport services29, (ii) cargo
         air transport services and (iii) maintenance, repair and overhaul (“MRO”)
         services.
4.1.     Identification of the relevant markets in respect of air transport services of
         passengers
4.1.1. Relevance of the O&D approach
(24)     In respect of air transport services of passengers, the Commission has, in its prior
         decision practice related to air transport, defined the relevant markets for
         scheduled passenger air transport services on the basis of two approaches: (i) the
         "point of origin/point of destination" ("O&D") city-pair approach, where the
         target was an active air carrier;30 and (ii) the "airport-by-airport" approach, when
         the target included an important slot portfolio.31
(25)     Under the O&D approach, every combination of an airport or city of origin to an
         airport or city of destination is defined as a distinct market. 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,
27  Turnover calculated in accordance with Article 5 of the Merger Regulation.
28  AFKL, Delta and VAL calculated their turnover based on the “point of sales” methodology, but the
    Parties confirmed that the turnover thresholds would also be met under the “point of origin” and the
    “50/50 split” methods (with the exception of AFKL’s MRO turnover, which was calculated based on
    the “point-of-origin” methodology, but AFKL confirmed that its turnover exceeds the
    EUR 250 million threshold under any calculation method).
29   The Parties’ activities give rise to overlap in the provision of passenger air transport services under
     both the route-by-route (or “O&D”) approach and the airport-by-airport approach.
30  See e.g. Cases M.7541 − IAG/Aer Lingus, paragraph 14; M.7333 − Alitalia/Etihad, paragraph 63;
    M.6447 − IAG/bmi, paragraph 31.
31  See e.g. Cases M.8869 – Ryanair/LaudaMotion, paragraphs 96 and 116, M.8672 – easyJet/Certain Air
    Berlin Assets, paragraph 41; M.8633 – Lufthansa/Certain Air Berlin Assets, paragraph 58; M.6447 –
    IAG/bmi, paragraph 483. For Cases M.8672 – easyJet/Certain Air Berlin Assets and M.8633 –
    Lufthansa/Certain Air Berlin Assets, the Commission only carried out an airport-by-airport
    assessment, since the target assets did not constitute an active air carrier (Air Berlin had definitively
    ceased its flight operations on all routes due to its insolvency).
                                                            6
 ---pagebreak---         which they do not consider substitutable for a different city pair. The effects of a
        transaction on competition are thus assessed for each O&D separately.
4.1.2. Relevance of the airport-by-airport approach
(26)    Under the airport-by-airport approach, every airport (or substitutable airports) is
        defined as a distinct market. Such a market definition has notably been adopted to
        assess the risks of foreclosure entailed by the concentration of slots at certain
        airports in the hands of a single undertaking.32 Under this approach, the effects of
        a transaction on competition are thus assessed for all O&Ds taken together to or
        from an airport (or substitutable airports).
4.1.2.1.         Introduction
        Slots as an input for air transport services
(27)    By virtue of the Slot Regulation,33 slots, i.e. the permission to land and take-off at
        a specific date and time at congested airports, are essential for airlines' operations.
        Indeed, only air carriers holding slots are entitled to get access to the airport
        infrastructure services delivered by airport managers and, consequently, to
        operate routes to or from those airports.
(28)    The Commission has, in its prior decision practice, highlighted that the lack of
        access to slots constitutes a significant barrier to entry or expansion at Europe's
        busiest airports, such as London Heathrow airport.34
(29)    The Commission has also insisted, in the framework of its airport policy, that
        "slots are a rare resource" and "access to such resources is of crucial importance
        for the provision of air transport services and for the maintenance of effective
        competition."35
(30)    In addition, the Slot Regulation recalls that, with the increase of air traffic, there
        is a continuously growing demand for capacity at congested airports.36 Therefore,
        the lack of available slots has become a prominent feature of the EU airline
        industry and is expected to become an even more critical issue for air carriers in
        the near future.
32  See e.g. Case M.8633 – Lufthansa/Certain Air Berlin Assets, paragraphs 164 et seq.
33  Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for the allocation of slots at
    Community airports (the “Slot Regulation”).
34  See e.g. Cases M.7541 – IAG/Aer Lingus, paragraphs 188 et seq.; M.6447 – IAG/bmi, paragraphs 174
    and 663.
35  Recital (4) of the Commission Proposal for a Regulation of the European Parliament and of the
    Council on common rules for the allocation of slots at European Union airports (COM/2011/827 final
    of 01 December 2011).
36  Slot Regulation, first recital: "Whereas there is a growing imbalance between the expansion of the air
    transport system in Europe and the availability of adequate airport infrastructure to meet that
    demand; whereas there is, as a result, an increasing number of congested airports in the Community."
                                                          7
 ---pagebreak---          Rules for the allocation of slots
(31)     In the context of the imbalance between demand and supply of airport capacity,
         the Slot Regulation defines the rules for the allocation of slots at EU airports. It
         aims to ensure that, where airport capacity is scarce, the latter is used in the fullest
         and most efficient way and slots are distributed in an equitable, non-
         discriminatory and transparent way.
(32)     Under the Slot Regulation, the general principle regarding slot allocation is that
         an air carrier having operated its particular slots for at least 80% during the
         summer or winter scheduling period is entitled to the same slots in the equivalent
         scheduling period of the following year (the "grandfather rights").37 Conversely,
         slots which are not sufficiently used by air carriers (below 80%) are reallocated to
         other air carriers (the "use it or lose it" rule).
(33)     The Slot Regulation also provides for the setting up of "pools" containing newly-
         created time slots, unused slots and slots which have been given up by a carrier or
         have otherwise become available (e.g. via the “use it or lose it” rule). 50% of the
         slots from the slot pool shall first be offered to new entrants. The other 50% of the
         slots from the slot pool shall be placed at the disposal of other applicant airlines
         (incumbent airlines). If applications by new entrants amount to less than 50% of
         the capacity made available through slots from the pool, this remaining capacity
         shall also be placed at the other applicants' disposal.38
(34)     Under the Slot Regulation, slots cannot be traded. They may however be
         exchanged or transferred between airlines in certain specified circumstances and
         subject to the explicit confirmation from the coordinator under the Slot
         Regulation.39
4.1.2.2.          Parties’ views
(35)     The Parties do not object to the airport-by-airport approach but submit that the
         Transaction does not make any material change to the position of any of the
         Parties at any EEA airport.40
4.1.2.3.          Commission’s assessment
(36)     According to the Explanatory Memorandum for the Commission Proposal for a
         Regulation of the European Parliament and of the Council on common rules for
         the allocation of slots at European Union airports,41 "the emergence of a strong
         competitor at a given airport requires it to build up a sustainable slot portfolio to
37  Slot Regulation, Article 8(2).
38  Slot Regulation, Article 10(6).
39  The coordinator is the person responsible for the allocation of slots (Slot Regulation, Article 4(5)).
    According to the first sentence of Article 8a(2) of the Slot Regulation, "[t]he transfers or exchanges
    referred to in paragraph 1 shall be notified to the coordinator and shall not take effect prior to the
    express confirmation by the coordinator."
40  Form CO, paragraph 293.
41  COM/2011/827 final of 01 December 2011.
                                                        8
 ---pagebreak---         allow it to compete effectively with the dominant carrier (usually the “home”
        carrier)."
(37)    In this context, in a number of prior decisions related to transactions entailing the
        transfer of slots at certain airports, the Commission has considered the effects of
        the transaction on the operation of passenger air transport services at a given
        airport in terms of the slot portfolio held by a carrier at the airport, without
        distinguishing between the specific routes served to or from that airport.42 Under
        this approach, the Commission assesses how the transaction strengthens the
        merged entity's position at certain airports and the potential effects thereof on the
        merged entity’s ability and incentive to foreclose other air carriers from accessing
        the relevant airports. Foreclosing access to airports may in turn foreclose those
        other air carriers from operating routes from/to the relevant airports.43
(38)    AFKL’s major hubs are Amsterdam and Paris-Charles de Gaulle airports,44 where
        Delta holds a negligible amount of slots.45 Delta’s slots at these airports are all
        used for existing TATL Joint Venture services. Virgin Atlantic does not hold any
        slot (and historic rights thereto) at Amsterdam or Paris-Charles de Gaulle airports,
        nor at any EEA airport outside the United Kingdom.46 Therefore, the Transaction
        will not have any impact on any of the Parties’ slot portfolio at any EEA airport
        outside the United Kingdom.47
(39)    In the United Kingdom, Delta/Virgin Atlantic hold slots (and historic rights
        thereto) at London Heathrow, London Gatwick and Manchester airports in both
        IATA Seasons. AFKL also holds slots at London Heathrow and Manchester
        airports in both IATA Seasons. The Parties’ slot portfolios thus overlap at London
        Heathrow and Manchester airports.48
(40)    Therefore, in view of the above, the Commission considers it appropriate, for the
        purpose of this Decision, to apply the analytical framework designed to address
42 See e.g. Cases M.8869 – Ryanair/LaudaMotion, paragraph 116; M.8672 – easyJet/Certain Air Berlin
   Assets, paragraph 41; M.8633 – Lufthansa/Certain Air Berlin Assets, paragraph 58; M.6447 –
   IAG/bmi, paragraph 483.
43 See e.g. Cases M.8869 – Ryanair/LaudaMotion, paragraph 506 et seq. ;M.8672 – easyJet/Certain Air
   Berlin Assets, paragraphs 91 et seq.; M.8633 – Lufthansa/Certain Air Berlin Assets, paragraphs 160 et
   seq.; M.6447 − IAG/bmi, paragraph 483.
44 Form CO, paragraph 204.
45 Form CO, paragraphs 306-307. Delta holds a negligible amount of slots at AMS and CDG, namely
   [20-30] daily slot pairs at AMS and [20-30] daily slot pairs at CDG.
46 Form CO, paragraph 305.
47 Without prejudice to any assessment conducted under Article 101 TFUE, the Commission considers
   that the Transaction will not bring any change with regard to slot holding at non-overlap airports.
48 For the sake of completeness, it can be noted that, in the United Kingdom, AFKL has [5-10] daily slot
   pairs at Birmingham, [5-10] daily slot pairs at London City, [5-10] daily slot pairs at Newcastle, [5-10]
   daily slot pairs at Aberdeen, [0-5] daily slot pairs at Bristol, [0-5] daily slot pairs at Leeds Bradford,
   [0-5] daily slot pairs at Southampton and [0-5] daily slot pair at Belfast City. Virgin Atlantic/Delta has
   no slot pairs at any of these airports (Form CO, footnote 89).
                                                         9
 ---pagebreak---          the risk of foreclosure from access to airport infrastructure services potentially
         resulting from the acquisition of joint control over Virgin Atlantic, at airports
         where the slot portfolio of Virgin Atlantic/Delta and AFKL overlap in
         Winter 2018/2019 and Summer 2019 IATA Seasons, namely London Heathrow
         and Manchester airports.
4.1.3. Relevance of the market for air transport services to tour operators
(41)       Carriers, both charter and scheduled airlines, may sell seats (or entire flights) to
           tour operators, which then integrate the flights into package holidays or resell
           seats only to end customers.
(42)       In prior decisions, the Commission has regarded the wholesale supply of airline
           seats to tour operators as a distinct market from the supply of scheduled air
           transport services to end customers.49 Indeed, from a demand-side perspective,
           tour operators have different requirements from those of individual passengers
           (for example, purchase of large seat packages in advance from the start of the
           season, negotiation of rebates, taking into account passengers’ needs in terms of
           flight times). In Ryanair/Aer Lingus III, the Commission stated that
           “competitive conditions in this market [the supply of seats to tour operators] are
           manifestly different, since tour operators have different requirements from those
           of individual customers (for example, buying of large seat packages, negotiation
           of rebates, taking into account of customers' needs in terms of flight times).”50
4.1.3.1.          Parties’ views
(43)       The Parties stated that the distinction between retail and wholesale supply of
           airline seats to tour operators is not meaningful for the competitive assessment
           of specific routes in the case at hand.51
4.1.3.2.          Commission’s assessment
(44)       The Commission considers that, for the purpose of assessing the horizontal
           effects of the Transaction, the supply of airline seats to tour operators only
           constitutes a meaningful market on routes where either AFKL or Virgin52 are
           active to a significant extent.53 Indeed, in the absence of any (material) overlap,
49  See e.g. Cases M.8046 – TUI/Transat France, paragraphs 66-88; M.5867 – Thomas Cook/Öger Tours,
    paragraph 16; M.4601 – KarstadtQuelle/MyTravel, paragraph 43; M.4600 – TUI/First Choice,
    paragraph 57; M.3770 – Lufthansa/Swiss, paragraph 20.
50  Decision of 27 February 2013, case M.6663 – Ryanair/Aer Lingus III, paragraph 409.
51  See Reply of the Parties to RFI 3 of 23 January 2019, question 5.
52  On routes from Europe (excluding the UK) to North America, because of the TATL Joint Venture,
    Virgin Atlantic’s market share equate to the increment brought about by the Transaction. On all other
    routes, the increment brought about by the Transaction corresponds to AFKL’s market share given that
    pre-Transaction, VAL is co-controlled by Virgin Group and Delta.
53  In the absence of data on the total size of the market for supply of airline seats to tour operators, the
    Commission considers that AFKL (or Virgin when relevant) can be considered as only marginally
    active on that market when the number of seats sold to tour operators is on average below 5 per day or
                                                        10
 ---pagebreak---           the market for the supply of airline seats to tour operators cannot be considered
          as meaningful for the purpose of the Transaction.54
(45)      Therefore, for the purpose of the Transaction, a competitive assessment of the
          effects of the Transaction on the market for the supply of airline seats to tour
          operators could be meaningful only on the London – Shanghai route.55
          Nevertheless, the Commission notes that competitive features on the London –
          Shanghai route are similar as regards both the supply of scheduled air transport
          services to end customers and the supply of airline seats to tour operators.56 In
          particular, the Commission notes that the main competitors of the Parties in the
          supply of air transport services to end customers are also active on the supply of
          seats to tour operators. For instance, the established carrier China Eastern
          operated a daily direct flight on the London – Shanghai route in Summer 2017
          and six weekly frequencies in Winter 2017/2018 IATA Season.57 While the
          Parties do not have access to third party data for the market for the supply of
          seats to tour operators, they estimate that their market shares58 and the
          increment brought about by the Transaction are moderate under any plausible
          market definition, as in the market for supply of air transport services to end
          customers.59
(46)      In view of the moderate market shares and increments and the presence of
          established carriers offering direct flights on the markets for the supply of airline
          seats to (i) tour operators and (ii) end customers, the Commission considers that,
          for the purpose of this Decision, it is not necessary to further assess the effects
          of the Transaction on the market for the supply of airline seats to tour operators
          with regard to the London – Shanghai route.
   when the number of seats sold to tour operators represent less than 5% of the number of seats sold by
   Virgin Atlantic/Delta (or AFKL/Delta when relevant).
54 Should these markets considered as relevant, the Commission notes that the Transaction would not
   raise serious doubts as to its compatibility with the internal market with respect to the supply of airline
   seats to tour operators, under any plausible market definition.
55 See Form CO, annex B.01, Wholesale supply of seats data of each of AFKL, Virgin Atlantic, and
   Delta; Reply of the Parties to RFI 3 of 23 January 2019.
56 See Reply of the Parties to RFI 3 of 23 January 2019, questions 1 and 4.
57 See Reply of the Parties to RFI 3 of 23 January 2019, question 1. AFKL has a joint venture agreement
   on that route with China Eastern which covers Amsterdam – Shanghai and Paris – Shanghai but not
   London-Shanghai. China Eastern can therefore also be considered as a competitor of the Parties
   operating a direct flight London – Shanghai.
58 The Parties submit that a large part of their wholesale bookings are attributable to Chinese tourists
   travelling in organised groups (for instance, [90-100]% of AFKL’s wholesale activities on that route
   were point-of-sale China). In 2016, over 260 000 Chinese tourists visited the UK, of which [40-50]%
   were part of a tour group. The number of seats sold by the Parties to tour operators represents
   [40-50]% of the number of Chinese tourists who visited the UK as part of a tour group (Form CO,
   paragraph 212 and Reply of the Parties to RFI 3 of 23 January 2019, question 2).
59 See Section 5.1.4.2 below.
                                                         11
 ---pagebreak--- (47)      In any event, the Transaction is unlikely to raise serious doubts as to its
          compatibility with the internal market with respect to the supply of airline seats
          to tour operators, under any plausible market definition.
4.1.4. Conclusion on the relevant market in respect of passenger air transport services
(48)      In the present case, the target is an active air carrier and the Parties’ slot holding
          overlap at London Heathrow and Manchester airports. In its prior decisional
          practice, the Commission noted that London Heathrow is an airport where
          barriers to entry are high due to the scarcity of slots.60 Therefore, the relevant
          market for scheduled passenger air transport services will be defined under both
          the O&D approach and the airport-by-airport approach.
(49)      For the purpose of this Decision, the Commission considers that it is not
          necessary to further assess the effects of the Transaction on the market for the
          supply of airline seats to tour operators.
4.2.    Definition of the relevant markets
4.2.1. O&D approach - Air transport services of passengers
4.2.1.1.         Distinction between groups of passengers
         The Parties’ views
(50)      The Parties note that in previous cases the Commission has considered that a
          distinction may be drawn between (i) time sensitive (“TS” or premium)
          passengers and (ii) non-time sensitive (“NTS” or non-premium) passengers,
          while ultimately leaving the market definition open in many instances. The
          Parties do not object to this distinction. Consistent with the Commission’s
          previous approach, the Parties have considered that (i) restricted economy class
          passengers were NTS passengers and (ii) all first class, business class and
          premium economy class passengers, as well as economy class passengers with
          the most flexible economy tickets were TS passengers.61
         Commission’s assessment
(51)      The Commission has in its decisional practice (mostly concerning network
          carriers) considered distinguishing, for a given O&D route, between (i) time
          sensitive ("TS" or premium) passengers who tend to travel for business
          purposes, require significant flexibility for their tickets and are willing to pay
          higher prices for this flexibility, and (ii) non-time sensitive ("NTS" or non-
          premium) passengers who travel predominantly for leisure purposes, do not
60  See e.g. Cases M.7541 – IAG/Aer Lingus, paragraphs 188 et seq.; M.6447 – IAG/bmi, paragraphs 174
    and 663.
61  Form CO, paragraphs 237-239.
                                                    12
 ---pagebreak---           require flexibility with their booking and are more price-sensitive than the first
          category.62
(52)      In its recent decisional practice relating to long-haul flights, the Commission has
          considered that it may be relevant to distinguish between TS and NTS
          passengers, although ultimately leaving the question open.63
(53)      The outcome of the market investigation is inconclusive, as to whether the
          distinction between TS and NTS passengers is relevant for the purpose of the
          Transaction.64 While some competitors, travel agents and corporate customers
          indicated that the distinction was relevant for the assessment of the Transaction,
          other respondents to the market investigation considered that the distinction
          between TS and NTS passengers has become increasingly blurred, as some
          business travellers increasingly travel on economy fares, whereas leisure
          travellers might choose a “premium” cabin to secure a seat on a high-demand
          flight.65
         Conclusion
(54)      In light of the above, the Commission concludes that the question whether it is
          necessary to distinguish between TS and NTS passengers can be left open, as
          the Transaction would not raise serious doubts as to its compatibility with the
          internal market under any plausible market definition. The Commission will
          consider the relevance of the distinction between TS and NTS passengers in the
          route-by-route analysis where relevant.
4.2.1.2.           Distinction between direct and indirect flights66
         The Parties’ views
(55)      The Parties submit that on the overlap routes passengers consider indirect flights
          as an equivalent alternative to direct flights. In that regard, the Parties’ booking
          data show that some passengers do choose one-stop flights, although those
          indirect flights are more than 150 minutes longer in duration than non-stop
62  See e.g. Cases M.7333 – Alitalia/Etihad, paragraphs 70 et seq.; M.7270 – Cesky Aeroholding/Travel
    Service/Ceske Aerolinie, paragraphs 20 et seq.; M.6663 – Ryanair/Aer Lingus III, recital 382; M.6607
    – US Airways/American Airlines, paragraph 8; M.6447 – IAG/bmi, paragraph 36.
63  See e.g. Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraphs 20-23; M.7541 – IAG/Aer
    Lingus, paragraphs 28-29; M.7333 – Alitalia/Etihad, paragraphs 70-74; M.6828 – Delta Air
    Lines/Virgin Group/Virgin Atlantic Limited, paragraphs 23-28.
64  Replies to eQ1 – Questionnaire 1 for Competitors, questions 8 and 8.1; eQ2 – Questionnaire 2 to
    corporate customers and travel agencies, questions 3 and 3.1.
65  Replies to eQ1 – Questionnaire 1 for Competitors, questions 8 and 8.1; eQ2 – Questionnaire 2 to
    corporate customers and travel agencies, questions 3 and 3.1.
66  "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.
                                                          13
 ---pagebreak---          flights.67 Therefore, the Parties consider that one-stop flights may impose a
         competitive constraint on non-stop flights and that the extent to which one-stop
         flights are substitutable for non-stop flights is apparent from the booking data
         for a certain route.. The Parties have submitted market shares for all non-
         stop/one-stop and one-stop/one-stop overlap routes.
       Commission’s assessment
(56)     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 via an intermediate destination.68
(57)     The level of substitutability of indirect flights to 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.69
(58)     The Transaction does not give rise to any short/medium-haul overlap routes,
         because Virgin Atlantic does not operate any short/medium-haul services.70
         Therefore, the question of the substitutability of direct and indirect flights is
         only needs to be addressed for long-haul services.
(59)     In prior decisions, the Commission has considered that with respect to long-haul
         routes (more than 6 hours flight duration), indirect flights constitute a
         competitive alternative to direct services under certain conditions (for example
         if they are marketed as connecting flights on the O&D pair in the computer
         reservation systems).71
(60)     A majority of competitors having expressed their views confirmed that one-stop
         services could constitute competitive alternatives to non-stop services as
         identified above.72 The majority of travel agencies stated that, on each of the
         relevant routes for the purpose of this decision, they sell tickets to both direct
         and indirect flights to their customers. The majority of corporate customers
         having expressed a view stated that they buy tickets for both direct and indirect
67 Form CO, paragraph 245.
68 Cases M. 8361 – Qatar Airways/Alisarda/Meridiana, paragraph 24; M.7541 – IAG/Aer Lingus,
   paragraph 30; M.7333 –Alitalia/Etihad, paragraph 75; M.6663 – Ryanair/Aer Lingus III,
   paragraph 373.
69 Cases M.7541 – IAG/Aer Lingus, paragraph 31; M.7333 –Alitalia/Etihad, paragraph 76; M.6447 –
   IAG/bmi, paragraph 68; M.5440 – Lufthansa/Austrian Airlines, paragraph 24; M.5335 – Lufthansa/SN
   Airholding, paragraph 36.
70 Form CO, paragraph 246.
71 Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraph 26; M.7541 – IAG/Aer Lingus,
   paragraph 33; M.6828 – Delta Air Lines/Virgin Group/Virgin Atlantic Limited, paragraph 29; M.6447
   − IAG/bmi, paragraph 69.
72 Replies to eQ1 – Questionnaire 1 for Competitors, questions 9 and 9.1.
                                                      14
 ---pagebreak---           flights on the affected direct/indirect overlap routes.73 Travel agents and
          corporate agents having expressed a view specifically mentioned that the
          following criteria can lead passengers to choose one-stop flights over non-stop
          flights: the price, the total travel duration (including stopover times), the
          schedules and the number of frequencies.74
         Conclusion
(61)      The Transaction does not give rise to direct/direct overlap routes.75 If direct and
          indirect flights were to be considered as two separate markets, the direct/indirect
          overlap routes would not be affected overlap routes as a result of the
          Transaction. For the purpose of this Decision, the Commission will consider that
          direct and indirect flights are part of the same market and assess the effects of
          the Transaction on direct/indirect overlap routes. Nevertheless, the conclusion
          on whether or not direct and indirect flights belong to the same market can be
          left open as the Transaction would not raise serious doubts as to its compatibility
          with the internal market under either of these alternative market definitions.
4.2.1.3.         Distinction between charter flights and scheduled flights
         The Parties’ views
(62)      The Parties submit that they face significant competition from charter
          companies selling so-called “dry seats” (seats only without other services) on a
          number of routes, especially in respect of sunshine/leisure destinations in the
          Caribbean (such as Cuba and Jamaica) served by Virgin Atlantic.76
(63)      In the Parties’ views, charter flights offering “dry seats” and scheduled flights
          are substitutable and are therefore part of the same relevant product market.77
         Commission’s assessment
(64)      The Commission has previously considered that charter flights, as opposed to
          scheduled flights, are usually defined as air transport services that take place
          outside normal schedules, normally through a hiring arrangement with a
          particular customer (in particular a tour operator). Charter companies often fly
          to destinations where no scheduled airline is active and usually operate on a
          seasonal basis with a relatively low frequency of flights, in response to the
          requirements of tour operators (for example, once a week on Saturday, only
          during the summer or only during the ski season).78
73  Replies to eQ2 – Questionnaire 2 to corporate customers and travel agencies, question 5 and 6.
74  Replies to eQ2 – Questionnaire 2 to corporate customers and travel agencies, questions 7 and 7.1.
75  Form CO, paragraphs 17 and 18.
76  Form CO, paragraph 251.
77  Form CO, paragraph 251.
78  See case M.6663 – Ryanair/Aer Lingus III, paragraph 388.
                                                       15
 ---pagebreak--- (65)      The Commission has also considered that charter companies do not traditionally
          sell tickets directly to passengers. They sell seats on their aircraft to tour
          operators, which include the flight in a holiday package. As such, the flight (air
          transport) is part of a package holiday, the price of which includes flights,
          accommodation and other services. However, charter companies sell to some
          extent "dry seats" directly to passengers.79
(66)      The Commission has previously held that most of the services offered by charter
          companies (package holiday sales, seat sales to tour operators) are not in the
          same market as scheduled point-to-point air passenger transport services.80
          However, as regards charter carriers selling dry seats and scheduled point-to-
          point air passenger transport services, the Commission has left open whether
          they are part of the same relevant product market and has considered the
          relevance of dry seats offered by charter companies in its competitive
          assessment.81
(67)      The Parties submit that charter carriers are not represented in the market data
          they submitted.82 The Commission notes that the market data submitted by the
          Parties includes on some routes the airlines Thomas Cook/Condor and TUI,
          which are integrated into a tour operating company.
        Conclusion
(68)      In light of the above, the Commission considers that the question of whether dry
          seats are part of the same market as scheduled air transport services can be left
          open, as the Transaction would not raise serious doubts as to its compatibility
          with the internal market under any plausible market definition. The Commission
          will consider the relevance of the dry seats sold by charter airlines in the route-
          by-route analysis where relevant.
4.2.1.4.         Airport substitutability
         Analytical framework
(69)      When defining the relevant O&D markets for passenger air transport services,
          the Commission has previously found that flights to or from airports with
          sufficiently overlapping catchment areas can be considered as substitutes in the
          eyes of passengers (particularly if the airports serve the same main city). In
          order to correctly capture the competitive constraint that flights to or from two
79  See case M.6663 – Ryanair/Aer Lingus III, paragraph 389.
80  Cases M.6663 – Ryanair/Aer Lingus III, paragraph 418; M.4439 – Ryanair/Aer Lingus, paragraph 311.
81  Cases M.6663 – Ryanair/Aer Lingus III, paragraph 419; M.4439 – Ryanair/Aer Lingus, paragraph 311;
    M.6828 – Delta Air Lines/Virgin Group/Virgin Atlantic Limited, paragraph 71.
82  See Form CO, paragraph 214.
                                                      16
 ---pagebreak---          different airports exert on each other, a detailed analysis taking into
         consideration the specific characteristics of the relevant airports is necessary.83
(70)     The evidence used to characterise airport substitutability includes inter alia a
         comparison of actual distances and travelling times to the indicative benchmark
         of 100 km/1 hour driving time,84 the outcome of the market investigation (views
         of the competitors and other market participants), and the competitors’ practices
         in terms of monitoring of competition.
(71)     In the present case, taking account of the relevant routes where the Parties’
         activities overlap, the question of airport substitutability arises for the routes to
         or from the following cities: Shanghai, Lyon, Paris, Düsseldorf, Milan, London,
         Manchester, New York, Orlando and San Francisco.
(72)     Nevertheless, for the purpose of this Decision, the question of airport
         substitutability is not relevant for Shanghai, Lyon, Düsseldorf, Manchester,
         Orlando and San Francisco. 85
        Assessment of airport substitutability
   a) Paris
(73)     Paris has two main airports, namely Charles de Gaulle (CDG) and Orly (ORY).
(74)     In its prior decision practice, the Commission has considered ORY and CDG as
         substitutable airports, but ultimately left the question open.86
(75)     For the purposes of the O&D assessment of the Transaction, the question of
         airport substitutability is relevant for the following routes: Paris – San-Francisco
         and Paris – Boston.
83 See e.g. Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraph 29; M.7333 –Alitalia/Etihad,
   paragraph 82; M.6663 – Ryanair/Aer Lingus III, paragraph 65.
84 The 100 km/1 hour driving time is nevertheless used as a first proxy only. It was defined by the
   Commission in the specific case of routes served out of Dublin by two airlines with typical attributes
   of low-frills point-to-point carriers. This "rule" is thus not necessarily strictly applicable for other cases
   (see Case M.6663 – Ryanair/Aer Lingus III, paragraph 82). In this regard, In "Airport Competition:
   Myth or Reality? IATA Economics Briefing", November 2017, it is noted that "[w]hile isochrones are
   a simple and powerful visual tool, they are of limited use in understanding the choices that passengers
   actually make. (…) Moreover, the proximity of an alternative airport can only represent a relevant
   choice if the airlines which compete with each other offer a substitutable service, for instance a
   comparable itinerary. Isochrone maps do not reflect the availability of services at comparator airports
   and are therefore likely to overstate the extent of effective airport competition."
85 Shanghai, Lyon, Düsseldorf, Manchester and San Francisco are cities served by several airports.
   Nevertheless, the question of airport substitutability does not arise given that the Parties operate the
   affected routes to/from the same airport (namely Shanghai Pudong International, Lyon, Düsseldorf,
   Manchester and San Francisco airports) and no competitor operates a direct service to/from the
   potential substitutable airport(s). Should the Commission take account of potential substitutable
   airports, the outcome of the competitive assessment would remain unchanged.
86 Case M.5830 – Olympic/Aegean Airlines, paragraph 1676: the Commission concluded that CDG and
   ORY are substitutable for TS and NTS passengers on the Athens – Paris route.
                                                           17
 ---pagebreak--- (76)     On the Paris – San Francisco route, AFKL/Delta operates direct services and
         markets an indirect service to/from CDG. VAL only operates indirect services
         to/from CDG while Frenchbee operates a direct service to/from ORY.87
(77)     On the Paris – Boston route, AFKL/Delta operates direct services and markets
         an indirect service to/from CDG. VAL only operates indirect services to/from
         CDG.88
(78)     The travel distances and times between Charles de Gaulle and Orly airports and
         the centre of Paris are summarised below:
                              Approximate
                             distance to city        Approximate travel time to city centre
             Airport               centre
                                   Road                  By car/taxi       By public transport
          Charles de                                                       Rail: 30 min
                            24 km                 29 min
          Gaulle                                                           Coach/bus: 45 min
                                                                           Rail: 30-40 min
          Orly              19 km                 43 min
                                                                           Coach/bus: 35 min
         Source: Form CO, paragraph 275.
(79)   Both competitors and corporate customers and travel agents having expressed a
       view gave mixed replies as to whether passengers consider CDG and ORY as
       substitutable.89 The majority of competitors having expressed a view do monitor
       air carriers flying on the Paris – San Francisco and Paris - Boston routes to/from
       CDG or ORY.90 The outcome of the market investigation is therefore
       inconclusive.
(80)   In any case, for the purpose of this Decision, the question of whether the relevant
       market consists of Charles de Gaulle, or of Charles de Gaulle and Orly, can be
       left open, as the Transaction would not raise serious doubts as to its compatibility
       with the internal market under either plausible market definition.
   b) Milan
(81)   Milan has three airports, namely Malpensa (MXP), Linate (LIN) and Bergamo
       (BGY). In light of the fact that mostly domestic and short/medium-haul flights are
       operated from Bergamo, the latter will therefore not be included in the airport
       substitutability analysis.
87 Form CO, paragraphs 702-704.
88 Form CO, paragraphs 731-732.
89 Replies to eQ1 – Questionnaire 1 for Competitors, question 15; eQ2 – Questionnaire 2 to corporate
   customers and travel agencies, question 9.
90 Replies to eQ1 – Questionnaire 1 for Competitors, question 16.
                                                      18
 ---pagebreak--- (82)   In its prior decision practice, the Commission has considered Malpensa and
       Linate as substitutable, but the market definition was ultimately left open.91
(83)   For the purposes of the O&D assessment of the Transaction, the question of
       airport substitutability is relevant for the routes: Milan – Los Angeles and Milan –
       San Francisco.
(84)   With respect to both the Milan – Los Angeles and Milan – San Francisco routes,
       the Parties operate indirect services to/from MXP and to/from LIN.92
(85)   The travel distances and times between Linate and Malpensa airports and the
       centre of Milan are summarised below:
                              Approximate
                             distance to city          Approximate travel time to city centre
             Airport               centre
                                   Road                   By car/taxi       By public transport
          Linate            11 km                   25 min                  Bus: 20 min
          Malpensa          45 km                   50 min                  Rail: 40 min
         Source: Reply of the Parties to RFI 5 of 31 January 2019.
(86)   Both competitors and corporate customers and travel agents having expressed a
       view gave mixed replies as to whether passengers consider LXP and LIN airports
       as substitutable.93 The majority of competitors having expressed a view do
       monitor air carriers flying on the Milan – Los Angeles and Milan – San Francisco
       routes to/from MXP or LIN.94 The outcome of the market investigation is
       therefore inconclusive.
(87)   In any case, for the purpose of this Decision, the question of whether the relevant
       market consists of Malpensa, or of Malpensa and Linate, can be left open, as the
       Transaction would not raise serious doubts as to its compatibility with the internal
       market under either plausible market definition.
91 Cases M.7333 – Alitalia/Etihad, paragraphs 102-105; M.4439 – Ryanair/Aer                  Lingus,
   paragraphs 263-267; Case M.6663 – Ryanair/Aer Lingus III, paragraphs 245-252.
92 Form CO, paragraphs 978-979 and 1034-1035.
93 Replies to eQ1 – Questionnaire 1 for Competitors, question 15; eQ2 – Questionnaire 2 to corporate
   customers and travel agencies, question 9.
94 Replies to eQ1 – Questionnaire 1 for Competitors, question 16.
                                                       19
 ---pagebreak---     c) London
(88)     London has six main airports, namely Heathrow (LHR), Gatwick (LGW), City
         (LCY), Stansted (STN), Luton (LTN) and Southend (SEN).95
(89)     In its prior decisional practice relating to long-haul services to/from London, the
         Commission examined the effects of the transaction on a market comprising
         flights to and from Heathrow only and on a wider market comprising flights to
         and from LHR, LGW and LCY, but the market definition was ultimately left
         open.96
(90)     The Parties consider that there is no reason to deviate from this practice.97
(91)     For the purposes of the O&D assessment of the Transaction, the question of
         airport substitutability is relevant for the following routes: London – Seattle,
         London – Atlanta, London – Minneapolis, London – Detroit, London – Portland,
         London – Lagos, London – Shanghai, London – Havana and London – Montego
         Bay.
(92)     On the London – Seattle route, VAL/Delta operates direct and indirect services
         to/from LHR. AFKL operates indirect services to/from LHR via AMS or CDG.
         VAL/Delta also operates indirect services to/from LGW while Norwegian
         operates direct services to/from LGW.98
(93)     On the London - Atlanta route, VAL/Delta operates direct and indirect services
         to/from LHR. AFKL operates indirect service to/from LHR via AMS or CDG.
         VAL/Delta also operates an indirect service to/from LGW.99
(94)     On the London – Minneapolis route, VAL/Delta operates direct and indirect
         services to/from LHR. AFKL operates indirect services to/from LHR via AMS or
         CDG.100
(95)     On the London – Detroit route, VAL/Delta operates direct and indirect services
         to/from LHR. AFKL operates indirect services to/from LHR via AMS or CDG.101
95  Given that no direct services on any of the relevant routes are operated to/from STN, LTN and SEN
    and that a negligible number of passengers booked indirect flights provided by the Parties’ competitors
    to/from these airports, these airports are not considered as plausible substitutable airports for the
    purpose of the Decision (Form CO, paragraphs 258, 261 and 1140).
96  M.6828 – Delta Air Lines/Virgin Group/Virgin Atlantic Limited, paragraph 43.
97  Form CO, paragraphs 256 and 265.
98  Form CO, paragraphs 441-442.
99  Form CO, paragraphs 496-498.
100 Form CO, paragraphs 521-522.
101 Form CO, paragraphs 545-546.
                                                       20
 ---pagebreak--- (96)    On the London – Portland route, VAL/Delta operates direct and indirect services
        to/from LHR. AFKL operates indirect services to/from LHR via AMS or CDG.102
(97)    On the London – Lagos route, VAL operates direct and indirect services to/from
        LHR. AFKL operates indirect services to/from LHR and to/from LCY.103
(98)    On the London – Shanghai route, VAL operates direct services to/from LHR.
        AFKL operates indirect services to/from LHR and to/from LCY.104
(99)    On the London – Havana route, VAL operates direct and indirect services to/from
        LGW. AFKL operates indirect services to/from LHR.105
(100) On the London – Montego Bay route, VAL operates direct services to/from LGW
        while AFKL and VAL/Delta operate indirect services to/from LHR.106
(101) The travel distances and times between Heathrow, Gatwick and City airports and
        the centre of London are summarised below:
                               Approximate
                              distance to city      Approximate travel time to city centre
              Airport
                                    centre
                                    Road              By car/taxi             By public transport
                                                                           Rail: 15-30 min
           Heathrow          28km                 65 min
                                                                           Coach/bus: 65/135 min
                                                                           Rail: 30-45 min
           Gatwick           46 km                85 min
                                                                           Coach/bus: 90/145 min
           City              14 km                20 min                   Rail: 22 min
          Source: Form CO, paragraph 260 and reply of the Parties to RFI 5 of 31 January 2019.
(102) Both competitors and corporate customers and travel agents having expressed a
        view gave mixed replies as to whether the relevant market consists of flights
        to/from LHR only, or to/from LHR, LGW and LCY taken together.107 The
        majority of competitors having expressed a view do monitor air carriers flying
102 Form CO, paragraphs 596-597.
103 Form CO, paragraphs 1064-1066.
104 Form CO, paragraphs 1096-1098.
105 Form CO, paragraphs 1127-1129.
106 Form CO, paragraphs 1151-1152.
107 Replies to eQ1 – Questionnaire 1 for Competitors, question 15; eQ2 – Questionnaire 2 to corporate
    customers and travel agencies, question 9.
                                                    21
 ---pagebreak---         to/from LHR, LGW or LCY on the routes listed in paragraph (91) above.108 The
        outcome of the market investigation is therefore inconclusive.
(103) In any case, for the purpose of this Decision, the question of whether the relevant
        market consists of flights to/from Heathrow only, or to/from Heathrow, Gatwick
        and City airports, can be left open, as the Transaction would not raise serious
        doubts as to its compatibility with the internal market under either plausible
        market definition.
    d) New-York
(104) The city of New York is served by three primary airports, namely John F.
        Kennedy (JFK), Newark Liberty (EWR) and La Guardia (LGA) airports. La
        Guardia predominantly serves North American destinations and there are no
        direct flights to and from La Guardia relevant for the assessment of the
        Transaction.109 La Guardia will therefore not be included in the airport
        substitutability analysis.
(105) In its prior decisional practice relating to transatlantic flights to/from New York,
        the Commission examined the effects of the transaction on a market comprising
        flights to and from JFK only and a wider market comprising flights to and from
        JFK and EWR, but the market definition was ultimately left open.110
(106) For the purposes of the O&D assessment of the Transaction, the question of
        airport substitutability is relevant for the following routes: Manchester – New
        York, Edinburgh – New York, Nice – New York, Dublin – New York, Lyon –
        New York, Marseille – New York and Hamburg – New York.
(107) On the Manchester – New York route, VAL/Delta operates direct and indirect
        services to/from JFK and indirect services to/from EWR. AFKL operates indirect
        services to/from JFK while United Airlines, Lufthansa and Air Canada operate
        direct services to/from EWR.111
(108) On the Edinburgh – New York route, VAL/Delta operates direct and indirect
        services to/from JFK. AFKL operates indirect services to/from JFK via AMS or
        CDG while United Airlines, Lufthansa and Air Canada operate direct services
        to/from EWR.112
108 Replies to eQ1 – Questionnaire 1 for Competitors, question 16.
109 See e.g. Form CO, paragraph 488.
110 Cases M.7333 – Alitalia/Etihad, paragraph 110; M.6828 – Delta Air Lines/Virgin Group/Virgin
    Atlantic Limited, paragraph 47. In case M.7541 – IAG/Aer Lingus, paragraph 104, the Commission
    considered that JFK and EWR were substitutable for TS and NTS passengers with respect to the
    Dublin – New York route.
111 Form CO, paragraphs 471-473.
112 Form CO, paragraphs 568-570.
                                                       22
 ---pagebreak--- (109) On the Nice – New York route, AFKL/Delta operates direct and indirect services
        to/from JFK while VAL operates indirect services to/from JFK. The Parties also
        operate limited indirect services to/from EWR.113
(110) On the Dublin – New York route, AFKL/Delta operates direct and indirect
        services to/from JFK. VAL operates indirect services to/from JFK and to/from
        EWR while United Airlines, Lufthansa, Air Canada and Aer Lingus operate direct
        services to/from EWR.114
(111) On the Lyon – New York route, the Parties operate indirect services to/from JFK
        and to/from EWR.115
(112) On the Marseille – New York route, the Parties operate indirect services to/from
        JFK and to/from EWR.116
(113) On the Hamburg – New York route, the Parties operate indirect services to/from
        JFK and to/from EWR while United Airlines operates a direct service to/from
        EWR in summer only.117
(114) The Parties consider JFK and EWR as substitutable.118
(115) The travel distances and times between these airports and the centre of New York
        are summarised below:
                              Approximate
                             distance to city          Approximate travel time to city centre
               Airport
                                   centre
                                    Road                  By car/taxi      By public transport
            John F.                                                         By train: 75 min
                                    31 km                    30 min
            Kennedy                                                          By bus: 52 min
            Newark                  21 km                    22 min         By train: 24 min
          Source: Form CO, paragraph 272.
(116) The outcome of the market investigation is inconclusive. While a majority of
        competitors having expressed a view consider that JFK and EWR airports are
        substitutable and monitor air carriers flying on the routes listed in paragraph (106)
        above to/from JFK or EWR,119 the corporate customers and travel agents gave
113 Form CO, paragraphs 756-758.
114 Form CO, paragraphs 789-791.
115 Form CO, paragraphs 899-900.
116 Form CO, paragraphs 922-923.
117 Form CO, paragraphs 959-960.
118 Form CO, paragraph 270.
119 Replies to eQ1 – Questionnaire 1 for Competitors, questions 15 and 16.
                                                       23
 ---pagebreak---         mixed replies as to whether passengers consider JFK and EWR as substitutable
        airports.120
(117) In any case, for the purpose of this Decision, the question of whether John F.
        Kennedy and Newark airports are substitutable can be left open, as the
        Transaction would not raise serious doubts as to its compatibility with the internal
        market under either plausible market definition.
    e) Orlando
(118) Orlando is served by two airports, namely Orlando International (MCO) and
        Orlando Sanford International (SFB).
(119) In its prior decisional practice, the Commission found that MCO and SFB can be
        considered as substitutable from the point of view of passengers, at least with
        regards to NTS passengers, with regard to the routes London – Orlando and
        Manchester - Orlando.121
(120) For the purpose of the O&D assessment of the Transaction, the question of
        substitutability of MCO and SFB is relevant for the following routes: Dublin –
        Orlando and Amsterdam – Orlando.
(121) On the Dublin – Orlando route, the Parties operate indirect services to/from
        MCO, while Aer Lingus operates direct flights from MCO.122 With respect to the
        Amsterdam – Orlando route, the Parties operate from MCO while TUI operated a
        direct service to/from SFB.123
(122) The travel times and distances between these airports and the city centre of
        Orlando are summarised below:
                              Approximate
                             distance to city          Approximate travel time to city centre
              Airport              centre
                                   Road                   By car/taxi            By public transport
           Orlando
                                   21 km                    20 min                 By train: 36 min
           (MCO)
           Sanford                                                                 Approximately 3
                                   37 km                    30 min
           (SFB)                                                                          hours
          Source: Form CO, paragraph 280.
120 Replies to eQ2 – Questionnaire 2 to corporate customers and travel agencies, question 9.
121 M.6828 – Delta Air Lines/Virgin Group/Virgin Atlantic Limited, paragraph 52.
122 Form CO, paragraphs 278 and 845.
123 Form CO, paragraphs 862-863.
                                                       24
 ---pagebreak--- (123) The outcome of the market investigation is inconclusive. While a majority of
         competitors having expressed a view consider that Orlando and Sanford airports
         are substitutable and monitor competitors on the route Amsterdam – Orlando
         flying to/from MCO or SFB,124 the corporate customers and travel agents gave
         mixed replies as to whether passengers consider Orlando and Sanford as
         substitutable.125
(124) In any case, for the purpose of this Decision, the question of whether Orlando and
         Sanford airports are substitutable can be left open, as the Transaction would not
         raise serious doubts as to its compatibility with the internal market under either
         plausible market definition.
         Conclusion
(125) For the purpose of this Decision, it is not necessary to decide whether (i) Paris-
         Charles de Gaulle and Paris Orly airports, (ii) Milan Malpensa and Milan Linate
         airports, (iii) London Heathrow, Gatwick and City, (iv) John F. Kennedy and
         Newark, (v) Orlando and Sanford airports are substitutable as the Transaction
         would not raise serious doubts as to its compatibility with the internal market
         under any plausible market definition.
4.2.2. Airport-by-airport approach – Air transport of passengers
(126) As explained in paragraph (40) above, the Commission considers it appropriate to
         apply the airport-by-airport approach for the purpose of this Decision. The
         Commission will assess the effect of the Transaction on the Parties’ slot holding
         in both IATA Seasons at London Heathrow and Manchester airports in relation to
         the markets for air transport services of passengers to or from the relevant airports
         and the market for airport infrastructure services provided at the relevant airports.
(127) The Commission will consider below the various possible delineations of these
         two relevant markets under the airport-by-airport approach.
4.2.2.1.          Air transport services of passengers to or from the relevant airports
         Relevant product market
(128) In prior decisions, the Commission has not deemed it necessary to consider under
         the airport-by-airport approach, when all O&Ds to or from an airport are
         aggregated, the same distinctions as those considered when each O&D market is
         examined separately (e.g. time sensitive vs. non-time sensitive passengers, direct
         vs. indirect flights, charter flights vs. scheduled flights, wholesale vs. retail supply
         of airline seats).126 On the basis of the information in the file, the Commission
124 Replies to eQ1 – Questionnaire 1 for Competitors, questions 15 and 16. The question of whether air
    carriers monitors competitors flying between Dublin and Sanford airports is irrelevant as no air carrier
    provides direct services on that airport pair.
125 Replies to eQ2 – Questionnaire 2 to corporate customers and travel agencies, question 9.
126 See Cases M.8869 – Ryanair/LaudaMotion, paragraph 222; M.8672 – easyJet/Certain Air Berlin
    assets, paragraph 52; M.8633 – Lufthansa/Certain Air Berlin assets, paragraph 58; M.6447 − IAG/bmi,
    paragraphs 492-506.
                                                       25
 ---pagebreak---          considers that there are no grounds for it to deviate from this past practice for the
         purposes of this Decision.
         Relevant geographic market
(129) In prior decisions, the Commission has considered whether the relevant airports
         were substitutable with other airports in view of their overlapping catchment
         areas.127
(130) In the present case, the substitutability from the point of view of passengers of
         (i) London Heathrow, Gatwick, City, Stansted, Luton and Southend airports and
         (ii) Manchester, Liverpool and Leeds airports has been considered in
         section 4.2.1.4. above.128
         Conclusion
(131) For the purpose of its airport-by-airport assessment of the Transaction in this
         Decision, the Commission will assess the competitive effects of the Transaction
         on the markets for the provision of passenger air transport services, encompassing
         all routes to or from an airport, or to or from substitutable airports.
(132) For the purpose of its airport-by-airport assessment of the Transaction in this
         Decision, the question of whether the relevant geographic market consists of
         (i) flights to/from London Heathrow only or Heathrow, Gatwick and City airports
         and (ii) flights to/from Manchester only or Manchester, Liverpool and Leeds can
         be left open, as the Transaction would not raise serious doubts as to its
         compatibility with the internal market under either plausible market definition
         (see section 5.2. below).
4.2.2.2.          Airport infrastructure services
(133) For the purpose of providing passenger air transport services at congested
         airports, airlines have to source infrastructure services at those airports. As
         indicated in paragraph (27) above, at congested airports, infrastructure capacity is
         managed through the allocation of slots, which enable air carriers to fly to and
         from the airports. Slots are therefore defined, from the point of view of airports,
         as "a planning tool for rationing capacity at airports where demand for air travel
         exceeds the available runway and terminal capacity."129 From the point of view
         of airlines, the granting of a slot at an airport means that the airline may use the
         entire range of infrastructure necessary for the operation of a flight at a given time
         (runway, taxiway, stands and, for passenger flights, terminal infrastructure). This
         in turn enables the airlines to provide passenger air transport services to and from
         that airport.
127 See Cases M.8869 – Ryanair/LaudaMotion, paragraphs 223-226 ; M.8672 – easyJet/Certain Air Berlin
    assets, paragraphs 53 et seq.; M.8633 – Lufthansa/Certain Air Berlin assets, paragraphs 59 et seq.
128 See in particular paragraphs (72) and (89) above.
129 Press release of 1 December 2011 accompanying the Airport Package (http://europa.eu/rapid/press-
    release MEMO-11-857 en.htm).
                                                       26
 ---pagebreak--- (134) As a consequence, through the Transaction and the combination of slot portfolios,
        the Parties together obtain a right of access to a higher share of airport
        infrastructure capacity. The Transaction therefore has an impact on (the demand-
        side of) the markets for airport infrastructure services at the relevant airports and
        also on the markets for passenger air transport to and from those airports.
        Relevant product market
(135) The Commission has, in its prior decisional practice, delineated a product market
        for the provision of airport infrastructure services to airlines, which includes the
        development, maintenance, use and provision of the runway facilities, taxiways
        and other airport infrastructure.130
(136) The Commission has considered sub-dividing the market for airport infrastructure
        services on the basis of airline customers (i.e. charter operators, scheduled full
        service carriers and scheduled low cost carriers) and on the basis of the type of
        flights (i.e. short-haul and long-haul).131
(137) However, in prior decisions relating to the transfer of slots at airports, the
        Commission has not considered it appropriate to further distinguish within the
        market for airport infrastructure services, considering that slot portfolios give
        access to all infrastructure services necessary to operate at the airport.
(138) The Commission considers that there is no element in the file that would require
        deviating from the Commission's past practice for the purposes of this Decision.
        Relevant geographic market
(139) In its prior decisional practice, the Commission has, defined the geographic scope
        of the market for airport infrastructure services as the catchment area of
        individual airports.
(140) The Commission has also considered additional criteria relevant for assessing
        airport substitutability in relation to the market for airport infrastructure services,
        while acknowledging that the airlines' choice of airports ultimately depends on
        passengers' demand. In addition to the catchment area of a particular airport, the
        Commission has notably analysed the capacity constraints for slots and facilities,
        passenger volumes or the positioning of the airport (e.g. a niche airport serving
        high yield time-sensitive passengers or an airport serving mainly leisure, less
        time-sensitive passengers).132
130 See e.g. Cases M.7270 − Český Aeroholding/Travel Service/České aerolinie, paragraph 50; M.7008 –
    Aena International/Axa PE/LLAGL, paragraph 12.
131 See e.g. Case M.7398 − MIRAEL/ Ferrovial/NDH1, paragraph 19.
132 See e.g. Cases M.5652 – GIP/Gatwick Airport, paragraph 14; M.4164 – Ferrovial/Quebec/GIC/BAA,
    paragraphs 15-17; M.3823 – MAG/Ferrovial Aeropuertos/Exeter Airport, paragraphs 16-19.
                                                    27
 ---pagebreak--- (141) The Commission has taken account of all the above-mentioned criteria when
         assessing the geographic scope of the airport infrastructure services markets
         relevant for the assessment of the effects of transfer of slots.133
Substitutability of London Heathrow, Gatwick, City, Stansted, Luton and Southend
airports
(142) VAL, AFKL and Delta each hold slots at Heathrow airport. Virgin Atlantic/Delta
         hold slot at Gatwick, while AFKL holds slot at City.134 The Transaction therefore
         gives rise to an overlap between AFKL and Virgin Atlantic/Delta at Heathrow,
         and on a broader geographic scope comprising at least (i) LHR and (ii) LCY
         and/or LGW.
(143) The question of the catchment area of London airports is addressed in
         section 4.2.1.4. above. From the point of view of passengers, the relevant markets
         consists of flights to/from London Heathrow only or to/from Heathrow, Gatwick
         and City airports.
(144) As regards capacity constraints, these three airports are coordinated (Level 3)
         airports.
(145) In 2018, 78 million passengers used Heathrow airport,135 46.1 million passengers
         travelled to/from Gatwick136 and 4.8 million passengers used City airport.137
(146) As regards positioning, Heathrow is the “world’s busiest international airport”
         and a major international hub for air transport, with more than 81 airlines
         operating 204 destinations.138 Gatwick is used by 50 airlines, which provide “a
         combination of full service, low-cost and charter services” and fly to
         230 destinations.139 While 56% of City airport’s passengers travel for business
         purpose, 44% are leisure passengers. In that regard, City airport “has developed
133 See Cases M.8869 – Ryanair/LaudaMotion, paragraphs 238 et seq., M.8672 – easyJet/Certain Air
    Berlin assets, paragraphs 73 et seq.; M.8633 – Lufthansa/Certain Air Berlin assets, paragraphs 117
    et seq.
134 Form CO, paragraph 300. In addition, none of the Parties holds slots at the other plausible airports.
    Taking account of these airports would therefore dilute the Parties’ slot holdings.
135 Heathrow airport’s “Facts and figures”: https://www.heathrow.com/company/company-news-and-
    information/company-information/facts-and-figures .
136 Gatwick Key Facts https://www.gatwickairport.com/business-community/about-gatwick/company-
    information/gatwick-by-numbers/ .
137 London City Airport’s website https://www.londoncityairport.com/media-centre/passengers-up-by-6-
    4-in-2018-to-4-8m .
138 Heathrow airport’s “Facts and figures”: https://www.heathrow.com/company/company-news-and-
    information/company-information/facts-and-figures                        and              “History”
    https://www heathrow.com/company/company-news-and-information/company-information/our-
    history .
139 Gatwick Key Facts https://www.gatwickairport.com/business-community/about-gatwick/company-
    information/gatwick-key-facts/ .
                                                        28
 ---pagebreak---          an attractive mix of airlines and destinations with 11 airline customers […]
         serving 43 different destinations (11 UK, 34 European and 1 US destination)”.140
(147) Considering that Heathrow, City and Gatwick have different positioning and
         strategy, the Commission concludes that, for the purpose of this Decision, the
         geographic scope of the market for the provision of airport infrastructure services
         to airlines is limited to Heathrow airport.141
Substitutability of Manchester, Liverpool and Leeds-Bradford airports
(148) Virgin Atlantic/Delta and AFKL hold slots at Manchester airport. The
         Transaction therefore gives rise to an overlap between Virgin Atlantic/Delta and
         AFKL’s slot portfolios. […].142
(149) As regards catchment area, Manchester, Liverpool and Leeds airports are each all
         located within 100 km/1 hour driving time from Manchester city centre.
(150) In previous decisions, the Commission considered that Manchester and Liverpool
         or Manchester, Liverpool and Leeds airports could belong to the same market in
         respect of certain short-haul routes.143
(151) As regards capacity constraints, Manchester airport is a coordinated (Level 3)
         airport during both IATA Seasons, while Liverpool and Leeds airports are both
         schedules facilitated airports144 (Level 2)145 during both IATA Seasons.
(152) As regards positioning and passenger volumes, Manchester serves in particular
         full service carriers. It is used by 70 airlines serving 220 destinations. The number
         of passengers at Manchester airport reached 59 million in 2018. Leeds and
         Liverpool are mainly used by low-cost carriers such as Ryanair and easyJet (at
140 2018                             LCY                          Customer                           Profile:
    https://assets.ctfassets net/ggj4kbqgcch2/7KiRJ9oud2wEsKyAcSie60/66c269783be6dcbc5d604a512af
    57364/2018 LCY Customer Profile.pdf .
141 For the sake of completeness, the Parties have provided their slot holding for all plausible airport
    combination and submit that the competitive assessment concerning their slot holding at LHR is valid
    under any plausible market definition (Form CO, paragraph 300).
142 […].
143 See e.g. Case M.6663 – Ryanair/Aer Lingus III, paragraph 238.
144 Under the Slot Regulation, a schedules facilitated airport is "an airport where there is potential for
    congestion at some periods of the day, week or year which is amenable to resolution by voluntary
    cooperation between air carriers and where a schedules facilitator has been appointed to facilitate the
    operations of air carriers operating services or intending to operate services at that airport."
145 Under the 8th Edition of Worldwide Slot Guidelines issued by IATA (effective 1 January 2017), a
    Level 2 airport "is one where there is potential for congestion during some periods of the day, week or
    season, which can be resolved by schedule adjustments mutually agreed between the airlines and
    facilitator." A Level 2 airport under the IATA Worldwide Slot Guidelines corresponds to a schedules
    facilitated airport under the Slot Regulation.
                                                         29
 ---pagebreak---          Liverpool only).146 3.6 million passengers travelled to/from Leeds airport,               147
         compared to 5.1 million to/from Liverpool airport. 148
(153) Considering that (i) only Manchester airport is a coordinated airport, and
         (ii) Manchester airport has a different positioning and market strategy, the
         Commission concludes that, for the purpose of this Decision, the geographic
         scope of the market for the provision of airport infrastructure services to airlines
         is limited to Manchester airport.
         Conclusion
(154) For the purpose of this Decision, the Commission will assess the effects of the
         Transaction on the market for the provision of airport infrastructure services to
         airlines.
(155) For the purpose of this Decision, the Commission considers that the geographic
         scope of the market for airport infrastructures services in London is London
         Heathrow airport and the geographic scope of airport infrastructure services in
         Manchester is limited to Manchester airport.
4.2.3. Air transport services of cargo
4.2.3.1.           Relevant product market
(156) In prior decisions, the Commission considered a market for air transport of cargo
         including all kinds of transported goods provided by all types of air cargo
         carriers,149 without any further subdivision to be made according to the nature of
         the goods transported (for example, dangerous or perishable goods) or the type of
         air cargo carrier.150
(157) In fact, the Commission has concluded that four types of air cargo carriers,
         namely (i) cargo airlines with dedicated freighter planes; (ii) airlines with only
         belly space cargo capacity on passenger flights; (iii) combination airlines
         (i.e. airlines with both dedicated freighter airplanes and belly space cargo
146 Leeds airport website: https://www.leedsbradfordairport.co.uk/our-destinations/airlines.
147 Leeds airport’s Strategic Development Plan, available
    https://www.leedsbradfordairport.co.uk/media/2522/masterplan-2017-update.pdf .
148 https://www.liverpoolairport.com/news/2019/01/double-celebration-for-ljla-with-growing-passenger-
    numbers-and-the-uk-s-best-on-time-performance .
149 Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraph 37; M. 6828 – Delta Airlines/ Virgin
    Group / Virgin Atlantic Limited, paragraph 76; M.6447 – IAG/bmi, paragraph 92; M.5747 -
    Iberia/British Airways, paragraph 40.
150 M. 6828 – Delta Airlines/ Virgin Group / Virgin Atlantic Limited, paragraphs 73-74; M.6447 –
    IAG/bmi, paragraphs 91-92; M.5747 – Iberia/British Airways, paragraph 40.
                                                       30
 ---pagebreak---         capacity); and (iv) integrators, compete with each other for business with the
        same kinds of customers.151
(158) Based on the Commission’s prior decisions, the O&D approach to market
        definition is not appropriate for air cargo transport services because cargo is (i) in
        principle less time-sensitive than passengers, and (ii) usually transported “behind”
        and “beyond” the points of origin and destination by trans-modal transport
        methods and thus can be routed via a higher number of stops than passengers.152
        Consequently, the Commission considers that a wider market for air transport of
        cargo exists as, unlike passengers, cargo can be transported with a higher number
        of stopovers and therefore any one-stop route is a substitute for any non-stop
        route.153
(159) In addition, according to the Commission's precedents, cargo transport markets
        should be assessed on a unidirectional basis, due to differences in demand at each
        end of the route.154
(160) The Parties agree with the Commission's decision-making practice.155
(161) Therefore, in line with its prior decisional practice, the Commission will assess
        the effects of the Transaction on a broader market for air transport of cargo
        encompassing all types of air cargo carriers and including all kinds of transported
        goods on a unidirectional basis.
4.2.3.2.          Relevant geographic market
(162) In prior decisions, the Commission defined the market in intra-European routes of
        air cargo transport as European-wide.156 As regards intercontinental routes, the
        Commission established that catchment areas at each end of the route broadly
        correspond to continents where local infrastructure is adequate to allow for
        onward connections (for example, by road, train, or inland waterways, etc.), such
        as Europe and North America. As regards continents where local infrastructure is
151 M. 6828 – Delta Airlines/ Virgin Group / Virgin Atlantic Limited, paragraph 75; M.6447 – IAG/bmi,
    paragraph 89; M.5747 – Iberia/British Airways, paragraph 38.
152 Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraph 38; M.6828 – Delta Airlines/ Virgin
    Group / Virgin Atlantic Limited, paragraph 72; M.6447 – IAG/bmi, paragraph 87; M.5747 –
    Iberia/British Airways, paragraph 36.
153 Cases M.6828 – Delta Airlines/ Virgin Group / Virgin Atlantic Limited, paragraph 73; M.6447 –
    IAG/bmi, paragraph 88; M.5747 – Iberia/British Airways, paragraph 37.
154 Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraph 39; M.6828 – Delta Airlines/ Virgin
    Group / Virgin Atlantic Limited, paragraph 77; M.6447 – IAG/bmi, paragraph 90; M.5747 –
    Iberia/British Airways, paragraph 39.
155 Form CO, paragraphs 1418 and 1420.
156 Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraph 39; M.6447 – IAG/bmi, paragraph 93;
    M.5747 – Iberia/British Airways, paragraph 41.
                                                      31
 ---pagebreak---          less developed, the relevant catchment area has been considered the country of
         destination.157
(163) The Parties agree with the Commission's previously established geographic
         definition.
(164) Therefore, in line with its prior decisional practice, the Commission will assess
         the effects of the Transaction on a continent-to-continent and continent-to-country
         basis as the case may be. The Transaction gives rise to the following affected
         cargo flows: EEA - North America (USA & Canada), North America (USA &
         Canada) - EEA, Mexico - EEA, UK - North America (USA & Canada), North
         America (USA & Canada) - UK, Mexico - UK, UK - Mexico, EEA - Caribbean,
         Caribbean - EEA, EEA - Cuba, Cuba - EEA, EEA - South Africa, South Africa -
         EEA, EEA - Nigeria, Nigeria - EEA.
4.2.4. Maintenance, repair and overhaul (“MRO”) services
4.2.4.1.          Relevant product market
(165) In prior decisions, the Commission distinguished four separate segments within
         the MRO market based on the part of the aircraft to be serviced and the level of
         service required, namely (i) line maintenance (minor checks carried out on
         aircraft and performed at the different airports), (ii) heavy maintenance
         (comprehensive inspection and overhaul of the aircraft, for which the aircraft is
         taken out of service), (iii) engine maintenance, and (iv) components maintenance
         (inspection, repair and overhaul of specific aircraft components).158 The
         Commission also considered but ultimately left the question open, whether a
         distinction between commercial and business aviation is appropriate.159 It
         moreover noted that line maintenance and heavy maintenance can be further
         subdivided according to nature and frequency of the checks involved (A, B, C and
         D-checks).160
157 Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraph 39; M.6828 – Delta Airlines/ Virgin
    Group / Virgin Atlantic Limited, paragraph 79; M.6447 – IAG/bmi, paragraph 94 ; M.5747 –
    Iberia/British Airways, paragraph 42.
158 Cases M.8425 – Safran/Zodiac Aerospace, paragraph 289; M.6447 – IAG/bmi, paragraph 105; M.6554
    – EADS/STA/Elbe Flugzeugwerke JV, paragraph 25; M.6410 – UTC/Goodrich, paragraph 174; M.5747
    – Iberia/British Airways, paragraph 48; M.3374 – SR Technics/FLS Aerospace, paragraph 9; M.3280 –
    Air France/KLM, paragraph 39.
159 Cases M.8425 – Safran/Zodiac Aerospace, paragraph 289.
160 Cases M.8425 – Safran/Zodiac Aerospace, paragraph 289; M.6554 – EADS/STA/Elbe Flugzeugwerke
    JV, paragraph 25; M.6410 – UTC/Goodrich, paragraph 174; M.3280 – Air France/KLM, paragraph 39.
    An A-check is performed approximately every 800 flight hours and requires around 200-300 man-
    hours to complete. Bchecks are performed approximately every 4-6 months and are usually performed
    within 3 days at an airport hangar. C-checks are performed approximately every 18 to 24 months or
    after a specific amount of actual Flight Hours as defined by the manufacturer. D-checks/structural
    checks are the most comprehensive and demanding checks, since the entire aircraft structure is taken
    apart for inspection and overhaul. Intermediate structural checks occur after 5-6 years and heavy
    structural checks occur after 10- 12 years. Such checks will usually demand around 15,000 to 20,000
    man-hours and around 1 month to complete at suitably equipped maintenance bases.
                                                       32
 ---pagebreak--- (166) The Parties submit that the precise scope of the product market definition for
        MRO can be left open as no serious doubts would arise under any plausible
        market definition. However, in line with the Commission’s decisional practice,
        they provided data for each MRO segment and notably for line maintenance
        services where the Parties’ activities overlap.
(167) In light of the above, the Commission concludes that the precise scope of the
        product market definition for MRO services can be left open since the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market under any plausible product market definition.
4.2.4.2.         Relevant geographic market
(168) In prior decisions, the Commission considered that the geographic scope of the
        market for heavy maintenance services might be at least EEA-wide, whereas line
        maintenance services could be local in scope and even limited to the airport
        where services are provided.161 Indeed, line maintenance services are usually
        carried out at the airport of origin or destination, or at the aircraft’s operational
        base.162 As regards to engine maintenance services and components maintenance
        services, the Commission has considered these services to be worldwide in
        scope.163
(169) The Parties submit that the precise scope of the geographic market definition for
        all MRO segments can be left open.
(170) For the assessment of the Transaction, the Commission concludes that the precise
        geographic market definition for MRO services can be left open since the
        Transaction does not raise serious doubts as to its compatibility with the internal
        market under any plausible geographic market definition.
4.2.4.3.         Conclusion
(171) Given that the Transaction does not raise serious doubts as to its compatibility
        with the internal market in respect of MRO services under any plausible market
        definition, the Commission concludes that the precise product and geographic
        market definitions can be left open.
161 Cases M.7545 – IAG/Aer Lingus, paragraph 121; M.6554 – EADS/STA/Elbe Flugzeugwerke JV,
    paragraph 26; M.6447 – IAG/bmi, paragraph 108; M.3374 – SR Technics/FLS Aerospace,
    paragraph 12.
162 Cases M.7545 – IAG/Aer Lingus, paragraph 121; M.6554 – EADS/STA/Elbe Flugzeugwerke JV,
    paragraph 26; M.3374 – SR Technics/FLS Aerospace, paragraph 12; M.3280 – Air France/KLM,
    paragraph 40.
163 Cases M.7545 – IAG/Aer Lingus, paragraph 121; M.6554 – EADS/STA/Elbe Flugzeugwerke JV,
    paragraph 26; M.6447 – IAG/bmi, paragraph 108.
                                                   33
 ---pagebreak--- 5.   COMPETITIVE ASSESSMENT
5.1.    Passenger air transport services under the O&D approach
5.1.1. Analytical framework
5.1.1.1.         Alliances and profit-sharing joint ventures
(172) Air France and Delta were founding members of the SkyTeam alliance in 2001.
        Since 2004, shortly after the merger of Air France and KLM, KLM has also been
        a full member of the SkyTeam alliance.164 Consistent with the Commission’s
        practice, alliance partners are generally not considered as forming a single
        economic entity for the purpose of determining affected markets.165
(173) Delta, Air France-KLM and Alitalia are parties to a revenue-sharing joint venture
        (or “metal neutral joint venture”), covering routes between Europe166 and North
        America (the “TATL” Joint Venture”).167
(174) Delta and Virgin Atlantic are parties to a metal neutral joint venture covering
        direct routes between the United Kingdom and North America (the “DL-VS Joint
        Venture”).168
(175) Delta, AFKL, Alitalia and Virgin Atlantic are also parties to a Coordination
        Agreement, covering routes between the United Kingdom and North America.169
        By final order issued on 23 September 2013, the American Department of
        Transportation granted antitrust immunity with respect to the activities
        contemplated under the DL-VS Joint Venture and the Coordination
        Agreement.170
(176) Metal neutral joint ventures involve extensive cooperation such as revenue-
        sharing and joint management of schedules, pricing and capacity.171
(177) There are two other metal neutral joint ventures on transatlantic routes, namely
        (i) the oneworld Transatlantic Joint Business Agreement entered into by
        American Airlines, British Airways (BA) and Iberia (IB) and Finnair (AY)
164 Form CO, paragraph 11.
165 See e.g. Case M.7541 – IAG/Aer Lingus, paragraph 145.
166 For the purpose of this Decision, it is understood that routes to/from the United Kingdom are not
    covered by the TATL Joint Venture.
167 Form CO, paragraph 402.
168 Form CO, paragraph 403.
169 Form CO, paragraphs 13 and 402.
170 Form CO, paragraph 13.
171 See e.g. Case M. 7541 – IAG/Aer Lingus, paragraph 146.
                                                      34
 ---pagebreak---         (“oneworld”) and (ii) the Star Alliance A++ Joint Venture of United (UA),
        Lufthansa (LH) and Air Canada (AC) (“Star Alliance”).
(178) Consistent with the Commission’s approach, each of the metal neutral joint
        ventures are treated as a single entity for the purposes of assessing market shares
        on all relevant routes.172
5.1.1.2.          Methodology used to calculate market shares
(179) The Commission has previously used Marketing Information Data Tapes
        (“MIDT”) data173 and PaxIS PLUS data174 as appropriate proxies to estimate
        market shares for air transport of passengers.
(180) The Parties have first submitted data on market size and market shares for each
        relevant O&D on the basis of MIDT while recognising that MIDT has certain
        limitations: MIDT data is based on bookings made through the Global
        Distribution Systems (GDS) and does not capture the direct sales made direct by
        airline to their customers.175
(181) To take account of the increasing number of direct sales, the Commission has
        asked the Parties in the pre-notification phase to use a data source that captures
        direct sales by the Parties and their competitors.
(182) The Parties submitted that none of the Parties subscribes to PaxIS PLUS and
        proposed not to use PaxIS PLUS since PaxIS PLUS [details about usability of
        PaxIS PLUS in the context of the case at hand].176
(183) Instead of PaxIS Plus, the Parties proposed to use Direct Data Solutions (“DDS”)
        data, another database developed by IATA.177 The Parties explained that DDS
        includes actual bookings data from GDS and ACR data (US country of sale
        agency settlement data) as well as contributed data from the carriers subscribing
        to it. IATA would apply an algorithm to estimate volumes for carriers that do not
        contribute data or do not allow for their contributed data to be published.
        According to the Parties, DDS is intended to capture all passenger bookings.178
172 See e.g. Cases M. 7541 – IAG/Aer Lingus, paragraph 147, M.6828 – Delta Air Lines/Virgin
    Group/Virgin Atlantic Limited, paragraph 87.
173 See e.g. Cases M.6447 – IAG/bmi; M.5889 – United Airlines/Continental Airlines; M.5747 –
    Iberia/British Airways.
174 See e.g. Cases M.7333 – Alitalia/Etihad, paragraphs 135 et seq.; M.7541 – IAG/Aer Lingus,
    paragraphs 135 et seq.
175 Form CO, paragraph 410 et seq.
176 Form CO, paragraph 417.
177 Form CO, paragraph 418.
178 See email of Parties to EC case team of 29 November 2018.
                                                     35
 ---pagebreak---          The Parties submitted data on market size and market shares for each relevant
         O&D on the basis of DDS for the last two IATA Seasons.179
(184) The Parties have also submitted their actual bookings data for the last two IATA
         Seasons and submit that the DDS data is often similar to the actual sales data in
         terms of number of bookings.180
(185) The Commission is of the view that DDS data are the best proxy to estimate the
         market shares and are appropriate for the assessment of the affected routes in this
         case.
5.1.1.3.           “Filters”
(186) Consistent with previous Commission practice,181 the Parties have applied the
         following filters to exclude likely unproblematic routes from the scope of its
         investigation (all criteria must have been met in the four last completed IATA
         Seasons and for all passenger segments for a route to be excluded under the
         filters):182
                   (a) For direct/indirect overlaps:
                       (i) the Parties’ combined market share was below 25%; or
                       (ii) one of the Parties had a market share below 2%;183 or
                       (iii) short-haul routes where the total share of indirect operations in the
                            relevant market was below 10%; or
                       (iv) at least one end of the city pair is outside the EU and the total
                            annual traffic was below 30 000 passengers; or
179 Form CO, paragraph 420.
180 Form CO, paragraph 423.
181 See e.g. Cases M.7541 – IAG/Aer Lingus, paragraphs 151 et seq.; M.7333 – Alitalia/Etihad,
    paragraphs 171 et seq.; M.6828 – Delta Air Lines/Virgin Group/Virgin Atlantic Limited, footnote 76;
    M.6607 – US Airways/American Airlines, paragraph 32.
182 The Parties have applied the filters to the MIDT data and filtered out around 700 routes. Considering
    that the Commission used MIDT data as an appropriate data source in several previous cases and
    considering the Parties submission that a comparison of the MIDT and the DDS shows that the DDS
    data is often similar to the MIDT data in terms of the Parties’ combined market shares and the market
    increment, the Commission has accepted the routes filtered out based on MIDT data.
183 The Parties have treated the parties to each of the TATL Joint venture and the DL-VS Joint Venture as
    a single entity: for the routes between the UK and North America, Delta and Virgin Atlantic were
    treated as a single entity and for routes between Europe (excluding the UK) and North America, Delta
    and AFKL were treated as a single entity. For the other O&Ds, each of AFKL, DL and VAL’s market
    share was analysed separately (see Form CO, paragraph 16 and footnote 18). Therefore, for the
    purpose of applying this filter (“one of the Parties had a market share below 2%”), the market share of
    either each of the Parties, or of the TATL Joint Venture, or the DL-VS Joint Venture has been taken
    into account, depending on the route (see Annex B.06).
                                                          36
 ---pagebreak---                        (v) the route was below the HHI thresholds of paragraph 20 of the
                            Horizontal Merger Guidelines.184
                   (b) For indirect/indirect overlaps:
                       (i) the Parties’ combined market share was below 25%; or
                       (ii) one of the Parties had a market share below 2%;185 or
                       (iii) as regards short-haul routes where the total annual traffic was
                            below 15 000 passengers or as regards long-haul routes where the
                            total annual traffic was below 30 000 passengers; or
                       (iv) the route was below the HHI thresholds of paragraph 20 of the
                            Horizontal Merger Guidelines.
(187) As a result of the above criteria, the Parties submitted that 32 routes
         (direct/indirect overlaps and indirect/indirect overlaps) would be affected by the
         Transaction.
5.1.1.4.           Closeness of competition
(188) The Transaction gives rise to 19 affected horizontal direct/indirect overlaps. On
         eight affected routes from the United Kingdom to North America, Virgin
         Atlantic/Delta operates a direct service, while AFKL operates an indirect service.
         These routes are: London-Seattle, Manchester-New York, London-Atlanta,
         London-Minneapolis, London-Detroit, Edinburgh-New York, London-Portland,
         Manchester-San Francisco. On seven affected routes from Continental
         Europe/Ireland to North America, AFKL/Delta operates a direct service, while
         Virgin Atlantic operates an indirect service. These routes are: Amsterdam-Los
         Angeles, Amsterdam-Miami, Amsterdam-San Francisco, Paris-San Francisco,
         Paris-Boston, Nice-New York and Dublin-New York. On three affected routes
         (London-Lagos, London-Shanghai, London-Havana), Virgin Atlantic operates a
         direct service, while AFKL operates an indirect service and on one affected route,
         Virgin Atlantic operates a direct service, while AFKL and Delta operate an
         indirect service (London-Montego Bay).
(189) The Commission will first assess the closeness of competition in general between
         the Parties on the 19 horizontal direct/indirect overlap routes, before assessing the
         effects of the Transaction on these routes.
(190) For the reasons explained below, the affected direct/indirect overlap routes will
         not give rise to competition concerns. If direct and indirect flights were to be
184 Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
    concentrations between undertakings, OJ C31, 5.2.2004, p.5.
185 The Parties have treated the parties to each of the TATL Joint venture and the DL-VS Joint Venture as
    a single entity: for the routes between the UK and North America, Delta and Virgin Atlantic were
    treated as a single entity and for routes between Europe (excluding the UK) and North America, Delta
    and AFKL were treated as a single entity. For the other O&Ds, the Parties’ market share was analysed
    separately, see Form CO, paragraph 16 and footnote 18.
                                                         37
 ---pagebreak---         considered as two separate markets, there would be no affected overlap routes as
        a result of the Transaction. Therefore, it is not necessary to reach a conclusion on
        whether direct and indirect passenger air transport services constitute part of the
        same market, as it would not change the conclusion of the competitive assessment
        as already stated in section 4.2.1.2 above.
(191) The Commission has in previous airline cases analysed the closeness of
        competition between the parties to the concentration.186 The concept of
        “closeness of competition” may play an important role in better understanding the
        competitive constraint exerted by different competitors on each other in
        differentiated markets such as airline markets.187 It is therefore relevant to assess
        whether a) Virgin Atlantic/Delta’s direct service and AFKL’s indirect service on
        the routes from the United Kingdom to North America, b) AFKL/Delta’s direct
        service and Virgin Atlantic’s indirect service on the routes from Continental
        Europe/Ireland to North America and c) Virgin Atlantic’s direct services and
        AFKL’s and Delta’s indirect services on the routes from London to certain rest of
        the world-destinations would be considered as close substitutes.
(192) As explained above, the market investigation gave mixed results concerning the
        question if of whether passengers consider direct flights as an alternative to
        indirect flights: while the majority of competitors (airlines) considered this to be
        the case, the views of the responding customers (travel agencies and corporate
        customers) were mixed.188
(193) The majority of customers (travel agencies and corporate customers) stated that
        they sell tickets to both direct and indirect flights to their customers and that they
        buy tickets for both direct and indirect flights on the affected direct/indirect
        overlap routes.189 However, around 1/3 of the corporate customers responding to
        the market investigation explained that they generally only buy tickets to direct
        flights.190 When asked which criteria would make customers choose an indirect
        flight over a direct flight, respondents to the Commission’s market investigation
        identified most frequently the price difference, followed by the schedule of the
        respective flight and the total travel duration.191
(194) The majority of respondents to the market investigation (competitors, travel
        agents, corporate customers) indicated that none of the Parties are each other’s
186 See e.g. Cases M.7541 - IAG/Aer Lingus, paragraphs155 et seq.; M.6828 - Delta Air Lines/Virgin
    Group/Virgin Atlantic Limited, paragraphs 168 et seq.
187 See paragraphs 28-30 of the Horizontal Merger Guidelines.
188 Replies to eQ1 – Questionnaire 1 to competitors, question 9; eQ2 – Questionnaire to corporate
    customers and travel agencies, question 4.
189 Replies to eQ2 – Questionnaire 2 to corporate customers and travel agencies, question 5 and 6.
190 Replies to eQ2 – Questionnaire 2 to corporate customers and travel agencies, question 6.
191 Replies to eQ1 – Questionnaire 1 to competitors, question 3; eQ2 – Questionnaire 2 to corporate
    customers and travel agencies, question 7.
                                                       38
 ---pagebreak---         closest competitor on any of the 19 affected direct/indirect overlap routes.192 In
        the majority of cases, British Airways, American Airlines, United Airlines or
        Lufthansa was identified as either Virgin Atlantic’s, AFKL’s or Delta’s closest
        competitor.
(195) In the light of the above, the Commission considers that none of the Parties are
        each other’s close competitor on the 19 direct/indirect overlap routes.
5.1.1.5.          Significant competitive pressure from other airlines
(196) The market investigation in previous cases has shown that indirect routes are
        often modified from one IATA Season to the next and that price increases or
        reductions of capacity could be countered by competitors who could start
        operating on these routes more easily than on direct/direct overlap routes which
        require the deployment of aircraft dedicated to the O&D route.193 Therefore, in
        general, any attempt by the Parties to raise prices on routes, where the overlap is
        between direct/indirect services, would likely be short-lived and ineffective. This
        was also confirmed by the market investigation. The majority of respondents
        having expressed a view consider that there will be sufficient competition to
        prevent the Parties from raising prices on all affected direct/indirect overlap
        routes. The Commission thus considers that other carriers like the members of the
        Star Alliance or oneworld would exert significant competitive pressure on the
        Parties post-Transaction on the affected direct/indirect overlap routes.
5.1.1.6.          De minimis increment
(197) In previous cases, the Commission has considered increments up to 5% as low
        increments on direct/indirect overlap routes.194 In line with its prior decisional
        practice, the Commission considers that, also taking into account that other
        airlines would exert competitive pressure on the Parties post-Transaction, an
        increment of up to 5% on an affected direct/indirect overlap is de minimis.
5.1.2. Direct/Indirect affected markets between the United Kingdom and North America
(198) As explained in paragraph (178) above, the Commission treats each of the metal
        neutral joint ventures as a single entity for the purpose of assessing the market
        shares on all relevant routes. Consistent with the approach, Delta and Virgin
        Atlantic are treated as a single entity on every route between the United Kingdom
        and North America.
5.1.2.1.          London – Seattle
(199) In Summer 2017 IATA Season, [100.000-200.000] passengers travelled between
        London Heathrow and Seattle airports and [100.000-200.000] passengers flew
192 Replies to eQ1 – Questionnaire 1 for Competitors, question 17; eQ2 – Questionnaire 2 to corporate
    customers and travel agencies, question 11.
193 See case M.7333 – Alitalia/Etihad, paragraph 279.
194 See e.g. case M.7541 – IAG/Aer Lingus, paragraphs 412 et seq.
                                                      39
 ---pagebreak---                 between London Heathrow, Gatwick and City and Seattle airports.195 In Winter
                2017/2018 IATA Season, [60.000-80.000] passengers travelled between London
                Heathrow and Seattle and [80.000-100.000] passengers flew between London
                Heathrow, Gatwick and City and Seattle airports.196
      (200) In Summer 2017 and Winter 2017/2018 IATA Seasons, Virgin Atlantic/Delta
                operated direct services on the LHR-SEA airport pair, while AFKL offered only
                indirect services on this airport pair via Paris-Charles de Gaulle or Amsterdam
                airports.
      (201) As explained in section 4.2.1.4 above, the Commission will assess the effect of
                the Transaction on the following airport pairs: LHR-SEA and LHR/LGW/LCY-
                SEA.
      (202) The table below provides the market shares of the Parties on the LHR-SEA
                airport pair.
      Table 1 - Market shares of the Parties on LHR-SEA
                            Summer 2017 IATA Season                            Winter 2017/2018 IATA Season
                   AFKL          DL           VS         Combined      AFKL            DL            VS          Combined
TS                [0-5]%      [10-20]%     [10-20]%     [30-40]%      [0-5]%       [10-20]%      [20-30]%       [30-40]%
NTS               [0-5]%      [10-20]%     [30-40]%     [50-60]%      [0-5]%       [10-20]%      [30-40]%       [50-60]%
All passengers    [0-5]%      [10-20]%     [20-30]%     [40-50]%      [0-5]%       [10-20]%      [30-40]%       [50-60]%
      Source: Form CO, paragraph 460.
      (203) The increment brought about by the Transaction is de minimis in both IATA
                Seasons and under any plausible market definition. With regard to TS passengers,
                the increment attributable to the Transaction would be [0-5]% in Summer IATA
                Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
                increment attributable to the Transaction would be [0-5]% in Summer IATA
                Season and [0-5]% in Winter IATA Season.197
      (204) The table below provides the market shares of the Parties on the
                LHR/LGW/LCY-SEA airport pair.
      195  Seattle-Tacoma Airport (SEA).
      196  Form CO, paragraphs 449 and 460.
      197 The Commission has applied the filters described in section 5.1.1.3 above on the basis of the MIDT
           data that were provided for the four last IATA Seasons rather than DDS data available only for the
           past two IATA Seasons. Therefore, the London – Seattle route is considered as “affected” although it
           might have been considered as “unproblematic”, should AFKL’s market shares have been below 2% in
           the past four IATA Seasons.
                                                            40
 ---pagebreak---       Table 2 - Market shares of the Parties on LHR/LGW/LCY-SEA
                         Summer 2017 IATA Season                            Winter 2017/2018 IATA Season
                 AFKL          DL            VS         Combined     AFKL        DL            VS         Combined
TS              [0-5]%     [10-20]%       [10-20]%     [30-40]%     [0-5]%    [10-20]%    [20-30]%       [30-40]%
NTS             [0-5]%     [10-20]%       [20-30]%     [40-50]%     [0-5]%    [10-20]%    [20-30]%       [30-40]%
All
passengers      [0-5]%     [10-20]%       [20-30]%     [40-50]%     [0-5]%    [10-20]%    [20-30]%       [30-40]%
      Source: Form CO, paragraph 449.
      (205) The increment brought about by the Transaction is de minimis in both IATA
               Seasons and under any plausible market definition. With regard to TS passengers,
               the increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
               increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season.
      (206) In addition, the Parties will remain constrained by the competition of the year-
               round direct service of oneworld as well as the daily all-year round indirect
               service operated by oneworld, Star Alliance and Icelandair on LHR-SEA.198 In
               addition, Norwegian operated a direct service on the LGW-SEA airport pair in
               Summer 2017 IATA Season.199
      (207) Finally, the majority of respondents to the market investigation having expressed
               a view considers that there will be sufficient competition on the route to prevent
               the Parties’ from raising prices on the route post-Transaction.200
      (208) In light of the above and of all available evidence, the Commission considers that
               the Transaction does not raise serious doubts as to its compatibility with the
               internal market with respect to the London – Seattle route under any plausible
               market definition.
      5.1.2.2.          Manchester – New York
      (209) In Summer 2017 IATA Season, [200.000-300.000] passengers travelled between
               Manchester and John F. Kennedy airports and [20.000-40.000] passengers flew
               between Manchester and Newark airports.201 In Winter 2017/2018 IATA Season,
               [100.000-200.000]           passengers      travelled     between     Manchester         and
               John F. Kennedy airports while [40.000-60.000] passengers travelled between
               Manchester and Newark airports.202
      198  Form CO, paragraph 441.
      199  Form CO, paragraph 442.
      200  Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
           customers and travel agencies, question 13.
      201  Manchester Airport (MAN).
      202  Form CO, paragraphs 480 and 486.
                                                             41
 ---pagebreak---       (210) In Summer 2017 and Winter 2017/2018 IATA Seasons, Virgin Atlantic/Delta
               operated direct services on the MAN-JFK airport pair, while AFKL offered only
               indirect services on this airport pair via Paris-Charles de Gaulle or Amsterdam
               airports.
      (211) As explained in section 4.2.1.4 above, the Commission will assess the effect of
               the Transaction on the following airport pairs: MAN-JFK/EWR and
               MAN-JFK.203
      (212) The table below provides the market shares of the Parties on the MAN-JFK/EWR
               airport pair.
      Table 3 - Market shares of the Parties on MAN-JFK/EWR204
                             Summer 2017 IATA Season                            Winter 2017/2018 IATA Season
                   AFKL             DL           VS         Combined      AFKL         DL          VS         Combined
TS                [0-5]%       [10-20]%       [30-40]%     [50-60]%      [0-5]%     [5-10]%    [30-40]%      [40-50]%
NTS               [0-5]%        [5-10]%       [20-30]%     [20-30]%      [0-5]%      [0-5]%    [10-20]%      [20-30]%
All passengers    [0-5]%        [5-10]%       [20-30]%     [20-30]%      [0-5]%      [0-5]%    [10-20]%      [20-30]%
      Source: Form CO, paragraph 480.
      (213) The increment brought about by the Transaction is de minimis in both IATA
               Seasons and under any plausible market definition. With regard to TS passengers,
               the increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
               increment attributable to the Transaction would be [0-5]% in Summer 2017 IATA
               Season and [0-5]% in Winter 2017/2018 IATA Season.
      (214) The table below provides the market shares of the Parties on the MAN-JFK
               airport pair.
      203  The Parties note that they have a small number of indirect bookings on the MAN-EWR airport pair in
           both Summer 2017 and Winter 2017/2018 IATA Seasons (Form CO, footnote 26). The effect of the
           Transaction on the MAN-EWR airport (indirect/indirect overlap) pair will not be further assessed as
           the Transaction is unlikely to give rise to competition concerns given that the Parties’ combined
           market shares will be below [5-10]% under any plausible market definition (Form CO, paragraph 488).
      204  Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (Form CO,
           paragraph 480).
                                                              42
 ---pagebreak---       Table 4 - Market shares of the Parties on MAN-JFK205
                           Summer 2017 IATA Season                          Winter 2017/2018 IATA Season
                  AFKL           DL            VS       Combined      AFKL          DL           VS         Combined
TS               [0-5]%      [10-20]%      [40-50]%    [50-60]%      [0-5]%     [10-20]%     [40-50]%      [50-60]%
NTS              [0-5]%       [5-10]%      [20-30]%    [30-40]%      [0-5]%      [5-10]%     [20-30]%       [30-40%
All passengers   [0-5]%       [5-10]%      [20-30]%    [30-40]%      [0-5]%      [5-10]%     [20-30]%      [30-40]%
      Source: Form CO, paragraph 486.
      (215) The increment brought about by the Transaction is de minimis in both IATA
               Seasons and under any plausible market definition. With regard to TS passengers,
               the increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
               increment attributable to the Transaction would be [0-5]% in Summer 2017 IATA
               Season and [0-5]% in Winter 2017/2018 IATA Season.
      (216) In addition, the Parties will remain constrained by the competition of the daily all-
               year round direct service operated by Star Alliance on the MAN-EWR airport
               pair.206 With respect to indirect flights, oneworld and Star Alliance, Aer Lingus
               and Icelandair operate on the MAN-JFK and MAN-EWR airport pairs all-year
               round.207
      (217) Thomas Cook/Condor also provides three to four weekly direct services all-year
               round on the MAN-JFK airport pair.208 The Parties consider that Thomas
               Cook/Condor exert a meaningful competitive constraint on the Parties post-
               Transaction, particularly in the non-time-sensitive segment of the market.209
      (218) Irrespective of whether seats sold by Thomas Cook/Condor are included or not, in
               both IATA Seasons, under any plausible market definition, the increment brought
               about by the Transaction is de minimis. Finally, the majority of respondents to the
               market investigation having expressed a view considers that there will be
               sufficient competition on the route to prevent the Parties’ from raising prices on
               the route post-Transaction.210
      (219) In light of the above and of all evidence available to it, the Commission considers
               that the Transaction does not raise serious doubts as to its compatibility with the
      205  Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (Form CO,
           paragraph 486).
      206  Form CO, paragraph 479.
      207  Form CO, paragraphs 472-473.
      208  Form CO, paragraph 471.
      209  Form CO, paragraph 477.
      210  Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
           customers and travel agencies, question 13.
                                                           43
 ---pagebreak---                internal market with respect to the Manchester – New York route under any
               plausible market definition.
      5.1.2.3.           London – Atlanta
      (220) In Summer 2017 IATA Season, [100.000-200.000] passengers travelled between
               London Heathrow and Atlanta airports211 and [100.000-200.000] passengers flew
               between London Heathrow, Gatwick and City and Atlanta airports. In Winter
               2017/2018 IATA Season, [80.000-100.000] passengers travelled between London
               Heathrow and Atlanta airports and [80.000-100.000] passengers flew between
               London Heathrow, Gatwick and City and Atlanta airports.212
      (221) In Summer 2017 and Winter 2017/2018 IATA Seasons, Virgin Atlantic/Delta
               operated direct services as well as indirect services on the LHR-ATL airport pair,
               while AFKL offered only indirect services on this airport pair as well as the
               LGW-ATL airport pair via Paris-Charles de Gaulle or Amsterdam airports.
      (222) As explained in section 4.2.1.4 above, the Commission will assess the effect of
               the Transaction on the following airport pairs: LHR-ATL and LHR/LGW/LCY-
               ATL.
      (223) The table below provides the market shares of the Parties on the LHR-ATL
               airport pair.
      Table 5 - Market shares of the Parties on LHR-ATL
                           Summer 2017 IATA Season                     Winter 2017/2018 IATA Season
                 AFKL          DL              VS     Combined   AFKL        DL           VS       Combined
TS              [0-5]%      [40-50]%       [20-30]%  [60-70]%   [0-5]%    [40-50]%    [10-20]%    [50-60]%
NTS             [0-5]%      [40-50]%       [20-30]%  [60-70]%   [0-5]%    [40-50]%    [20-30]%    [70-80]%
All
passengers      [0-5]%      [40-50]%       [20-30]%  [60-70]%   [0-5]%    [40-50]%    [10-20]%    [60-70]%
      Source: Form CO, paragraph 509.
      (224) The increment brought about by the Transaction is de minimis in both IATA
               Seasons and under any plausible market definition. With regard to TS passengers,
               the increment attributable to the Transaction would be [0-5]% in Summer 2017
               IATA Season and [0-5]% in Winter 2017/2018 IATA Season. With regard to
               NTS passengers, the increment attributable to the Transaction would be [0-5]% in
               Summer 2017 IATA Season and [0-5]% in Winter 2017/2018 IATA Season.
      (225) The table below provides the market shares of the Parties on the
               LHR/LGW/LCY-ATL airport pair.
      211  Hartsfield-Jackson Atlanta Airport (ATL).
      212  Form CO, paragraphs 503 and 509.
                                                         44
 ---pagebreak---       Table 6 - Market shares of the Parties on LHR/LGW/LCY-ATL
                           Summer 2017 IATA Season                           Winter 2017/2018 IATA Season
                 AFKL            DL            VS       Combined      AFKL         DL            VS         Combined
TS              [0-5]%       [40-50]%      [20-30]%    [60-70]%      [0-5]%     [40-50]%     [10-20]%      [60-70]%
NTS             [0-5]%       [30-40]%      [20-30]%    [60-70]%      [0-5]%     [40-50]%     [20-30]%      [70-80]%
All
passengers      [0-5]%       [30-40]%      [20-30]%    [60-70]%      [0-5]%     [40-50]%     [10-20]%      [60-70]%
      Source: Form CO, paragraph 503.
      (226) The increment brought about by the Transaction is de minimis in both IATA
               Seasons and under any plausible market definition. With regard to TS passengers,
               the increment attributable to the Transaction was [0-5]% in Summer 2017 IATA
               Season and [0-5]% in Winter 2017/2018 IATA Season. With regard to NTS
               passengers, the increment attributable to the Transaction was [0-5]% in Summer
               2017 IATA Season and [0-5]% in Winter 2017/2018 IATA Season.
      (227) In addition, the Parties will remain constrained by the competition of the daily all-
               year round direct service operated by oneworld on the LHR-ATL airport pair.213
               In addition, oneworld operates an indirect service on the LHR-ATL airport
               pair.214
      (228) Finally, the majority of respondents to the market investigation having expressed
               a view considers that there will be sufficient competition on the route to prevent
               the Parties’ from raising prices on the route post-Transaction.215
      (229) In light of the above and of all evidence available to it, the Commission considers
               that the Transaction does not raise serious doubts as to its compatibility with the
               internal market with respect to the London – Atlanta route under any plausible
               market definition.
      5.1.2.4.          London – Minneapolis
      (230) In Summer 2017 IATA Season, [60.000-80.000] passengers travelled between
               London Heathrow and Minneapolis airports and [60.000-80.000] passengers flew
               between London Heathrow, Gatwick and City and Minneapolis airports.216 In
               Winter 2017/2018 IATA Season, [20.000-40.000] passengers travelled between
               London Heathrow and Minneapolis airports and [20.000-40.000] passengers flew
               between London Heathrow, Gatwick and City and Minneapolis airports.217
      213  Form CO, paragraph 496.
      214  Form CO, paragraph 497.
      215  Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
           customers and travel agencies, question 13.
      216  Minneapolis-Saint Paul Airport (MSP).
      217  Form CO, paragraphs 528 and 534.
                                                           45
 ---pagebreak---       (231) In Summer 2017 and Winter 2017/2018 IATA Seasons, Virgin Atlantic/Delta
                operated direct services as well as indirect services on the LHR-MSP airport pair,
                while AFKL offered only indirect services on this airport pair via Paris-Charles
                de Gaulle or Amsterdam airports.
      (232) As explained in section 4.2.1.4 above, the Commission will assess the effect of
                the Transaction on the following airport pairs: LHR-MSP and LHR/LGW/LCY-
                MSP.
      (233) The table below provides the market shares of the Parties on the LHR-MSP
                airport pair.
      Table 7 - Market shares of the Parties on LHR-MSP218
                         Summer 2017 IATA Season                                 Winter 2017/2018 IATA Season
                  AFKL         DL              VS         Combined         AFKL           DL            VS         Combined
TS               [0-5]%    [70-80]%         [5-10]%      [80-90]%         [0-5]%      [70-80]%       [5-10]%      [80-90]%
NTS             [5-10]%    [50-60]%        [10-20]%      [70-80]%        [5-10]%      [50-60]%      [10-20]%      [80-90]%
All
passengers      [5-10]%    [50-60]%        [10-20]%      [70-80]%        [5-10]%      [60-70]%      [10-20]%      [80-90]%
      Source: Form CO, paragraph 534.
      (234) The table below provides the market shares of the Parties on the
                LHR/LGW/LCY-MSP airport pair.
      Table 8 - Market shares of the Parties on LHR/LGW/LCY-MSP219
                         Summer 2017 IATA Season                                 Winter 2017/2018 IATA Season
                  AFKL         DL              VS         Combined         AFKL           DL            VS         Combined
TS               [0-5]%    [70-80]%         [5-10]%      [70-80]%         [0-5]%     [70-80]%       [5-10]%       [80-90]%
NTS             [5-10]%    [40-50]%        [10-20]%      [60-70]%        [5-10]%     [50-60]%      [10-20]%       [70-80]%
All
passengers      [5-10]%    [50-60]%        [10-20]%      [70-80]%        [5-10]%     [60-70]%      [10-20]%       [70-80]%
      Source: Form CO, paragraph 528.
      (235) In both IATA Seasons and on both airport pairs, the increment brought about by
                the Transaction is rather limited and does not exceed [5-10]%.220 In the TS
                segment the increment is de minimis (below [0-5]%).
      218  Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (Form CO,
           paragraph 534), in particular, the analysis is valid irrespective of whether these seats are included or
           not.
      219  Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (Form CO,
           paragraph 528), in particular, the analysis is valid irrespective of whether these seats are included or
           not.
                                                                 46
 ---pagebreak--- (236) On both airport pairs, the Parties will remain constrained by the competition of
         other carriers. In particular, Star Alliance, oneworld and Icelandair provide a
         year-round indirect service on the LHR-MSP airport pair; in addition, Icelandair
         provides a year-round indirect service on the LGW-MSP airport pair.
(237) The market shares of the Parties’ competitors are as follows:
Table 9 - Market shares of competitors on LHR -MSP
                                                                     Winter 2017/2018 IATA Season
                           Summer 2017 IATA Season
                      oneworld      Star Alliance   Icelandair    oneworld    Star Alliance  Icelandair
TS                   [10-20]%          [0-5]%        [0-5]%     [10-20]%         [0-5]%       [0-5]%
NTS                   [5-10]%         [5-10]%      [10-20]%      [5-10]%        [5-10]%      [5-10]%
All passengers       [10-20]%         [5-10]%       [5-10]%      [5-10]%        [5-10]%       [0-5]%
Source: Form CO, paragraph 534.
Table 10 - Market shares of competitors on LHR/LGW/LCY-MSP
                                                                     Winter 2017/2018 IATA Season
                           Summer 2017 IATA Season
                       oneworld      Star Alliance   Icelandair   oneworld     Star Alliance  Icelandair
TS                   [10-20]%           [0-5]%      [5-10]%      [10-20]%         [0-5]%       [0-5]%
NTS                   [5-10]%          [5-10]%     [10-20]%       [5-10]%        [5-10]%      [5-10]%
All passengers        [5-10]%          [5-10]%     [10-20]%       [5-10]%        [5-10]%      [5-10]%
Source: Form CO, paragraph 528.
(238) The increment brought about by the Transaction is lower than the market shares
         of the Parties’ biggest competitor post-Transaction (with the exception of the
         NTS market segmentation in Winter 2017/2018 IATA Season on both airport
         pairs, on which the increment is around 1 percentage point higher than the market
         share of the biggest competitor).
(239) As already stated above (Section 5.1.1.5), the Commission considers that other
         carriers like the members of the Star Alliance or oneworld exert significant
         competitive pressure on the Parties post-Transaction on the affected
         direct/indirect overlap routes. Besides, the Parties submit that the market shares
         of Virgin might be overstated as, over the last two seasons, between 40% and
         50% of passengers were connecting at Minneapolis to or from other
         destinations.221
220  When excluding Thomas Cook/Condor’s seats, AFKL’s market shares are slightly higher but below
     [5-10]% in any market definition.
221  Form CO, paragraph 521.
                                                       47
 ---pagebreak--- (240) Finally, the majority of respondents to the market investigation having expressed
         a view considers that there will be sufficient competition on the route to prevent
         the Parties’ from raising prices on the route post-Transaction.
(241) In light of the above and of all evidence available to it, the Commission considers
         that the Transaction does not raise serious doubts as to its compatibility with the
         internal market with respect to the London - Minneapolis route under any
         plausible market definition.
5.1.2.5.         London – Detroit
(242) In Summer 2017 IATA Season, [40.000-60.000] passengers travelled between
         London Heathrow and Detroit airports222; [40.000-60.000] passengers travelled
         between London Heathrow, Gatwick and City and Detroit airports. In Winter
         2017/2018 IATA Season, [20.000-40.000] passengers travelled between London
         Heathrow and Detroit airports; [20.000-40.000] travelled between London
         Heathrow, Gatwick and City and Detroit airports.223
(243) In both Summer 2017 and Winter 2017/2018 IATA Seasons, Virgin
         Atlantic/Delta operated direct services on the LHR-DTW airport pair, as well as
         indirect services on this airport pair. AFKL serves LHR-DTW on an indirect
         basis, via Amsterdam or Paris Charles-de-Gaulle airports.224
(244) Given that the Parties’ market shares are similar on both LHR-DTW and
         LHR/LGW/LCY airports pairs,225 the Commission will assess the effect of the
         Transaction on the LHR/LGW/LCY-DTW airport pair.
(245) As explained in section 4.2.1.4 above, The Commission will assess the effects of
         the Transaction on the following airport pairs: LHR-DTW and LHR/LGW/LCY-
         DTW.
(246) The table below provides the market shares of the Parties on the LHR/
         LGW/LCY-DTW airport pair.
222 Detroit Metropolitan Wayne County Airport (DTW).
223 Form CO, paragraphs 552 and 557 and Form CO, Annex B.04, DDS Data.
224 For the sake of completeness, the Parties note that they do not overlap on LGW-DTW and that they
    have a small number of indirect bookings on the LCY-DTW, the latter being a thin route with less than
    30 000 passengers per year (Form CO, paragraph 559).
225 Form CO, paragraphs 552 and 557. The difference is negligible as the market shares on LHR-DTW
    are 0.1% higher than on LHR/LGW/LCY-DTW.
                                                       48
 ---pagebreak---       Table 11 - Market shares of the Parties on LHR/LCY/LGW-DTW
                         Summer 2017 IATA Season                         Winter 2017/2018 IATA Season
                  AFKL          DL          VS         Combined   AFKL            DL        VS         Combined
TS               [0-5]%     [70-80]%     [5-10]%      [80-90]%   [0-5]%      [70-80]%    [5-10]%      [80-90]%
NTS             [5-10]%     [60-70]%    [10-20]%      [80-90]%  [5-10]%      [60-70]%   [10-20]%      [80-90]%
All
                [5-10]%     [60-70]%    [10-20]%      [80-90]%  [5-10]%      [60-70]%   [10-20]%      [80-90]%
passengers
      Source: Form CO, paragraph 552.
      (247) In both IATA Seasons and on both airport pairs, the increment brought about by
               the Transaction is limited and does not exceed [5-10]%. In the TS segment the
               increment is de minimis (below [0-5]%).
      (248) On both airport pairs, the Parties will remain constrained by the competition of
               other carriers’ services. In particular, oneworld and Star Alliance also provide a
               year-round indirect service on the LHR-DTW airport pair.226
      (249) The market shares of the Parties’ competitors are as follows:
      Table 12 - Market shares of competitors on LHR/LGW/LCY -DTW
                              Summer 2017 IATA Season                   Winter 2017/2018 IATA Season
                          Star Alliance           oneworld            Star Alliance           oneworld
      TS                    [0-5]%                [5-10]%               [0-5]%               [5-10]%
      NTS                  [5-10]%                [5-10]%              [5-10]%               [5-10]%
      All
      passengers           [5-10]%                [5-10]%              [5-10]%               [5-10]%
      Source: Form CO, paragraph 552.
      (250) It is noteworthy that the increment attributable to the Transaction (overall and in
               respect of the TS and NTS segments) is lower than the market shares of the
               Parties’ biggest competitor post-Transaction in both Summer 2017 and Winter
               2017/2018 IATA Seasons.
      (251) As already stated above (Section 5.1.1.5), the Commission considers that other
               carriers like the members of the Star Alliance or oneworld exert significant
               competitive pressure on the Parties post-Transaction on the affected
               direct/indirect overlap routes.
      226  Form CO, paragraph 546.
                                                           49
 ---pagebreak--- (252) Besides, the Parties submit that the market share attributable to Virgin
         Atlantic/Delta is likely to overstate its position on that route as more than 60% of
         passengers on the London – Detroit route are connecting to another service.227
(253) Finally, the majority of respondents to the market investigation having expressed
         a view considers that there will be sufficient competition on the route to prevent
         the Parties’ from raising prices on the route post-Transaction.228
(254) In light of the above and of all available evidence available to it, the Commission
         considers that the Transaction does not raise serious doubts as to its compatibility
         with the internal market with respect to the London - Detroit route under any
         plausible market definition.
5.1.2.6.          Edinburgh – New York
(255) In Summer 2017 IATA Season, [60.000-80.000] passengers travelled between
         Edinburgh and John F. Kennedy airports229 and [40.000-60.000] passengers flew
         between Edinburgh and Newark airports. In Winter 2017/2018 IATA Season,
         [20.000-40.000] passengers travelled between Edinburgh and John F. Kennedy
         airports while [20.000-40.000] passengers travelled between Edinburgh and
         Newark airports.230
(256) In Summer 2017 and Winter 2017/2018 IATA Seasons, Virgin Atlantic/Delta
         operated both direct and indirect services on the EDI-JFK airport pair, while
         AFKL offered only indirect services on the EDI-JFK airport pair via Paris-
         Charles de Gaulle or Amsterdam airports.231
(257) As explained in section 4.2.1.4 above, the Commission will assess the effect of
         the Transaction on the following airport pairs: EDI-JFK/EWR and EDI-JFK.232
(258) The table below provides the market shares of the Parties on the EDI-JFK/EWR
         airport pair.
227 Form CO, paragraph 545.
228 Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
    customers and travel agencies, question 13.
229 Edinburgh airport (EDI).
230 Form CO, paragraphs 577 and 583.
231 Form CO, paragraphs 568 et seq.
232 The effects of the Transaction on the EDI-EWR airport pair (indirect/indirect overlap) will not be
    further assessed as the Transaction is unlikely to give rise to competition concerns given that the
    Parties’ combined market shares will be below [0-5]% under any plausible market definition.
                                                      50
 ---pagebreak---       Table 13 - Market shares of the Parties on EDI-JFK/EWR233
                         Summer 2017 IATA Season                                Winter 2017/2018 IATA Season
                  AFKL         DL            VS         Combined       AFKL           DL             VS           Combined
TS               [0-5]%    [10-20]%        [0-5]%      [10-20]%       [0-5]%      [10-20]%        [5-10]%        [10-20]%
NTS              [0-5]%    [10-20]%       [5-10]%      [20-30]%       [0-5]%      [10-20]%       [10-20]%        [20-30]%
All
passengers       [0-5]%    [10-20]%       [5-10]%      [20-30]%       [0-5]%      [10-20]%      [10-20]%         [20-30]%
      Source: Form CO, paragraph 577.
      (259) The increment brought about by the Transaction is de minimis. With regard to TS
                passengers, the increment attributable to the Transaction would be [0-5]% in
                Summer IATA Season and [0-5]% in Winter IATA Season. With regard to NTS
                passengers, the increment attributable to the Transaction would be [0-5]% in
                Summer IATA Season and [0-5]% in Winter IATA Season.
      (260) The table below provides the market shares of the Parties on the EDI-JFK airport
                pair.
      Table 14 - Market shares of the Parties on EDI-JFK234
                          Summer 2017 IATA Season                               Winter 2017/2018 IATA Season
                  AFKL         DL             VS          Combined        AFKL         DL             VS         Combined
TS               [0-5]%    [20-30]%         [0-5]%       [30-40]%       [0-5]%      [20-30]%       [5-10]%      [30-40]%
NTS              [0-5]%    [20-30]%       [10-20]%       [40-50]%       [0-5]%      [20-30]%      [30-40]%      [50-60]%
All
passengers       [0-5]%    [20-30]%       [10-20]%       [40-50]%       [0-5]%      [20-30]%      [20-30]%      [50-60]%
      Source: Form CO, paragraph 583.
      (261) The increment brought about by the Transaction is de minimis. With regard to TS
                passengers, the increment attributable to the Transaction would be [0-5]% in
                Summer IATA Season and [0-5]% in Winter 2017/2018 IATA Season. With
                regard to NTS passengers, the increment attributable to the Transaction would be
                [0-5]% in Summer IATA Season and [0-5]% in Winter IATA Season.
      (262) While oneworld operated a direct service on the EDI-JFK airport pair in the
                Summer 2018 IATA Season, it ceased operating this route and will operate the
                EDI-PHL airport pair instead. However, the Parties will remain constrained by
                the direct service of Star Alliance on EDI-EWR as well as the indirect services of
      233  Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (Form CO,
           paragraph 577), in particular, the analysis is valid irrespective of whether these seats are included or
           not.
      234  Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (Form CO,
           paragraph 583), in particular, the analysis is valid irrespective of whether these seats are included or
           not.
                                                                51
 ---pagebreak---         oneworld, Star Alliance and Aer Lingus on the EDI-JFK and EDI-EWR airport
        pairs.235
(263) Finally, the majority of respondents to the market investigation having expressed
        a view considers that there will be sufficient competition on the route to prevent
        the Parties’ from raising prices on the route post-Transaction.236
(264) In light of the above and of all evidence available to it, the Commission considers
        that the Transaction does not raise serious doubts as to its compatibility with the
        internal market with respect to the Edinburgh – New York route under any
        plausible market definition.
5.1.2.7.          London – Portland
(265) In Summer 2017 IATA Season, [40.000-60.000] passengers travelled between
        London Heathrow and Portland airports237 and [40.000-60.000] passengers flew
        between London Heathrow, Gatwick and City and Portland airports. In Winter
        2017/2018 IATA Season, [0-20.000] passengers travelled between London
        Heathrow and Portland and [0-20.000] passengers flew between London
        Heathrow, Gatwick and City and Portland.238
(266) In Summer 2017 IATA Season, Virgin Atlantic/Delta operated direct services as
        well as indirect services on the LHR-PDX airport pair, while Virgin
        Atlantic/Delta operated only indirect services on the LHR-PDX airport pair in
        Winter 2017/2018 IATA Season. AFKL offered only indirect services on this
        airport pair via Paris-Charles de Gaulle or Amsterdam airports.
(267) As explained in section 4.2.1.4 above, the Commission will assess the effect of
        the Transaction on the following airport pairs: LHR-PDX and LHR/LGW/LCY-
        PDX.
(268) The table below provides the market shares of the Parties on the LHR-PDX
        airport pair.
235 Form CO, paragraphs 568 et seq.
236 Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
    customers and travel agencies, question 13.
237 Portland International Airport (PDX).
238 Form CO, paragraphs 503 and 509.
                                                    52
 ---pagebreak---       Table 15 - Market shares of the Parties on LHR-PDX239
                          Summer 2017 IATA Season                               Winter 2017/2018 IATA Season
                 AFKL          DL             VS          Combined        AFKL         DL             VS         Combined
TS              [0-5]%     [50-60]%       [10-20]%       [60-70]%       [0-5]%     [30-40]%      [10-20]%       [40-50]%
NTS             [0-5]%     [40-50]%       [10-20]%       [60-70]%       [0-5]%     [10-20]%      [10-20]%       [40-50]%
All
passengers      [0-5]%     [40-50]%       [10-20]%       [60-70]%       [0-5]%     [20-30]%      [10-20]%       [40-50]%
      Source: Form CO, paragraph 614.
      (269) The increment brought about by the Transaction is de minimis. With regard to TS
                passengers, the increment attributable to the Transaction would be [0-5]% in
                Summer IATA Season and [0-5]% in Winter IATA Season. With regard to NTS
                passengers, the increment attributable to the Transaction would be [0-5]% in
                Summer IATA Season and [0-5]% in Winter IATA Season.
      (270) The table below provides the market shares of the Parties on the
                LHR/LGW/LCY-PDX airport pair.
      Table 16 - Market shares of the Parties on LHR/LGW/LCY-PDX240
                          Summer 2017 IATA Season                               Winter 2017/2018 IATA Season
                 AFKL          DL             VS          Combined        AFKL         DL             VS         Combined
TS              [0-5]%     [50-60]%       [10-20]%       [60-70]%       [0-5]%     [30-40]%      [10-20]%       [40-50]%
NTS             [0-5]%     [30-40]%       [10-20]%       [50-60]%       [0-5]%     [10-20]%      [10-20]%       [30-40]%
All
passengers      [0-5]%     [30-40]%       [10-20]%       [50-60]%       [0-5]%     [20-30]%      [10-20]%       [40-50]%
      Source: Form CO, paragraph 608.
      (271) The increment brought about by the Transaction is de minimis. With regard to TS
                passengers, the increment attributable to the Transaction would be [0-5]% in
                Summer IATA Season and [0-5]% in Winter IATA Season. With regard to NTS
                passengers, the increment attributable to the Transaction would be [0-5]% in
                Summer IATA Season and [0-5]% in Winter IATA Season.
      (272) In addition, the Parties will remain constrained by the competition of other
                airlines operating an indirect service on the LHR-PDX airport pair, for example
                oneworld and Star Alliance.241
      239  Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (see Form CO,
           paragraph 614), in particular, the analysis is valid irrespective of whether these seats are included or
           not.
      240  Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (see Form CO,
           paragraph 608), in particular, the analysis is valid irrespective of whether these seats are included or
           not.
      241  Form CO, paragraph 597.
                                                                53
 ---pagebreak---       (273) Finally, the majority of respondents to the market investigation having expressed
                a view considers that there will be sufficient competition on the route to prevent
                the Parties’ from raising prices on the route post-Transaction.242
      (274) In light of the above and of all evidence available to it, the Commission considers
                that the Transaction does not raise serious doubts as to its compatibility with the
                internal market with respect to the London – Portland route under any plausible
                market definition.
      5.1.2.8.           Manchester – San Francisco
      (275) In Summer 2017 IATA Season, [60.0000-80.000] passengers travelled between
                Manchester and San Francisco airports.243 In Winter 2017/2018 IATA Season,
                [0-20.000] passengers travelled between Manchester and San Francisco
                airports.244 The only plausible airport pair is MAN-SFO.245
      (276) In both Summer 2017 and Winter 2017/2018 IATA Seasons, Virgin
                Atlantic/Delta operated direct services on the MAN-SFO airport pair, while
                AFKL offered indirect services on this route via Paris Charles-de-Gaulle or
                Amsterdam airports.246
      (277) The table below provides the market shares of the Parties on the MAN-SFO
                airport pair.
      Table 17 - Market shares of the Parties on MAN-SFO247
                         Summer 2017 IATA Season                                Winter 2017/2018 IATA Season
                 AFKL         DL            VS          Combined       AFKL          DL             VS           Combined
TS              [0-5]%    [10-20]%     [40-50]%        [60-70]%       [0-5]%      [0-5]%        [10-20]%        [20-30]%
NTS             [0-5]%      [0-5]%     [30-40]%        [40-50]%       [0-5]%      [0-5]%        [10-20]%        [10-20]%
All
passengers      [0-5]%     [5-10]%     [30-40]%        [40-50]%       [0-5]%      [0-5]%        [10-20]%        [10-20]%
      Source: Form CO, paragraph 636.
      (278) The increment brought about by the Transaction is de minimis. With regard to TS
                passengers, the increment attributable to the Transaction would be [0-5]% in
      242  Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
           customers and travel agencies, question 13.
      243  San Francisco International Airport (SFO).
      244  Form CO, paragraph 636.
      245  See section 4.2.1.4 above and Form CO, paragraph 626.
      246  Form CO, paragraphs 626 et seq.
      247  Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (see Form CO,
           paragraph 614), in particular, the analysis is valid irrespective of whether these seats are included or
           not.
                                                                54
 ---pagebreak---         Summer IATA Season and [0-5]% in Winter IATA Season. With regard to NTS
        passengers, the increment to the Transaction would be [0-5]% in Summer IATA
        Season and [0-5]% in Winter IATA Season.
(279) In addition, the Parties will remain constraint by the competition of other airlines
        operating this route. Oneworld and Star Alliance offer indirect services on this
        route year-round.248
(280) Non-stop services were provided by Thomas Cook/Condor in Summer 2017
        IATA Season.249 Irrespective of whether seats sold by Thomas Cook/Condor are
        included or not, in both IATA Seasons, under any plausible market definition, the
        increment brought about by the Transaction is de minimis.
(281) The majority of respondents to the market investigation having expressed a view
        considers that there will be sufficient competition on the route to prevent the
        Parties’ from raising prices on the route post-Transaction.250
(282) In light of the above and of all evidence available to it, the Commission considers
        that the Transaction does not raise serious doubts as to its compatibility with the
        internal market with respect to the Manchester – San Francisco route under any
        plausible market definition.
5.1.3. Direct/Indirect affected markets between Continental Europe/Ireland and North
        America
(283) As explained in paragraph (178) above, the Commission treats each of the metal
        neutral joint ventures as a single entity for the purpose of assessing the market
        shares on all relevant routes. Consistent with the approach, Delta and AFKL are
        treated as a single entity on every route between the Continental Europe/ Ireland
        and North America.
5.1.3.1.          Amsterdam – Los Angeles
(284) In Summer 2017 IATA Season, [100.000-200.000] passengers travelled between
        Amsterdam and Los Angeles airports.251 In Winter 2017/2018 IATA Season,
        [40.000-60.000] passengers travelled between Amsterdam and Los Angeles
        airports.252 The only plausible airport pair is AMS-LAX.253
248 Form CO, paragraph 633.
249 Form CO, paragraph 626. There were no regular direct services on this route in Winter 2017/2018.
250 Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
    customers and travel agencies, question 13.
251 Amsterdam Airport Schipol (AMS) and Los Angeles International Airport (LAX).
252 Form CO, paragraph 668.
253 See section 4.2.1.4 above and Form CO, paragraph 662.
                                                     55
 ---pagebreak---       (285) In both Summer 2017 and Winter 2017/2018 IATA Seasons, AFKL/Delta
               operated direct services on the Amsterdam – Los Angeles route, while Virgin
               Atlantic offered indirect services on this route via London.254
      (286) The table below provides the market shares of the Parties on the AMS-LAX
               airport pair.
      Table 18 - Market shares of the Parties on AMS-LAX
                        Summer 2017 IATA Season                            Winter 2017/2018 IATA Season
                 AFKL            DL          VS         Combined    AFKL          DL           VS         Combined
TS             [50-60]%      [10-20]%      [0-5]%      [60-70]%   [50-60]%    [10-20]%       [0-5]%      [60-70]%
NTS            [40-50]%       [5-10]%      [0-5]%      [50-60]%   [30-40]%     [5-10]%       [0-5]%      [40-50]%
All
passengers     [40-50]%       [5-10]%      [0-5]%      [50-60]%   [40-50]%     [5-10]%       [0-5]%      [50-60]%
      Source: Form CO, paragraph 668.
      (287) The increment brought about by the Transaction is de minimis. With regard to TS
               passengers, the increment attributable to the Transaction would be [0-5]% in
               Summer IATA Season and [0-5]% in Winter IATA Season. With regard to NTS
               passengers, the increment to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season.
      (288) In addition, both oneworld and Star Alliance offer indirect services on this route
               all year long.255
      (289) The majority of respondents to the market investigation having expressed a view
               considers that there will be sufficient competition on the route to prevent the
               Parties’ from raising prices on the route post-Transaction.256
      (290) In light of the above and of all evidence available to it, the Commission considers
               that the Transaction does not raise serious doubts as to its compatibility with the
               internal market with respect to the Amsterdam – Los Angeles route under any
               plausible market definition.
      5.1.3.2.          Amsterdam – Miami
      (291) In Summer 2017 IATA Season, [60.000-80.000] passengers travelled between
               Amsterdam and Miami airports.257 In Winter 2017/2018 IATA Season,
      254  Form CO, paragraphs 662 et seq.
      255  Form CO, paragraphs 663 and 668.
      256  Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
           customers and travel agencies, question 13.
      257  Miami International Airport (MIA).
                                                               56
 ---pagebreak---                 [40.000-60.000] passengers travelled on this route.258 The only plausible airport
                pair is AMS-MIA.259
      (292) In both Summer 2017 and Winter 2017/2018 IATA Seasons, AFKL/Delta
                operated direct services on the AMS-MIA airport pair, while Virgin Atlantic
                offered indirect services on this airport pair via London.260
      (293) The table below provides the market shares of the Parties on the AMS-MIA
                airport pair.
      Table 19 - Market shares of the Parties on AMS-MIA261
                           Summer 2017 IATA Season                                 Winter 2017/2018 IATA Season
                  AFKL             DL             VS       Combined        AFKL             DL           VS    Combined
TS              [30-40]%       [10-20]%       [0-5]%      [40-50]%      [50-60]%        [10-20]%       [0-5]% [60-70]%
NTS             [10-20]%       [10-20]%       [0-5]%      [30-40]%      [20-30]%         [5-10]%       [0-5]% [30-40]%
All
passengers      [20-30]%       [10-20]%       [0-5]%      [30-40]%      [30-40]%         [5-10]%       [0-5]% [40-50]%
      Source: Form CO, paragraph 682.
      (294) The increment brought about by the Transaction is de minimis. With regard to TS
                passengers, the increment attributable to the Transaction would be [0-5]% in
                Summer IATA Season and [0-5]% in Winter IATA Season. With regard to NTS
                passengers, the increment to the Transaction would be [0-5]% in Summer IATA
                Season and [0-5]% in Winter IATA Season.
      (295) In addition, the Parties will remain constrained by other airlines operating this
                route. Oneworld, Star Alliance, TAP Portugal and Air Europa offer indirect
                services on this airport pair all year long.262
      (296) Non-stop services were provided by TUI in both Summer 2017 and Winter
                2017/2018 IATA Season. Irrespective of whether seats sold by TUI are included
                or not, in both IATA Seasons, under any plausible market definition, the
                increment brought about by the Transaction is de minimis.
      (297) The majority of respondents to the market investigation having expressed a view
                considers that there will be sufficient competition on the route to prevent the
                Parties’ from raising prices on the route post-Transaction.263
      258  Form CO, paragraph 682.
      259  See section 4.2.1.4 above and Form CO, paragraph 674.
      260  Form CO, paragraphs 674 et seq.
      261  Market shares excluding seats sold by TUI do not significantly differ (see Form CO, paragraph 614),
           in particular, the analysis is valid irrespective of whether these seats are included or not.
      262  Form CO, paragraphs 674 et seq. and 682.
                                                                  57
 ---pagebreak---       (298) In light of the above and of all evidence available to it, the Commission considers
               that the Transaction does not raise serious doubts as to its compatibility with the
               internal market with respect to the Amsterdam – Miami route under any plausible
               market definition.
      5.1.3.3.           Amsterdam – San Francisco
      (299) In Summer 2017 IATA Season, [100.000-200.000] passengers travelled between
               Amsterdam and San Francisco airports. In Winter 2017/2018 IATA Season,
               [40.000-60.000] passengers travelled between Amsterdam and San Francisco
               airports.264 The only plausible airport pair is AMS-SFO.265
      (300) In both Summer 2017 and Winter 2017/2018 IATA Seasons, AFKL/Delta
               operated direct services on the AMS-SFO airport pair, while Virgin Atlantic
               offered indirect services on this airport pair via London.266
      (301) The table below provides the market shares of the Parties on the AMS-SFO
               airport pair.
      Table 20 - Market shares of the Parties on AMS-SFO
                          Summer 2017 IATA Season                           Winter 2017/2018 IATA Season
                 AFKL             DL          VS        Combined      AFKL           DL           VS        Combined
TS             [50-60]%       [10-20]%      [0-5]%     [60-70]%     [50-60]%     [10-20]%      [0-5]%      [60-70]%
NTS            [40-50]%        [5-10]%      [0-5]%     [50-60]%     [40-50]%      [5-10]%      [0-5]%      [60-70]%
All
passengers     [40-50]%        [5-10]%      [0-5]%     [50-60]%     [40-50]%      [5-10]%      [0-5]%      [60-70]%
      Source: Form CO, paragraph 694.
      (302) The increment brought about by the Transaction is de minimis in both IATA
               Seasons and under any plausible market definition. With regard to TS passengers,
               the increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
               increment to the Transaction would be [0-5]% in Summer IATA Season and
               [0-5]% in Winter IATA Season.
      (303) In addition, the Parties will remain constrained by other airlines operating this
               route. oneworld and Star Alliance offer indirect services on this route all year
               long.267
      263  Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
           customers and travel agencies, question 13.
      264  Form CO, paragraph 694.
      265  See section 4.2.1.4 above and Form CO, paragraph 688.
      266  Form CO, paragraphs 688 et seq.
      267  Form CO, paragraphs 689 and 694.
                                                             58
 ---pagebreak---       (304) The majority of respondents to the market investigation having expressed a view
               considers that there will be sufficient competition on the route to prevent the
               Parties’ from raising prices on the route post-Transaction.268
      (305) In light of the above and of all evidence available to it, the Commission considers
               that the Transaction does not raise serious doubts as to its compatibility with the
               internal market with respect to the Amsterdam – San Francisco route under any
               plausible market definition.
      5.1.3.4.          Paris – San Francisco
      (306) In Summer 2017 IATA Season, [200.000-300.000] passengers travelled between
               Paris-Charles de Gaulle and San Francisco airports and [200.000-300.000]
               passengers flew between Paris-Charles de Gaulle, Orly and San Francisco
               airports. In Winter 2017/2018 IATA Season, [80.000-100.000] passengers
               travelled between Paris-Charles de Gaulle and San Francisco airports and
               [80.000-100.000] passengers flew between Paris-Charles de Gaulle, Orly and San
               Francisco airports.269
      (307) In Summer 2017 and Winter 2017/2018 IATA Seasons, AFKL/Delta operated
               direct services on the CDG-SFO airport pair, while Virgin Atlantic offered only
               indirect services on this airport pair.
      (308) As explained in section 4.2.1.4 above, the Commission will assess the effect of
               the Transaction on the following airport pairs: CDG-SFO and CDG/ORY-SFO.270
      (309) The table below provides the market shares of the Parties on the CDG-SFO
               airport pair.
      Table 21 - Market shares of the Parties on CDG-SFO
                         Summer 2017 IATA Season                               Winter 2017/2018 IATA Season
                 AFKL            DL          VS         Combined        AFKL            DL            VS         Combined
TS             [60-70]%       [5-10]%      [0-5]%      [70-80]%      [60-70]%        [5-10]%       [0-5]%       [60-70]%
NTS            [30-40]%       [5-10]%      [0-5]%      [40-50]%      [30-40]%        [5-10]%       [0-5]%       [40-50]%
All
passengers     [30-40]%       [5-10]%      [0-5]%      [40-50]%      [40-50]%        [5-10]%       [0-5]%       [40-50]%
      Source: Form CO, paragraph 720.
      (310) The increment brought about by the Transaction is de minimis in both IATA
               Seasons and under any plausible market definition. With regard to TS passengers,
               the increment attributable to the Transaction would be [0-5]% in Summer IATA
      268  Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
           customers and travel agencies, question 13.
      269  Form CO, paragraphs 712 and 720.
      270  The Parties’ activities do not overlap on ORY-SFO. Indeed, Virgin had a negligible number of
           booking in Summer 2017 IATA Season but discontinued this indirect service from Winter 2017/2018
           IATA Season. The impact of the Transaction on this airport pair will therefore not be further assessed.
                                                              59
 ---pagebreak---                Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
               increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season.
      (311) he table below provides the market shares of the Parties on the CDG/ORY-SFO
               airport pair.
      Table 22 - Market shares of the Parties on CDG/ORY-SFO
                         Summer 2017 IATA Season                            Winter 2017/2018 IATA Season
                 AFKL           DL          VS          Combined      AFKL         DL          VS         Combined
TS             [60-70]%      [5-10]%      [0-5]%       [70-80]%     [60-70]%    [5-10]%      [0-5]%      [60-70]%
NTS            [30-40]%      [5-10]%      [0-5]%       [40-50]%     [30-40]%    [5-10]%      [0-5]%      [40-50]%
All
passengers     [30-40]%      [5-10]%      [0-5]%       [40-50]%     [40-50]%    [5-10]%      [0-5]%      [40-50]%
      Source: Form CO, paragraph 712.
      (312) The increment brought about by the Transaction is de minimis in both IATA
               Seasons and under any plausible market definition. With regard to TS passengers,
               the increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
               increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season.
      (313) In addition, the Parties will remain constrained by the competition of the daily all-
               year round direct service operated by Star Alliance on the CDG-SFO airport
               pair.271 XL Airways also operated a weekly non-stop service in Summer 2017
               IATA Season.272 In addition, oneworld and Star Alliance operate an indirect
               service on the CDG-SFO airport pair.273 On the ORY-SFO airport pair,
               Frenchbee commenced to operate a weekly non-stop service and Star Alliance
               operate an indirect service.274
      (314) Finally, the majority of respondents to the market investigation having expressed
               a view considers that there will be sufficient competition on the route to prevent
               the Parties’ from raising prices on the route post-Transaction.275
      (315) In light of the above and of all evidence available to it, the Commission considers
               that the Transaction does not raise serious doubts as to its compatibility with the
               internal market with respect to the Paris – San Francisco route under any
               plausible market definition.
      271  Form CO, paragraph 702.
      272  Form CO, paragraph 702.
      273  Form CO, paragraph 703.
      274 Form CO, paragraph 704.
      275  Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
           customers and travel agencies, question 13.
                                                              60
 ---pagebreak---       5.1.3.5.         Paris – Boston
      (316) In Summer 2017 IATA Season, [100.000-200.000] passengers travelled between
               Paris Charles de Gaulle and Boston airports and [100.000-200.000] passengers
               flew between Paris Charles de Gaulle, Orly and Boston airports.276 In Winter
               2017/2018 IATA Season, [40.000-60.000] passengers travelled between Paris
               Charles de Gaulle and Boston airports and [60.000-80.000] passengers flew
               between Paris Charles de Gaulle, Orly and Boston airports.277
      (317) In Summer 2017 and Winter 2017/2018 IATA Seasons, AFKL/Delta operated
               direct services on the CDG-BOS airport pair, while Virgin Atlantic offered only
               indirect services on this airport pair.
      (318) As explained in section 4.2.1.4 above, the Commission will assess the effect of
               the Transaction on the following airport pairs: CDG-BOS and CDG/ORY-BOS.
      (319) The table below provides the market shares of the Parties on the CDG-BOS
               airport pair.
      Table 23 - Market shares of the Parties on CDG-BOS
                        Summer 2017 IATA Season                         Winter 2017/2018 IATA Season
                 AFKL           DL          VS        Combined    AFKL         DL          VS       Combined
TS             [60-70]%      [20-30]%     [0-5]%     [80-90]%   [60-70]%   [20-30]%      [0-5]%    [80-90]%
NTS            [30-40]%      [20-30]%     [0-5]%     [50-60]%   [30-40]%   [20-30]%      [0-5]%    [60-70]%
All
passengers     [30-40]%      [20-30]%     [0-5]%     [60-70]%   [40-50]%   [20-30]%      [0-5]%    [70-80]%
      Source: Form CO, paragraph 747.
      (320) The increment brought about by the Transaction is de minimis in both IATA
               Seasons and under any plausible market definition. With regard to TS passengers,
               the increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
               increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season.
      (321) The table below provides the market shares of the Parties on the CDG/ORY-BOS
               airport pair.
      276  Boston Logan International Airport (BOS).
      277  Form CO, paragraphs 741 and 747.
                                                             61
 ---pagebreak---       Table 24 - Market shares of the Parties on CDG/ORY-BOS
                        Summer 2017 IATA Season                            Winter 2017/2018 IATA Season
                 AFKL            DL          VS         Combined     AFKL         DL           VS         Combined
TS             [50-60]%      [10-20]%      [0-5]%      [70-80]%    [50-60]%   [20-30]%       [0-5]%      [80-90]%
NTS            [30-40]%      [20-30]%      [0-5]%      [50-60]%    [30-40]%   [20-30]%       [0-5]%      [60-70]%
All
passengers     [30-40]%      [20-30]%      [0-5]%     [50-60]%     [40-50]%   [20-30]%       [0-5]%      [60-70]%
      Source: Form CO, paragraph 741.
      (322) The increment brought about by the Transaction is de minimis in both IATA
               Seasons and under any plausible market definition. With regard to TS passengers,
               the increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
               increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season.
      (323) In addition, the Parties will remain constrained by the other airlines operating on
               this route. On the CDG-BOS airport pair, oneworld operated a weekly direct
               service in Summer 2017 IATA Season and Norwegian started to operate a non-
               stop service in 2018.278 In addition, Star Alliance, oneworld, Aer Lingus and
               Icelandair operate indirect services all year round.279 On the ORY-BOS airport
               pair, oneworld, Icelandair and TAP Portugal operate indirect services.280 Air
               Europa operated a one-stop service in Summer 2017 IATA Season.281
      (324) Finally, the majority of respondents to the market investigation having expressed
               a view considers that there will be sufficient competition on the route to prevent
               the Parties’ from raising prices on the route post-Transaction.282 A competitor
               also indicated it intends to provide several weekly frequency on the route on a
               seasonal basis.283
      (325) In light of the above and of all evidence available to it, the Commission considers
               that the Transaction does not raise serious doubts as to its compatibility with the
               internal market with respect to the Paris – Boston route under any plausible
               market definition.
      278  Form Co, paragraph 731.
      279  Form Co, paragraph 732.
      280  Form Co, paragraph 733.
      281  Form Co, paragraph 733.
      282  Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
           customers and travel agencies, question 13.
      283  Reply to eQ1 - Questionnaire 1 for Competitors, question 19.
                                                               62
 ---pagebreak---       5.1.3.6.         Nice – New York
      (326) In Summer 2017 IATA Season, [60.000-80.000] passengers travelled between
               Nice and John F. Kennedy airports and [5.000-10.000] passengers flew between
               Nice and Newark airports.284 In Winter 2017/2018 IATA Season, [0-20.000]
               passengers travelled between Nice and John F. Kennedy airports while [0-5.000]
               passengers travelled between Nice and Newark airports.285
      (327) In Summer 2017 Season, AFKL/Delta operated direct services on the NCE-JFK
               airport pair and an indirect service all-year round; Virgin Atlantic operates an
               indirect service on this airport pair.286 AFKL/Delta and Virgin Atlantic also
               operate indirect services on the NCE-EWR airport pair on a year-round basis.287
      (328) As explained in section 4.2.1.4 above, the Commission will assess the effect of
               the Transaction on the following airport pairs: NCE-JFK, NCE-EWR and
               NCE-JFK/EWR.
      (329) The table below provides the market shares of the Parties on the NCE-JFK airport
               pair.
      Table 25 - Market shares of the Parties on NCE-JFK
                        Summer 2017 IATA Season                      Winter 2017/2018 IATA Season
                 AFKL           DL          VS     Combined    AFKL         DL           VS       Combined
TS             [10-20]%     [50-60]%      [0-5]%  [70-80]%   [30-40]%   [10-20]%       [0-5]%    [50-60]%
NTS            [20-30]%     [40-50]%      [0-5]%  [70-80]%   [20-30]%    [5-10]%      [10-20]%   [40-50]%
All
passengers     [20-30]%     [40-50]%      [0-5]%  [70-80]%   [20-30]%    [5-10]%      [10-20]%   [40-50]%
      Source: Form CO, paragraph 774.
      (330) In Summer IATA Season, the increment brought about by the Transaction is de
               minimis under any plausible market definition. With regard to TS passengers, the
               increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% with respect to the NTS segment. In Winter IATA Season, the
               increment brought about by the Transaction is moderate on the overall and NTS
               segments (below [10-20]%). With regard to TS passengers in Winter IATA
               Season, the increment attributable to the Transaction would be de minimis
               ([0-5]%).
      284  Nice Côte d’Azur airport (NCE).
      285  Form CO, paragraphs 774 and 780.
      286  Form Co, paragraph 756 et seq.
      287  Form Co, paragraph 758.
                                                          63
 ---pagebreak---       (331) The market shares of the Parties’ competitors are as follows:
      Table 26 - Market shares of competitors on NCE-JFK
                               Summer 2017 IATA Season                     Winter 2017/2018 IATA Season
                            oneworld              Star Alliance            oneworld             Star Alliance
      TS                   [10-20]%                 [0-5]%                [20-30]%                [0-5]%
      NTS                  [10-20]%                 [0-5]%                [20-30]%                [0-5]%
      All passengers       [10-20]%                 [0-5]%                [20-30]%                [0-5]%
      Source: Form CO, paragraph 774.
      (332) The table below provides the market shares of the Parties on the NCE-EWR
               airport pair.
      Table 27 - Market shares of the Parties on NCE-EWR
                       Summer 2017 IATA Season                            Winter 2017/2018 IATA Season
                 AFKL      DL          VS         Combined       AFKL         DL            VS             Combined
TS             [0-5]%   [5-10]%      [0-5]%      [10-20]%       [0-5]%     [5-10]%       [0-5]%           [10-20]%
NTS            [0-5]%   [5-10]%      [0-5]%      [10-20]%       [0-5]%      [0-5]%      [20-30]%          [20-30]%
All
passengers     [0-5]%   [5-10]%      [0-5]%      [10-20]%       [0-5]%      [0-5]%      [10-20]%          [20-30]%
      Source: Form CO, paragraph 780.
      (333) On the NCE-EWR airport pair, the Parties’ combined market shares are less
               than 30% on any plausible passenger segmentation in both Summer and Winter
               IATA Seasons and the increment is limited.
      (334) The table below provides the market shares of the Parties on the NCE-JFK/EWR
               airport pair.
      Table 28 - Market shares of the Parties on NCE-JFK/EWR
                         Summer 2017 IATA Season                           Winter 2017/2018 IATA Season
                  AFKL          DL          VS        Combined       AFKL          DL          VS           Combined
TS              [10-20]%     [50-60]%     [0-5]%     [60-70]%      [30-40]%    [10-20]%      [0-5]%        [40-50]%
NTS             [20-30]%     [40-50]%     [0-5]%     [60-70]%      [20-30]%     [5-10]%     [10-20]%       [40-50]%
All
passengers      [10-20]%     [40-50]%     [0-5]%     [60-70]%      [20-30]%     [5-10]%     [10-20]%       [40-50]%
      Source: Form CO, paragraph 769.
      (335) In Summer IATA Season, the increment brought about by the Transaction is de
               minimis under any plausible market definition. With respect to the TS passengers,
               the increment attributable to the Transaction would be [0-5]%. With regard to
               NTS passengers, the increment would be [0-5]%.
      (336) In Winter IATA Season, the Parties’ combined market shares are below [40-50]%
               under any plausible market definition and the increment brought about by the
               Transaction is moderate. The increment is [10-20]% in respect of NTS passengers
                                                             64
 ---pagebreak---          and [10-20]% without distinguishing between TS and NTS passengers. With
         regard to TS passengers, the increment is even de minimis ([0-5]%).
           The market shares of the Parties’ competitors are as follows:
Table 29 - Market shares of competitors on NCE-JFK/EWR
                          Summer 2017 IATA Season                     Winter 2017/2018 IATA Season
                        oneworld               Star Alliance          oneworld              Star Alliance
TS                     [10-20]%                  [5-10]%             [20-30]%                [10-20]%
NTS                     [5-10]%                   [0-5]%             [20-30]%                 [5-10]%
All passengers         [10-20]%                  [5-10]%             [20-30]%                 [5-10]%
Source: Form CO, paragraph 769.
(337) On all plausible airport pairs, the Parties will remain constrained by the
         competition of other carriers’ services. In particular, oneworld operates a year
         round indirect service on the NCE-JFK airport pair288 and Star Alliance is
         operating a year-round indirect service on NCE-EWR.289 In addition, as of
         May 2019, La Compagnie will offer a five-time weekly direct service on NCE-
         EWR on a seasonal basis.290
(338) As already stated above (Section 5.1.1.5), the Commission considers that other
         carriers like the members of the Star Alliance or oneworld exert significant
         competitive pressure on the Parties post-Transaction on the affected
         direct/indirect overlap routes.
(339) It is noteworthy that the increment attributable to the Transaction is lower than
         the market share of the Parties’ biggest competitor post-Transaction in both
         Summer 2017 and Winter 2017/2018 IATA Seasons under any plausible market
         segmentation.
(340) Finally, the majority of respondents to the market investigation having expressed
         a view considers that there will be sufficient competition on the route to prevent
         the Parties’ from raising prices on the route post-Transaction.291
(341) In light of the above and of all available evidence, the Commission considers that
         the Transaction does not raise serious doubts as to its compatibility with the
288  Form CO, paragraph 774.
289  Form CO, paragraph 780.
290  La Compagnie’s press release, available https://www.lacompagnie.com/media/1627/la-co-nice-
     announcement- -final.pdf .
291  Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
     customers and travel agencies, question 13.
                                                         65
 ---pagebreak---                 internal market with respect to the Nice – New York route under any plausible
                market definition.
      5.1.3.7.           Dublin – New York
      (342) In Summer 2017 IATA Season, [100.000-200.000] passengers travelled between
                Dublin and John F. Kennedy airports and [100.000-200.000] passengers flew
                between Dublin and Newark airports.292 In Winter 2017/2018 IATA Season,
                [100.000-200.000] passengers travelled between Dublin and John F. Kennedy
                airports while [60.000-80.000] passengers travelled between Dublin and Newark
                airports.293
      (343) In Summer 2017 and Winter 2017/2018 IATA Seasons, AFKL/Delta operated
                direct services on the DUB-JFK airport pair, while Virgin Atlantic offered only
                indirect services on this airport pair via London.294 Furthermore, Virgin Atlantic
                also offer a one-stop service on the DUB-EWR airport pair.295
      (344) As explained in section 4.2.1.4 above, the Commission will assess the effect of
                the Transaction on the following airport pairs: DUB-JFK/EWR and DUB-JFK.296
      (345) The table below provides the market shares of the Parties on the DUB-JFK/EWR
                airport pair.
      Table 30 - Market shares of the Parties on DUB-JFK/EWR
                         Summer 2017 IATA Season                             Winter 2017/2018 IATA Season
                  AFKL          DL           VS       Combined      AFKL            DL           VS          Combined
TS               [0-5]%      [10-20]%     [0-5]%     [10-20]%      [0-5]%      [10-20]%        [0-5]%       [10-20]%
NTS            [5-10]%       [10-20]%     [0-5]%     [10-20]%     [5-10]%      [10-20]%        [0-5]%       [20-30]%
All
passengers     [5-10]%       [10-20]%     [0-5]%     [10-20]%     [5-10]%      [10-20]%        [0-5]%       [20-30]%
      Source: Form CO, paragraph 798.
      (346) The increment brought about by the Transaction is de minimis in both IATA
                Seasons and under any plausible market definition. With regard to TS passengers,
                the increment attributable to the Transaction would be [0-5]% in Summer IATA
                Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
      292  Dublin airport (DUB).
      293  Form CO, paragraphs 798 and 804.
      294  Form Co, paragraph 789.
      295  Form Co, paragraph 791.
      296  The effects of the Transaction on the DUB-EWR airport pair (indirect/indirect overlap) will not be
           further assessed as the Transaction is unlikely to give rise to competition concerns given that the
           Parties’ combined market shares will be below [0-5]% under any plausible market definition
           (Form CO, paragraph 807).
                                                             66
 ---pagebreak---                increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season.
      (347) The table below provides the market shares of the Parties on the DUB-JFK airport
               pair.
      Table 31 - Market shares of the Parties on DUB-JFK
                        Summer 2017 IATA Season                            Winter 2017/2018 IATA Season
                 AFKL          DL           VS          Combined     AFKL         DL           VS         Combined
TS              [0-5]%     [20-30]%       [0-5]%       [20-30]%     [0-5]%    [10-20]%       [0-5]%      [20-30]%
NTS            [5-10]%     [10-20]%       [0-5]%       [20-30]%   [10-20]%    [20-30]%       [0-5]%      [30-40]%
All
passengers     [5-10]%     [10-20]%       [0-5]%       [20-30]%    [5-10]%    [20-30]%       [0-5]%      [30-40]%
      Source: Form CO, paragraph 804.
      (348) The increment brought about by the Transaction is de minimis in both IATA
               Seasons and under any plausible market definition. With regard to TS passengers,
               the increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
               increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season.
      (349) In addition, Aer Lingus offers a daily all-year round non-stop service on the
               DUB-JFK airport pair.297 With respect to indirect flights, oneworld and Star
               Alliance operate all-year round.298 On the DUB-EWR airport pair, oneworld and
               Aer Lingus offer a daily all-year round non-stop service; Star Alliance and
               oneworld also offer a one-stop service on this airport pair.299
      (350) Finally, the majority of respondents to the market investigation having expressed
               a view considers that there will be sufficient competition on the route to prevent
               the Parties’ from raising prices on the route post-Transaction.300
      (351) In light of the above and of all available evidence, the Commission considers that
               the Transaction does not raise serious doubts as to its compatibility with the
               internal market with respect to the Dublin – New York route under any plausible
               market definition.
      297  Form CO, paragraph 789.
      298  Form CO, paragraph 790.
      299  Form CO, paragraph 791.
      300  Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
           customers and travel agencies, question 13.
                                                               67
 ---pagebreak---       5.1.4. Direct/Indirect affected markets between the United Kingdom and destinations
              excluding North America and Continental Europe/Ireland
                            5.1.4.1.   London – Lagos
      (352) In Summer 2017 IATA Season, [100.000-200.000] passengers travelled between
              London Heathrow and Lagos airports and [200.000-300.000] passengers flew
              between London Heathrow, Gatwick and City and Lagos airports.301 In Winter
              2017/2018 IATA Season, [100.000-200.000] passengers travelled between
              London Heathrow and Lagos airports and [100.000-200.000] passengers flew
              between London Heathrow, Gatwick and City and Lagos airports.302
      (353) In both Seasons, Summer 2017 IATA Season and Winter 2017/2018 IATA
              Season, Virgin Atlantic operated direct services as well as indirect services on the
              LHR-LOS airport pair. AFKL offers indirect services on this airport pair as well
              as on the LCY-LOS airport pair. Delta does not operate this route.
      (354) As explained in section 4.2.1.4 above, the Commission will assess the effect of
              the Transaction on the following airport pairs: LHR-LOS and LHR/LGW/LCY-
              LOS.
      (355) The table below provides the market shares of the Parties on the LHR-LOS
              airport pair.
      Table 32 - Market shares of the Parties on LHR-LOS
                       Summer 2017 IATA Season                         Winter 2017/2018 IATA Season
                 AFKL        DL          VS         Combined     AFKL       DL           VS        Combined
TS            [10-20]%     [0-5]%    [40-50]%      [50-60]%    [5-10]%    [0-5]%     [40-50]%     [50-60]%
NTS           [10-20]%     [0-5]%    [30-40]%      [50-60]%   [10-20]%    [0-5]%     [30-40]%     [40-50]%
All
passengers    [10-20]%     [0-5]%    [30-40]%      [50-60]%   [10-20]%    [0-5]%     [30-40]%     [50-60]%
      Source: Form CO, paragraph 1080.
      (356) The table below provides the market shares of the Parties on the
              LHR/LGW/LCY-LOS airport pair.
      301  Murtala Muhammed International Airport (LOS).
      302  Form CO, paragraphs 1074 and 1080.
                                                           68
 ---pagebreak---       Table 33 - Market shares of the Parties on LHR/LGW/LCY-LOS
                        Summer 2017 IATA Season                            Winter 2017/2018 IATA Season
                  AFKL        DL           VS        Combined       AFKL         DL           VS            Combined
TS              [10-20]%    [0-5]%     [40-50]%     [50-60]%      [5-10]%      [0-5]%     [40-50]%         [50-60]%
NTS             [10-20]%    [0-5]%     [20-30]%     [40-50]%     [10-20]%      [0-5]%     [20-30]%         [40-50]%
All
passengers      [10-20]%    [0-5]%     [30-40]%     [40-50]%     [10-20]%      [0-5]%     [30-40]%         [40-50]%
      Source: Form CO, paragraph 1074.
      (357) On both airport pairs, the Parties’ combined market share would be below 60% in
               both IATA Seasons.
      (358) Post-Transaction, the Parties will remain constrained by the competition from
               other airlines operating the London – Lagos route. In particular, oneworld is a
               significant competitor operating a direct daily all-year round service on the LHR-
               LOS airport pair, whose market share (on all plausible market) is higher than the
               increment brought about by the Transaction.303
      (359) The Parties’ competitors’ market share is as follows:
      Table 34 - Market shares of the Parties’ competitors on LHR-LOS
                              Summer 2017 IATA Season                       Winter 2017/2018 IATA Season
                            oneworld               Star Alliance            oneworld             Star Alliance
      TS                   [30-40]%                  [0-5]%                [30-40]%                 [0-5]%
      NTS                  [10-20]%                  [0-5]%                [20-30]%                 [0-5]%
      All passengers       [20-30]%                  [0-5]%                [20-30]%                 [0-5]%
      Source: Form CO, paragraph 1080.
      Table 35 - Market shares of the Parties on LHR/LGW/LCY-LOS
                              Summer 2017 IATA Season                       Winter 2017/2018 IATA Season
                            oneworld              Star Alliance             oneworld             Star Alliance
      TS                  [30-40]%                  [0-5]%                [30-40]%                 [0-5]%
      NTS                 [10-20]%                  [0-5]%                [10-20]%                 [0-5]%
      All
      passengers          [10-20]%                  [0-5]%                [20-30]%                 [0-5]%
      Source: Form CO, paragraph 1074.
      (360) The increment brought about by the Transaction is lower than the market shares
               of the Parties’ biggest competitor post-Transaction.
      303  On LHR/LCY/LGW-LOS, in the NTS segment in Summer IATA Season, the share of oneworld
           would be equivalent to the increment brought about by the Transaction (Form CO, paragraphs 1074
           and 1080.
                                                              69
 ---pagebreak--- (361) As already stated above (Section 5.1.1.5), the Commission considers that other
        carriers like the members of the Star Alliance or oneworld exert significant
        competitive pressure on the Parties post-Transaction on the affected
        direct/indirect overlap routes.
(362) Finally, the majority of respondents to the market investigation having expressed
        a view considers that there will be sufficient competition on the route to prevent
        the Parties’ from raising prices on the route post-Transaction.304
(363) In light of the above and of all evidence available to it, the Commission considers
        that the Transaction does not raise serious doubts as to its compatibility with the
        internal market with respect to the London – Lagos route under any plausible
        market definition.
5.1.4.2.         London – Shanghai
(364) In Summer 2017 IATA Season, [300.000-400.000] passengers travelled between
        London Heathrow and Shanghai airports and [300.000-400.000]passengers flew
        between London Heathrow, Gatwick and City and Shanghai airports.305 In Winter
        2017/2018 IATA Season, [100.000-200.000] passengers travelled between
        London Heathrow and Shanghai and [100.000-200.000] passengers flew between
        London Heathrow, Gatwick and City and Shanghai.306
(365) In both Seasons, Summer 2017 IATA Season and Winter 2017/2018 IATA
        Season, Virgin Atlantic operated direct services on the LHR-PVG airport pair.
        AFKL offers indirect services on this airport pair as well as on the LCY-PVG
        airport pair. Delta does not operate on this route.
(366) As explained in section 4.2.1.4 above, the Commission will assess the effect of
        the Transaction on the following airport pairs: LHR-PVG and LHR/LGW/LCY-
        PVG.
(367) The table below provides the market shares of the Parties on the LHR-PVG
        airport pair.
304 Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
    customers and travel agencies, question 13.
305 Shanghai Pudong Airport (PVG).
306 Form CO, paragraphs 1106 and 1113.
                                                    70
 ---pagebreak---        Table 36 - Market shares of the Parties on LHR-PVG
                       Summer 2017 IATA Season                        Winter 2017/2018 IATA Season
                AFKL         DL           VS         Combined   AFKL      DL           VS          Combined
TS             [0-5]%      [0-5]%      [20-30]%     [20-30]%   [0-5]%   [0-5]%      [20-30]%      [20-30]%
NTS           [5-10]%      [0-5]%      [20-30]%     [20-30]%   [0-5]%   [0-5]%      [20-30]%      [30-40]%
All
passengers     [0-5]%      [0-5]%      [20-30]%     [20-30]%   [0-5]%   [0-5]%      [20-30]%      [20-30]%
       Source: Form CO, paragraph 1113.
       (368) The increment brought about by the Transaction is de minimis in both IATA
               Seasons with regard to TS passengers and an overall market comprising all
               passengers. With regard to TS passengers, the increment attributable to the
               Transaction would be [0-5]% in Summer 2017 IATA Season and [0-5]% in
               Winter 2017/2018 IATA Season. With regard to NTS passengers, the increment
               attributable to the Transaction would also be de minimis in Winter 2017/2018
               IATA Season, while in the Summer 2017 IATA Season, the increment brought
               about by the Transaction is rather limited ([5-10]%).
       (369) The table below provides the market shares of the Parties on the
               LHR/LGW/LCY-PVG airport pair.
       Table 37 - Market shares of the Parties on LHR/LGW/LCY-PVG
                       Summer 2017 IATA Season                        Winter 2017/2018 IATA Season
               AFKL         DL           VS         Combined    AFKL      DL           VS         Combined
TS            [0-5]%     [0-5]%      [20-30]%      [20-30]%    [0-5]%   [0-5]%     [20-30]%      [20-30]%
NTS          [5-10]%     [0-5]%      [20-30]%      [20-30]%    [0-5]%   [0-5]%     [20-30]%      [30-40]%
All
passengers    [0-5]%     [0-5]%      [20-30]%      [20-30]%    [0-5]%   [0-5]%     [20-30]%      [20-30]%
       Source: Form CO, paragraph 1106.
       (370) The increment brought about by the Transaction is de minimis in both IATA
               Seasons and under any plausible market definition. With regard to TS passengers,
               the increment attributable to the Transaction would be [0-5]% in Summer IATA
               Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
               increment attributable to the Transaction would be [5-10]% in Summer IATA
               Season and [0-5]% in Winter IATA Season.
       (371) In addition, post-Transaction, the Parties will remain constrained by the all year
               round direct service of China Eastern and oneworld on the LHR-PVG airport pair.
               In addition, several other airlines provide indirect services on the LHR-PVG and
               LGW-PVG airport pairs.307
       307 See Form CO, paragraphs 1096 et seq.
                                                            71
 ---pagebreak--- (372) Finally, the majority of respondents to the market investigation having expressed
        a view considers that there will be sufficient competition on the route to prevent
        the Parties’ from raising prices on the route post-Transaction.308
(373) In light of the above and of all evidence available to it, the Commission considers
        that the Transaction does not raise serious doubts as to its compatibility with the
        internal market with respect to the London – Shanghai route under any plausible
        market definition.
5.1.4.3.         London – Havana
(374) In Summer 2017 IATA Season, [40-000-60.000] passengers travelled between
        London Heathrow, Gatwick and City and Havana airports.309 In Winter
        2017/2018 IATA Season, [40-000-60.000] passengers flew between London
        Heathrow, Gatwick and City and Havana airports. 310
(375) Virgin Atlantic operates direct flights on the LGW-HAV airport pair, as well as
        an indirect service all-year round. AFKL offers indirect flights on the LHR-HAV
        airport pair in both IATA Seasons. Delta does not operate on this route.311
        Therefore, the Parties’ activities do not overlap on the LHR-HAV airport pair.
(376) In view of the above and as explained in section 4.2.1.4 above, the Commission
        will assess the effect of the Transaction on the LHR/LGW/LCY-HAV airport
        pair.
(377) The table below provides the market shares of the Parties on the
        LHR/LGW/LCY-HAV airport pair.312
308 Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
    customers and travel agencies, question 13.
309 José Martí International Airport (HAV).
310 Form CO, paragraph 1135.
311 Form Co, paragraph 1140.
312 For the sake of completeness, it can be noted that the Parties’ market shares on a narrower market
    LHR/LGW-HAV are similar and therefore, the competition assessment will remain unchanged.
                                                     72
 ---pagebreak---        Table 38 - Market shares of the Parties on LHR/LGW/LCY-HAV313
                         Summer 2017 IATA Season                           Winter 2017/2018 IATA Season
                 AFKL         DL           VS           Combined    AFKL        DL          VS            Combined
TS             [5-10]%      [0-5]%     [80-90]%       [90-100]%    [0-5]%    [0-5]%     [80-90]%        [90-100]%
NTS           [10-20]%      [0-5]%     [60-70]%        [70-80]%    [0-5]%    [0-5]%     [70-80]%         [70-80]%
All
passengers    [10-20]%      [0-5]%     [60-70]%        [70-80]%    [0-5]%    [0-5]%     [70-80]%         [80-90]%
       Source: Form CO, paragraph 1135.
       (378) Virgin Atlantic has high market shares on the London – Havana route, being the
                only carrier offering direct flights on this route.314 In Winter IATA Season, on the
                LHR/LGW/LCY-HAV airport pair, the increments are moderate. In Summer
                IATA Season, the increments are between [5-10] and [10-20]%. In addition, the
                Parties submit that Virgin Atlantic has decreased its direct services from three to
                two weekly services in Winter 2018/2019 IATA Season.315
       (379) It is noteworthy that Virgin Atlantic operated a twice weekly direct flight in
                Summer 2017 IATA Season; it increased its offering to three direct weekly
                frequencies in Winter 2017/2018 but it has decreased its direct services to two
                weekly services in Winter 2018/2019 IATA Season.316 Despite high combined
                market shares, the Parties will remain subject to an effective competitive
                constraint post-Transaction on the above airport pairs. Close to 25% of passengers
                on the London – Havana route flew on indirect services in IATA year 2017.317
                Indirect flights therefore exercise an effective competition constraint on Virgin
                Atlantic’s direct flights, notably because they are more frequent than its twice-
                weekly direct offering.318 In particular, Spanish carriers Iberia and Air Europa
                offer indirect flights on the LGW-HAV airport pair and IAG (Iberia and British
                Airways), Aeroméxico and Alitalia offer indirect flights on the LHR-HAV airport
                pair.319
       313 Market shares excluding seats sold by e.g. Thomas Cook/Condor or AeroMexico do not significantly
           differ (Form CO, paragraph 1131).
       314 Form CO, paragraph 1132.
       315 Form CO, paragraph 1127.
       316 Form CO, paragraph 1127.
       317 Form CO, paragraph 1132.
       318 Form CO, paragraph 1132.
       319 Form CO, paragraph 1132.
                                                              73
 ---pagebreak---        (380) The market shares of the Parties’ main competitors are as follows:
       Table 39 - Market shares of competitors on LHR/LGW/LCY-HAV
                        Summer 2017 IATA Season                            Winter 2017/2018 IATA Season
                Star                   Iberia (part of    Air       Star                 Iberia (part of
                           oneworld                                          oneworld                     Air Europa
              Alliance                 oneworld)         Europa  Alliance                  oneworld)
TS            [0-5]%       [5-10]%         [0-5]%       [0-5]%   [0-5]%      [5-10]%        [0-5]%         [0-5]%
NTS           [0-5]%      [10-20]%        [5-10]%      [5-10]%   [0-5]%     [10-20]%       [5-10]%         [0-5]%
All
passengers    [0-5]%      [10-20]%        [5-10]%       [0-5]%   [0-5]%     [10-20]%       [5-10]%         [0-5]%
       Source: Form CO, paragraph 1135.
       (381) Besides, the Parties submit that charter carriers offering dry seats not captured by
               the DDS data are active on the route and exert a meaningful competitive
               constraint on carriers operating scheduled services, in particular, given the leisure
               nature of the route.320 Therefore, it is very likely that the Parties’ market shares
               are overstated.
       (382) Finally, the majority of respondents to the market investigation having expressed
               a view considers that there will be sufficient competition on the route to prevent
               the Parties’ from raising prices on the route post-Transaction.321
       (383) In light of the above and of all evidence available to it, the Commission considers
               that the Transaction does not raise serious doubts as to its compatibility with the
               internal market with respect to the London - Havana route under any plausible
               market definition.
       5.1.4.4.         London – Montego Bay
       (384) In Summer 2017 IATA Season, [40.000-60.000] passengers travelled between
               London Heathrow and Gatwick and Montego Bay airports.322 In Winter
               2017/2018 IATA Season, [40.000-60.000] passengers flew between London
               Heathrow and Gatwick and Montego Bay airports.323
       (385) Virgin Atlantic operates direct flights on the LGW-MBJ airport pair, as well as an
               indirect service all-year round on the LHR-MBJ airport pair. AFKL offers an
               indirect service on the LHR-MBJ airport pair, but has a minimal number of
               bookings.324 Therefore, the Parties’ activities do not overlap on the LHR-MBJ
               airport pair. Based on the information provided by the Parties, no airline operates
       320 Form CO, paragraph 1134.
       321 Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
           customers and travel agencies, question 13.
       322 Sangster International Airport (MBJ).
       323 Form CO, paragraph 1135.
       324 Form CO, paragraph 1152.
                                                              74
 ---pagebreak---                the LCY-MBJ airport pair.325 Therefore, the Commission will assess the effects
               of the Transaction on the LHR/LGW-MBJ airport pair combination.
       (386) The table below provides the market shares of the Parties on the LHR/LGW-MBJ
               airport pair.
       Table 40 - Market shares of the Parties on LHR/LGW-MBJ (including seats sold by TUI and
       Thomas Cook/Condor)
                         Summer 2017 IATA Season                          Winter 2017/2018 IATA Season
               AFKL          DL          VS           Combined      AFKL        DL          VS       Combined
                                                                                                       [90-
TS            [0-5]%      [0-5]%     [90-100]%      [90-100]%      [0-5]%     [0-5]%    [90-100]%
                                                                                                      100]%
NTS           [0-5]%      [0-5]%      [40-50]%       [40-50]%      [0-5]%     [0-5]%     [40-50]%   [40-50]%
All
passengers    [0-5]%      [0-5]%      [40-50]%       [40-50]%      [0-5]%     [0-5]%     [40-50]%   [40-50]%
       Source: Form CO, paragraph 1159.
       Table 41 - Market shares of the Parties on LHR/LGW-MBJ (excluding seats sold by TUI and
       Thomas Cook/Condor)
                         Summer 2017 IATA Season                          Winter 2017/2018 IATA Season
               AFKL          DL          VS           Combined      AFKL        DL          VS       Combined
TS            [0-5]%      [0-5]%      [80-90]%      [90-100]%      [0-5]%     [0-5]%     [80-90]%   [80-90]%
                                                                                                       [90-
NTS           [0-5]%      [0-5]%     [90-100]%      [90-100]%      [0-5]%     [0-5]%    [90-100]%
                                                                                                      100]%
All                                                                                                    [90-
passengers    [0-5]%      [0-5]%     [90-100]%      [90-100]%      [0-5]%     [0-5]%    [90-100]%
                                                                                                      100]%
           Source: Form CO, paragraph 1154 (MIDT data excluding seats sold by airlines TUI and Thomas
           Cook/Condor).
       (387) The Parties submit Virgin Altantic has high market shares in the TS segment in
               Summer and Winter IATA Seasons, because it is the only scheduled carrier to
               operate a direct service on this route.326
       (388) The Parties consider that both TUI and Thomas Cook/Condor operate (charter)
               direct services on this route and exert a meaningful competitive constraint on the
               Parties post-Transaction, particularly in the non-time-sensitive segment of the
               market and in the overall market through the sale of dry seats (the latter being
               particularly relevant in respect of the leisure nature of the route).327
       325 Form CO, paragraph 1162.
       326 Form CO, paragraph 1151.
       327 Form CO, paragraph 1158.
                                                          75
 ---pagebreak--- (389) Irrespective of whether seats sold by TUI and Thomas Cook/Condor are included
        or not, in both IATA Seasons, under any plausible market definition, the
        increment brought about by the Transaction is de minimis.
(390) Finally, the majority of respondents to the market investigation having expressed
        a view considers that there will be sufficient competition on the route to prevent
        the Parties’ from raising prices on the route post-Transaction.328
(391) In light of the above and of all evidence available to it, the Commission considers
        that the Transaction does not raise serious doubts as to its compatibility with the
        internal market with respect to the London – Montego Bay route under any
        plausible market definition.
5.1.5. Indirect/Indirect overlaps
(392) As explained above, the Commission treats each of the metal neutral joint
        ventures as a single entity for the purpose of assessing the market shares on all
        relevant routes. Consistent with the approach, Delta and AFKL are treated as a
        single entity on every route between the Continental Europe/ Ireland and North
        America and Delta and Virgin Atlantic are treated as a single entity on every
        route between the United Kingdom and North America.
(393) The activities of the Parties also give rise to affected markets on 13 routes on a
        city-pair level329, where both (only) operate indirect flights. It is noteworthy that
        some of these routes are affected only on some segments or during only one of
        the two relevant IATA Seasons.
(394) These routes are analysed with respect to combined market shares of the Parties
        and the market share increment brought about by the Transaction.
(395) Given that the Transaction does not give rise to serious doubts as to its
        compatibility with the internal market under any plausible market definition, the
        Commission will, for the purpose of this Decision, take a conservative approach
        and assess the effects of the Transaction on the airport pair where the Parties’
        market shares are the highest.
(396) An overview of the Parties’ market shares on the relevant routes is provided in the
        table below.
328 Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
    customers and travel agencies, question 13.
329 Los Angeles – Manchester, Dublin – Las Vegas, Dublin – Orlando, Amsterdam – Orlando, Barcelona
    – Los Angeles, Lyon – New York, Marseille – New York, Madrid – San Francisco, Hamburg – New
    York, Los Angeles – Milan, Düsseldorf – Los Angeles, Hamburg – Miami and Milan – San Francisco.
                                                    76
 ---pagebreak---      Table 42 - Market shares of the Parties on indirect/indirect overlap routes (in %)330
                                        Summer 2017 IATA Season                   Winter 2017/2018 IATA Season
                                  AFKL        DL           VS     Combined    AFKL         DL        VS     Combined
               TS                 [0-5]     [5-10]      [10-20]   [20-30]    [5-10]       [0-5]    [5-10]   [10-20]
MAN - LAX      NTS                [0-5]      [0-5]       [5-10]   [10-20]     [0-5]       [0-5]    [5-10]   [10-20]
               All passengers     [0-5]      [0-5]       [5-10]   [10-20]    [5-10]       [0-5]    [5-10]   [10-20]
               TS                 [0-5]     [5-10]      [10-20]   [20-30]     [0-5]       [0-5]   [10-20]   [20-30]
DUB - LAS      NTS                [0-5]      [0-5]      [30-40]   [30-40]     [0-5]       [0-5]   [30-40]   [30-40]
               All passengers     [0-5]      [0-5]      [30-40]   [30-40]     [0-5]       [0-5]   [30-40]   [30-40]
               TS                 [0-5]     [5-10]       [5-10]   [10-20]     [0-5]       [0-5]     [0-5]    [5-10]
DUB - MCO      NTS                [0-5]      [0-5]      [10-20]   [20-30]     [0-5]       [0-5]   [10-20]   [20-30]
               All passengers     [0-5]      [0-5]      [10-20]   [20-30]     [0-5]       [0-5]   [10-20]   [20-30]
               TS               [10-20]    [20-30]        [0-5]   [40-50]   [10-20]     [30-40]     [0-5]   [50-60]
AMS - MCO      NTS              [10-20]    [20-30]        [0-5]   [40-50]   [10-20]     [10-20]     [0-5]   [30-40]
               All passengers   [10-20]    [20-30]        [0-5]   [40-50]   [10-20]     [20-30]     [0-5]   [40-50]
               TS               [10-20]    [10-20]        [0-5]   [30-40]   [10-20]     [10-20]     [0-5]   [20-30]
BCN - LAX      NTS               [5-10]      [0-5]        [0-5]   [10-20]     [0-5]       [0-5]     [0-5]    [5-10]
               All passengers    [5-10]      [0-5]        [0-5]   [10-20]    [5-10]       [0-5]     [0-5]    [5-10]
               TS               [60-70]     [5-10]          -     [70-80]   [50-60]     [10-20]       -     [60-70]
LYS – JFK      NTS              [30-40]     [5-10]        [0-5]   [30-40]   [30-40]       [0-5]    [5-10]   [50-60]
               All passengers   [30-40]     [5-10]        [0-5]   [40-50]   [40-50]      [5-10]    [5-10]   [50-60]
               TS               [60-70]     [5-10]        [0-5]   [70-80]   [60-70]      [5-10]     [0-5]   [70-80]
MRS – JFK      NTS              [30-40]     [5-10]        [0-5]   [40-50]   [40-50]       [0-5]     [0-5]   [40-50]
               All passengers   [40-50]     [5-10]        [0-5]   [40-50]   [40-50]       [0-5]     [0-5]   [40-50]
               TS               [10-20]     [5-10]        [0-5]   [10-20]    [5-10]      [5-10]     [0-5]   [10-20]
MAD – SFO      NTS              [10-20]    [10-20]        [0-5]   [20-30]   [10-20]      [5-10]     [0-5]   [20-30]
               All passengers   [10-20]    [10-20]        [0-5]   [20-30]   [10-20]      [5-10]     [0-5]   [20-30]
               TS                [5-10]      [0-5]        [0-5]   [10-20]   [10-20]      [5-10]     [0-5]   [20-30]
HAM – JFK      NTS               [5-10]     [5-10]        [0-5]   [10-20]   [10-20]     [10-20]    [5-10]   [30-40]
               All passengers    [5-10]     [5-10]        [0-5]   [10-20]   [10-20]     [10-20]    [5-10]   [30-40]
               TS               [10-20]     [5-10]        [0-5]   [20-30]   [10-20]      [5-10]  [0-5]      [20-30]
MXP – LAX      NTS               [5-10]     [5-10]        [0-5]   [10-20]   [10-20]      [5-10]    [5-10]   [30-40]
               All passengers    [5-10]     [5-10]        [0-5]   [20-30]   [10-20]      [5-10]    [5-10]   [20-30]
               TS                 [0-5]      [0-5]        [0-5]    [5-10]    [5-10]      [5-10]     [0-5]   [10-20]
DUS – LAX      NTS              [10-20]      [0-5]        [0-5]   [10-20]    [5-10]       [0-5]   [10-20]   [20-30]
               All passengers   [10-20]      [0-5]        [0-5]   [10-20]    [5-10]       [0-5]   [10-20]   [20-30]
               TS                 [0-5]      [0-5]        [0-5]     [0-5]    [5-10]       [0-5]     [0-5]    [5-10]
HAM – MIA      NTS                [0-5]      [0-5]        [0-5]    [5-10]   [10-20]       [0-5]   [10-20]   [20-30]
               All passengers     [0-5]      [0-5]        [0-5]    [5-10]    [5-10]       [0-5]    [5-10]   [20-30]
     330 For the Amsterdam-Orlando route and the Manchester-Los Angeles route, the data submitted by the
         Parties includes seats sold by Thomas Cook/Condor. Market shares excluding these seats do not
         significantly differ (see Form CO, paragraphs 651 and 877), in particular, the analysis is valid
         irrespective of whether these seats are included or not.
                                                              77
 ---pagebreak---                                         Summer 2017 IATA Season                       Winter 2017/2018 IATA Season
                                 AFKL          DL         VS        Combined       AFKL         DL         VS     Combined
               TS               [10-20]      [5-10]      [0-5]       [20-30]     [10-20]      [5-10]     [0-5]    [10-20]
MXP – SFO      NTS331           [10-20]      [5-10]     [5-10]       [20-30]      [5-10]      [5-10]    [10-20]   [30-40]
               All              [10-20]      [5-10]     [5-10]       [20-30]      [5-10]      [5-10]    [10-20]   [20-30]
               passengers332
             Source: Form CO, paragraphs 651, 839, 856, 877, 893, 914, 938, 954, 994, 1008, 1024, 1053 and
             Form CO, Annex B.04., DDS data
     (397) Indirect routes are often established in an opportunistic way by carriers and are
             modified from one IATA season to the next. Furthermore, price increases or
             reductions of capacity could be countered by competitors who could start
             operating on these routes more easily than on direct/direct routes, which require
             the deployment of aircraft dedicated to the O&D route.
     (398) On all of these routes no competition concerns arise because either the Parties
             combined market shares are below 60% or the increment brought about by the
             Transaction is below 5% (so that no material merger-specific effect would likely
             exist). Given the low competitive constraint between indirect services, market
             shares below 60% on routes indicate that there is already prima facie sufficient
             competition from other carriers.
     (399) The majority of the respondents having expressed a view considers that there will
             be sufficient competition on the indirect/indirect overlap routes to prevent the
             Parties from raising prices in the markets for passenger air transport services after
             the Transaction.333
     (400) In light of the above, the Commission considers that the Transaction does not
             raise any serious doubts as to its compatibility with the internal market under any
             possible market definition on any of the 13 indirect/indirect overlap routes.
     5.1.6. Conclusion
     (401) In light of the above, the Commission considers that, under the O&D approach,
             the Transaction does not raise any serious doubts as to its compatibility with the
             internal market with regard to passenger air transport services, under any
             plausible market definition.
     331 For the Winter 2017/2018 IATA Season the NTS combined market share is [40-50]% on the plausible
         airport-pair LIN – SFO and [30-40]% on the plausible airport-pair LIN+MXP – SFO and therefore
         higher than on the plausible airport pair MXP – SFO. However, the market shares are still below 60%,
         which indicates that there is already prima facie sufficient competition from other carriers.
     332 For the Winter 2017/2018 IATA Season the overall combined market share is [30-40]% on the
         plausible airport-pair LIN – SFO and [30-40]% on the plausible airport-pair LIN+MXP – SFO and
         therefore higher than on the plausible airport pair MXP – SFO. However, the market shares are still
         below 60%, which indicates that there is already prima facie sufficient competition from other carriers.
     333 Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
         customers and travel agencies, question 13.
                                                              78
 ---pagebreak--- 5.2.    Passenger air transport services under the airport-by-airport approach
5.2.1. Introduction
(402) According to paragraph 36 of the Horizontal Merger Guidelines,334 "some
        proposed mergers would, if allowed to proceed, significantly impede effective
        competition by leaving the merged firm in a position where it would have the
        ability and incentive to make the expansion of smaller firms and potential
        competitors more difficult or otherwise restrict the ability of rival firms to
        compete. In such a case, competitors may not, either individually or in the
        aggregate, be in a position to constrain the merged entity to such a degree that it
        would not increase prices or take other actions detrimental to competition. For
        instance, the merged entity may have such a degree of control, or influence over,
        the supply of inputs or distribution possibilities that expansion or entry by rival
        firms may be more costly."
(403) As explained in section 4.1.2 above, the Transaction entails the increase of the
        Parties’ combined slot holding at airports where their slot portfolios overlap,
        namely London Heathrow and Manchester airports.
(404) Accordingly, the Commission will first assess whether the Transaction, by
        reinforcing the Parties' slot holding at a number of airports and granting it broader
        access to their infrastructure, gives the Parties the ability and incentive to prevent
        other air carriers from getting access to airport infrastructure and therefore to the
        markets for the provision of passenger air transport services from those airports,
        preventing or reducing competition on those markets (sections 5.2.2 and 5.2.3
        below). The Commission will then analyse the overall effects of the Parties’ slot
        holding position on the ability of the Parties’ rivals to compete at the relevant
        airports (section 5.2.4).
5.2.2. Ability of the Parties to foreclose access to the market for the provision of
        passenger air transport services
5.2.2.1.          Conditions for the ability to foreclose access to the market for the
        provision of passenger air transport services
(405) In line with its prior decisional practice, the Commission considers that, for the
        Parties to be able to foreclose their competitors post-Transaction, the following
        conditions must be fulfilled: (i) the slots that the Parties would hold post-
        Transaction represent a significant share of the airport capacity, in particular at
        peak times; (ii) the Transaction has a material impact on the Parties' slot holding
        at the airport, in particular at peak times; and (iii) the Parties’ slot holding could
        negatively affect the overall availability of slots as an input for the passenger air
        transport markets to or from the relevant airport.335
334 Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
    concentrations between undertakings, OJ C 31, 5 February 2017, p. 5.
335 See e.g. Cases M.8869 – Ryanair/LaudaMotion, paragraph 508; M.8672 – easyJet/Certain Air Berlin
    Assets, paragraph 105; M.8633 – Lufthansa/Certain Air Berlin Assets, paragraph 182.
                                                      79
 ---pagebreak--- (406) In the present case, the combined slot holdings post-Transaction do not represent
         a significant share of the capacity of any of the airports where the Parties’
         respective portfolios overlap. In addition, the Transaction has no material impact
         on any of the Parties’ slot holding at any relevant airport, as described in
         section 5.2.2.3 below. Therefore, it is not necessary to assess whether the third
         condition (i.e. the negative impact on the overall availability of slots) is fulfilled.
(407) In assessing whether the merged entity would have the ability to foreclose, the
         Commission considers whether rival firms would be likely to deploy effective and
         timely counter-strategies in case of foreclosure. In this case, the Commission
         notes that there are limited effective and timely counter-strategies that the Parties’
         competitors would be likely to deploy in the case of a foreclosure strategy by any
         of them. There is no possibility for an air carrier to be less reliant on access to
         airport infrastructure and very limited possibility to sponsor the expansion of
         airport capacity or the opening of new airports.336
(408) In light of the above, the Commission will assess the ability of the Parties post-
         Transaction to foreclose access to the markets for the provision of passenger air
         transport at the relevant airports by taking account of the following two factors
         together:337 (i) the share of slots held by the Parties post-Transaction at the airport
         or at substitutable airports being high, in particular at peak times and (ii) the
         increment in the Parties' slot holding brought about by the Transaction at the
         airport or at the substitutable airports being material, in particular at peak times.
         Considering that the Parties' slot holdings at the relevant airports vary between the
         Summer and Winter IATA Seasons, the Commission will carry out separate
         assessments for each IATA Season.
(409) Before conducting an airport-by-airport assessment of the Parties’ ability to
         foreclose access to the markets for the provision of passenger air transport
         (section 5.2.2.3), the Commission will detail the methodologies for determining
         the slot holding post-Transaction and the increment brought about by the
         Transaction.
5.2.2.2.           Methodologies
(410) A slot holding is defined as the ratio between the number of slots held by an air
         carrier (or the air carriers that are part of the same group) at an airport and the
         total available slots at that airport (i.e. the airport runway capacity).
(411) Delta and AFKL have estimated their respective slot holding338 on the basis of
         AFKL’s internal slot data, while VAL estimated its slot holding through data
336 Without prejudice to the exceptional cases of joint ventures between an airport manager and an airline
    (see e.g. the joint venture between Lufthansa and Flughafen München GmbH, the company managing
    Munich airport).
337 As explained in paragraph (406) above, given that the three conditions are cumulative, there is no need
    to assess the third condition given that the first two conditions are not fulfilled.
338 The Parties have submitted slot holding data that captures all the slots which the parties used for their
    own operations in Winter 2017/2018 and Summer 2018. This includes remedy slots any party benefits
    from, as well as slots leased to or transferred to any of the Parties, as applicable. The data does not
    include slots leased to, transferred to, swapped out to or exchanged with another carrier (Reply of the
    Parties to RFI 4 of 28 January 2019). Nevertheless, as described in footnote 339 below, the
                                                           80
 ---pagebreak---          from the slot coordinator and cross-checked against its internal data.339 The
         runway capacity is based on the information provided by Airport Coordination
         Limited, which is the slot coordinator at the relevant overlap airports.340
(412) The Commission has calculated two values for the Parties’ slot holding post-
         Transaction: (i) their average slot holding during the opening hours of the airport,
         and (ii) their average slot holding during peak times.341
(413) In order to adopt a conservative approach, the Commission has calculated the
         Parties’ combined highest slot holding at any given hour band throughout the
         whole week (including any peak hour), which exceeds their combined average
         slot holding during peak times.
(414) The increment brought about by the Transaction corresponds to the difference
         between the combined slot holding post-Transaction and VAL/Delta’s slot
         holding pre-Transaction.
(415) To assess the impact of the Transaction, the Commission therefore considers the
         Parties’ combined slot holding post-Transaction, as well as the increment in
         AFKL’s slot holding as a result of the Transaction.
5.2.2.3.          Airport-by-airport assessment
(416) As explained in section 5.2.1 above, the Commission will assess the effects of the
         Transaction on the Parties’ slot holding in both IATA Seasons at London
         Heathrow and Manchester airports.
    Commission has crosschecked the data of the Parties against the data of the slot coordinator and did
    not note any material difference in the slot holding of the Parties.
339 Form CO, paragraph 296. The Commission has cross-checked the data on slot holding provided by the
    Parties against Airport Coordination Limited Seasonal Report information, which contains a
    breakdown of the number of slots allocated to an airline at a given airport. These reports are available
    online https://www.acl-uk.org/airport-info/. See for instance Heathrow airport, Winter 2018/19 Start
    of     Season      Report      available      on      ACL’s       website   https://www.acl-uk.org/wp-
    content/uploads/2018/09/LHR-W18-Start-Of-Season-Report.pdf .
340 The runway capacity of LHR and MAN is available online https://www.acl-uk.org/airport-info-
    details/?aid=1, section “Capacity Declaration”.
341 London Heathrow airport is open 24 hours with some restrictions on night flights between 23:30 and
    6:00. Similarly, Manchester airports operates on a 24-hour basis with restrictions at night, in particular
    between 23:00 and 6:59. Given that the Parties hold some slots at both airports during the restricted
    hour bands, in order to adopt a conservative approach, the Commission will take those slots into
    account for the sake of calculating the highest slot holding.
                                                          81
 ---pagebreak---            Table 43 - Slot holding342 - Winter
                             Average slot holding                                         Highest slot holding
 Airport
               Virgin         Delta        AFKL      Combined        Virgin         Delta            AFKL               Combined
              [0-5]%        [0-5]%        [0-5]%     [5-10]%      [10-20]%       [0-5]%             [0-5]%             [10-20]%
LHR                                                                                                                Hour band 4:00-4:59
              [0-5]%        [0-5]%        [0-5]%      [0-5]%       [0-5]%        [0-5]%             [0-5]%              [5-10]%
MAN                                                                                                               Hour band 10:00-10:59
                    Source: Form CO, annex B.03, Slot holding data for LHR and MAN.
           (417) In Winter 2018/2019 IATA Season, the Parties estimate that their combined slot
                    holding post-Transaction at London Heathrow would be no more than [5-10]% on
                    average at London Heathrow during the relevant airport’s opening hours, with a
                    gross increment of [0-5]%. At Manchester airport, the combined average slot
                    holding would be [0-5]% with an increment of [0-5]%. Such levels of slot holding
                    indicate that the Transaction is unlikely to be problematic.
           (418) In Winter 2018/2019 IATA Season, at London Heathrow, the Parties’ highest slot
                    holding during any specific hour band at each of the overlap airport would not
                    exceed [10-20]%. At Manchester, the highest slot holding would be [5-10]%.
           Table 44 - Slot holding343 - Summer
                             Average slot holding                                     Highest slot holding
   Airport
               Virgin        Delta        AFKL     Combined        Virgin       Delta         AFKL                 Combined
                                                                                                                  [10-20]%
  LHR         [0-5]%       [0-5]%       [0-5]%     [5-10]%      [10-20]%      [0-5]%         [0-5]%
                                                                                                            Hour band 4:00 – 4:59344
  MAN         [0-5]%       [0-5]%       [0-5]%      [0-5]%       [5-10]%      [0-5]%         [0-5]%                [5-10]%
                                                                                                              Hour band 9:00 – 9:59
                    Source: Form CO, annex B.03, Slot holding data for LHR and MAN.
           (419) In Summer 2019 IATA Season, the Parties estimate that their combined slot
                    holding post-Transaction at London Heathrow and Manchester airports would be
                    no more than [5-10]% on average during the relevant airport’s opening hours,
                    with a gross increment of [0-5]% at most. Such levels of slot holding indicate that
                    the Transaction is unlikely to be problematic.
           (420) In Summer 2019 IATA Season, the Parties’ highest slot holding during any
                    specific hour band at London Heathrow would not exceed [10-20]%. At
                    Manchester, the Parties’ combined highest slot holding during any relevant hour
                    band would be [5-10]%.
           (421) Therefore, in both IATA Seasons, the level of the Parties’ slot holdings post-
                    Transaction is unlikely to give rise to serious doubts as to its compatibility with
           342 Rounding effects.
           343 Rounding effects.
           344 It can be noted that runway movements are limited during the hour band 4:00-4:59. In particular,
               landing is prohibited until 4:30 (Form CO, footnote 90). The Parties therefore submit that their highest
               slot holding is actually [10-20]% during the hour band 9:00-9:59.
                                                                   82
 ---pagebreak---         the internal market. Furthermore, the limited increment in slot holdings brought
        about by the Transaction at London Heathrow and Manchester airports is unlikely
        to have any material impact on the Parties’ slot holdings at these airports and thus
        their ability to foreclose access to other air carriers.
(422) Finally, the majority of competitors having expressed a view consider that the
        Parties would not have the ability to prevent other carriers from providing
        passenger air transport services to/from London Heathrow and Manchester
        airports.345
5.2.2.4.          Conclusion
(423) In light of the above, given the Parties’ combined slot holding at London
        Heathrow and Manchester airports post-Transaction during the relevant IATA
        Seasons, the Commission considers that the Parties would likely not have the
        ability to foreclose competitors’ access to the markets for the provision of
        passenger air transport services.
5.2.3. Incentive of the Parties to foreclose access to the markets for the provision of
        passenger air transport services
(424) Although the Commission considers that the Parties will not have the ability to
        foreclose their competitors in either IATA Season, the Commission will briefly
        assess whether the Parties would have the incentive to foreclose access to market
        for the provision of passenger air transport at London Heathrow and Manchester.
(425) A dominant carrier at a relevant airport would in principle have a strong incentive
        to pursue a foreclosure strategy, as any new service or expansion by another
        carrier would be likely to introduce or increase competition on one of the
        dominant carrier's routes. Such dominant carrier would have a greater incentive
        than any other carrier at the airport to keep slots out of reach of other carriers. The
        incentive to foreclose would also grow with the increased size of the slot portfolio
        it would control at the airport.
(426) The Commission notes that the presence of the Parties at London Heathrow and
        Manchester airports is limited and they are evidently not dominant. At both
        airports, the Parties face the competition of the oneworld alliance, which holds a
        larger slot portfolio than the Parties.346 At London Heathrow, British Airways
        operates a base of 233 aircraft and more than 50% of the slots are held by
        oneworld alliance’s members British Airways and American Airlines.347
(427) Finally, respondents to the market investigation have not raised substantial
        concerns according to which the Parties had previously engaged or would engage
        in exclusionary practices such as "slot hoarding",348 "slot babysitting"349 or use of
345 Replies to eQ1 – Questionnaire 1 for Competitors, question 21.
346 Form CO, paragraph 294.
347 Form CO, footnote 90.
348 "Slot hoarding" involves the operation of small aircraft and/or low load factors in order to keep slots
    rather than lose them under the "use-it-or-lose-it" principle described in section 4.1.2.1 above.
                                                          83
 ---pagebreak---         its "slot shuffling power".350 A minority of respondents to the market
        investigation expressed concerns about the ability of the Parties, post-Transaction,
        to engage in exclusionary practice at London Heathrow through their ability to
        share slots through their joint venture. In particular, a competitor submits that the
        merged entity would have the ability to “saturate capacity at times [the
        competitor] would prefer to operate”.351 Nevertheless, considering the Parties’
        limited slot holding, such a practice appears unlikely (as it would likely require
        the Parties’ to cancel or retime their own operations) and could be countered by
        British Airways, given its strong position at London Heathrow.
(428) In light of the above, the Commission considers that the Parties’ would not have
        the incentive to foreclose competitors’ access to the markets for the provision of
        passenger air transport services at London Heathrow and Manchester airports
        post-Transaction during either IATA Winter and Summer Season.
5.2.4. Overall effect on competition for passenger air transport services
(429) Effective competition would be significantly harmed if the foreclosed air carriers
        played a sufficiently important role in the competitive process on the passenger
        air transport markets from and to the overlap airports. The higher the proportion
        of carriers which would be foreclosed on these markets, the more likely it would
        be that the merger would result in a significant price increase in the passenger air
        transport markets and, therefore, to significantly impede effective competition
        therein.
(430) On that basis, the Commission will assess whether the strengthening of the
        Parties’ slot holdings post-Transaction would result in less effective competition
        for passenger air transport services to or from London Heathrow and Manchester
        airports.
(431) The Commission notes that, when an air carrier holds a significant slot portfolio
        at a given airport while the remaining slot holding is very fragmented and slots
        are held by a large number of small air carriers, the latter are unable to translate
        these slots into a viable alternative to dominant air carriers. However, as noted in
        sections 5.2.2 and 5.2.3 above, the Parties do not hold a slot portfolio at London
        Heathrow and Manchester airports post-Transaction that would enable them, or
        give them the incentive, to foreclose other air carriers.
(432) In this respect, the Commission notes that the Parties will continue to face strong
        competition at London Heathrow and Manchester airports. At London Heathrow
        airport, more than 70 airlines compete with the Parties.352 At Manchester airport,
349 "Slot babysitting" involves the transfer of slots to non-competing airlines, such as partner airlines
    within an alliance before shifting them to uses that are more profitable.
350 "Slot shuffling power" refers to the ability to move a flight to a timing close to the timing envisaged by
    a new entrant.
351 Replies to eQ1 – Questionnaire 1 for Competitors, question 22.
352 Heathrow airport “Facts and figures » https://www.heathrow.com/company/company-news-and-
    information/company-information/facts-and-figures.
                                                          84
 ---pagebreak---         the Parties face competition from more than 60 airlines.353 These competitors will
        likely have the ability to react to any competitive behaviour by the merged entity.
(433) The Commission therefore considers that it is unlikely that the Transaction will
        harm effective competitive on the provision of passenger air transport services at
        London Heathrow and Manchester airports, where the Parties’ slot portfolios
        overlap.
5.2.5. Conclusion
(434) In light of the above, and considering in particular the Parties’ lack of ability to
        foreclose access of competitors to the markets for the provision of passenger air
        transport services at any relevant airports, the Commission concludes that, under
        the airport-by-airport approach, the Transaction does not raise serious doubts as to
        its compatibility with the internal market with respect to the markets for
        passenger air transport to or from London Heathrow and Manchester airports,
        under any plausible market definition.
5.3.    Cargo air transport
5.3.1. Analytical framework for the assessment of air transport of cargo – Alliances and
        joint ventures
5.3.1.1.         Alliances and joint ventures
(435) Delta, AF, KL and Alitalia are all parties of the TATL Joint Venture, which
        covers combined passenger/cargo flights, but excludes cargo-only flights. This
        Joint Venture involves cargo operations at seven main hubs: Amsterdam-
        Schiphol, Atlanta, Detroit, Minneapolis-St. Paul, New York-JFK, Paris-CDG and
        Rome-Fiumicino.
(436) Delta and Virgin Atlantic are also the two members of the DL-VS Joint Venture,
        which includes coordination on pricing, sales and capacity in respect of UK –
        North America cargo flows.
(437) In addition, AFKL and Delta are members of the SkyTeam Cargo alliance, which
        provides for a cooperation between participating SkyTeam members in
        transporting cargo across the SkyTeam global network. The SkyTeam alliance
        offers a less integrated cooperation than the TATL and DL-VS Joint Ventures and
        aims at developing the traffic between members by means of reciprocal
        interlining agreements.354
(438) For the purpose of the Decision, the market position of Delta and Virgin Atlantic
        will be analysed as being a single one on all routes covered by the DL-VS Joint
353 Route        Development         at        Manchester          airport,        https://live-webadmin-
    media.s3.amazonaws.com/media/3734/maav-0007-mag-routes-brochure-updated-web.pdf
354 For the avoidance of doubt, the Parties submit that [details about strategic cooperation] (Form CO,
    Chapter C, footnote 6).
                                                     85
 ---pagebreak---          Venture and the market position of AFKL and Delta will be analysed as being a
         single one on all routes covered by the TATL Joint Venture.355
5.3.1.2.         Methodology used to calculate market shares
(439) The Commission has previously accepted to take into account in its assessment
         estimated market shares based on World Air Cargo Data (“WACD”) and the
         Cargo Accounts Settlement System (“CASS”).356 However, the Commission has
         also noted that CASS and/or WorldACD data do not reflect the entire air cargo
         markets,357 and therefore underestimate the total market sizes and overestimate
         the Parties’ market shares.358 The Parties also acknowledge the inherent
         limitations in the different datasets available to them with respect to the air
         transport of cargo.359
(440) In fact, CASS does not include sales to agents that are not registered with IATA,
         nor direct sales to end-customers, whereas WorldACD data reflect an incomplete
         representation of the market as only sixty-six carriers provide their data to
         WorldACD.
(441) The Parties have submitted data based on their own estimates on the basis of
         World Air Cargo Data (“WACD”) database.360 However, the Parties have also
         compared the WACD data with alternative datasets,361 and have indicated in their
         submission, where those other data sources reinforce the position as shown by the
         WACD data or where they suggest a different competitive position.362
(442) For the purpose of the Decision, the Commission is of the view that the Parties’
         best estimates on the basis of WACD data is appropriate for the assessment of the
         affected routes in this case.
5.3.2. Horizontal overlaps
(443) Air France-KLM Martinair Cargo is AFKL’s air cargo division. For the air
         transport of cargo, AFKL primarily uses belly-hold space in its passenger aircraft
         or combi-aircraft (passenger planes with main deck cargo capacity) as well as six
355 The Parties submitted data for AFKL that included AFKL’s cargo-only freighters. Since cargo-only is
    excluded from the scope of the cooperation, the Parties combined market shares under the TATL Joint
    Venture, which covers only belly-hold cargo, are inflated.
356 M.5440 – Lufthansa/Austrian Airlines, paragraph 283.
357 M.5440 – Lufthansa/Austrian Airlines, paragraph 284.
358 M.6447 – IAG/bmi, paragraph 555.
359 Form CO, paragraph 1427.
360 Form CO, paragraph 1427.
361 The other datasets taken into account by the Parties are the following: the IATA Cargo Accounts
    Settlement System (“CASS”), T100 (the U.S. Department of Transport dataset) and Seabury.
362 Form CO, paragraph 1428.
                                                       86
 ---pagebreak---          full-freighter aircraft.363 Both Delta and Virgin Atlantic do not operate full-
         freighter aircraft and use only belly-hold space in its passenger aircraft.364
(444) The Transaction gives rise to fifteen affected markets with respect to air transport
         of cargo.365 The market shares of the Parties on the affected markets in 2017 were
         as follows:
         Table 45 - Parties' market shares in cargo air transport
                       Routes                      AFKL           Delta         Virgin          Combined
                                                                                Atlantic
          EEA – North America (USA               [10-20]%        [0-5]%        [5-10]%          [20-30]%
                  & Canada only)
             North America (USA &                 [5-10]%       [5-10]%         [0-5]%          [20-30]%
               Canada only) – EEA
                   Mexico – EEA                  [20-30]%        [0-5]%         [0-5]%          [20-30]%
         UK – North America (USA &                 [0-5]%       [5-10]%       [20-30]%          [30-40]%
                    Canada only)
             North America (USA &                  [0-5]%        [0-5]%       [10-20]%          [20-30]%
                Canada only) – UK
                   UK – Mexico                   [10-20]%        [0-5]%       [20-30]%          [40-50]%
                   Mexico – UK                   [20-30]%        [0-5]%         [0-5]%          [20-30]%
                 EEA – Caribbean                 [20-30]%        [0-5]%         [0-5]%          [20-30]%
                 Caribbean – EEA                 [10-20]%        [0-5]%        [5-10]%          [20-30]%
                    EEA – Cuba                   [20-30]%        [0-5]%         [0-5]%          [30-40]%
                    Cuba – EEA                   [30-40]%        [0-5]%         [0-5]%          [30-40]%
363 Form CO, paragraphs 1402 and 1404.
364 Form CO, paragraphs 1405-1406.
365 In line with the Commission’s established geographic market definition, the Parties have provided data
    on an EEA-basis. However, in light of the respective geographic focus of the parties’ activities, the
    Parties separately provided data on a UK-only basis in order to allow the Commission to assess the
    increment brought about by Virgin Atlantic in a more meaningful way. The Commission accepts to
    take account of this additional dataset in its assessment since even on this narrower basis, the
    Transaction does not give rise to any competition concerns.
                                                        87
 ---pagebreak---                        Routes                       AFKL           Delta          Virgin       Combined
                                                                                 Atlantic
               EEA – South Africa                 [20-30]%        [0-5]%          [0-5]%       [20-30]%
               South Africa – EEA                 [10-20]%        [0-5]%         [5-10]%       [20-30]%
                   EEA – Nigeria                  [10-20]%        [0-5]%        [10-20]%       [30-40]%
                   Nigeria – EEA                  [20-30]%        [0-5]%         [5-10]%       [30-40]%
         Source: Form CO, paragraphs 1435 et seq.
5.3.2.1.          The Parties’ views
(445) The Parties submit that their combined market shares in any of the relevant
         affected routes do not give rise to competition concerns in that they are generally
         below [30-40]%.366
(446) The Parties note that, given the limited market coverage of cargo market data
         sources, the Parties’ market shares on all the affected routes are likely to be
         overestimated.367
5.3.2.2.          The Commission’s assessment
(447) As can be seen in Table 45 above, the Parties’ combined market share post-
         Transaction will remain below [30-40]% for most of the routes and reach at most
         around [40-50]% with small increments of below [10-20]% and not higher than
         12% in all affected routes. The only exception is UK-Mexico on which the
         combined market shares will be slightly above [40-50]% with an increment of
         [10-20]%.
(448) In addition, on all routes, there are several credible and well-established
         competitors capable of imposing a significant competitive constraint on the
         Parties post-Transaction, such as combination airlines (i.e. Lufthansa, British
         Airways, American Airways), belly-hold cargo carriers (i.e. TUI, Thomas Cook),
         cargo carriers (i.e. LH Cargo, Cargolux)368 A majority of respondents to the
         market investigation confirmed the existence of alternative credible suppliers in
366 Form CO, paragraph 1401.
367 Form CO, paragraph 1432.
368 Form CO, paragraph 1401, Replies to eQ3 – Questionnaire 3 to customer in cargo transport,
    questions 6.1, 6.2 and 6.3. The Parties submit that they are also constrained post-Transaction by
    integrators such as e.g. FedEX, UPS and DHL. However, the Parties have also submitted that they
    cannot be certain that the WACD data covers integrators such as FedEX and UPS, see Form CO,
    paragraph 1430. The Commission notes, that neither FedEX nor UPS or DHL are mentioned as
    competitors for the affected cargo flows in the data submitted by the Parties. However, to the extent
    that these integrators are operating on the affected cargo flows, the Parties’ combined market shares
    post-Transaction are overstated. The competitive analysis does not change, irrespective of whether
    integrators are considered or not.
                                                        88
 ---pagebreak---         the affected routes.369 As regards to the UK-Mexico flow, the Parties will remain
        under a significant competitive constraint, notably from competitors such as
        CargoLogicAir’s, Panalpina and Turkish Airlines.370 This was also confirmed by
        a majority of respondents to the market investigation having expressed a view.371
(449) The Parties are not close competitors, since only AFKL operates both cargo-only
        freighters and belly-hold cargo services while Delta and Virgin only provide
        belly-hold cargo services. A majority of respondents to the market investigation
        confirmed that neither AFKL, Delta nor Virgin Atlantic are each other’s closest
        competitor on any affected routes.372
(450) The majority of the respondents to the market investigation also indicated that
        switching between air cargo service suppliers is easy, given the limited costs and
        time frame required for a customer to switch to another cargo supplier373 and the
        fact that cargo service contracts are normally concluded for six months to one
        year and do not contain exclusivity clauses.374
(451) Moreover, respondents to the market investigation having expressed a view did
        not raise any material concern as regards the effects of the Transaction in terms of
        prices or levels of services on any of the affected routes.375
5.3.2.3.         Conclusion
(452) In light of the above considerations and of all evidence available to it, the
        Commission concludes that the Transaction does not raise serious doubts as to its
        compatibility with the internal market with respect to the market for air transport
        of cargo services under any plausible market definition.
5.4.    MRO services
(453)     AFKL, Delta and, to a limited extent only, VAL are all active in the provision of
          maintenance, repair and overhaul (“MRO”) services. AFKL and Delta provide
          all the four types of MRO services (i.e. line maintenance, heavy maintenance,
          engine maintenance and components maintenance) to third-party carriers at
          various locations. The TATL Joint Venture between AFKL and Delta does not
          cover MRO services.
369 Replies to eQ3 – Questionnaire 3 to customer in cargo transport, questions 6.1, 6.2 and 6.3.
370 Form CO, paragraphs 1449 and 1461.
371 Replies to eQ3 – Questionnaire 3 to customer in cargo transport, question 13.
372 Replies to eQ3 – Questionnaire 3 to customer in cargo transport, questions 6.1, 6.2 and 6.3.
373 Replies to eQ3 – Questionnaire 3 to customer in cargo transport, question 8.
374 Replies to eQ3 – Questionnaire 3 to customer in cargo transport, question 7.
375 Replies to eQ1 – Questionnaire 1 for competitors, questions 25, 28 and 29; eQ3 – Questionnaire 3 to
    customer in cargo transport, questions 12 and 13.
                                                       89
 ---pagebreak--- (454) VAL is not active in heavy, engine or components maintenance and only offers
       line maintenance services to third-parties at three airports (JFK, JNB and
       LHR).376
5.4.1. Horizontal overlaps
(455) In the EEA, the Transaction does not give rise to any horizontal overlaps with
       respect to the provision of heavy maintenance services, engine maintenance
       services and components maintenance services.377 The Parties’ activities overlap
       at LHR airport for the provision of line maintenance services to third parties,
       however, the market for the supply of line maintenance services at LHR is not
       horizontally affected.
(456) In light of the above considerations and all evidence available to it, the
       Commission concludes that the Transaction does not raise serious doubts as to its
       compatibility with the internal market due to horizontal effects in the markets for
       MRO services, under any plausible market definition.
5.4.2. Vertical relationships
(457) The Parties are active on some vertically related markets since the provision of
       MRO services is an input for the provision of air transport services. However,
       The Transaction does not give rise to any vertically affected markets with respect
       to the provision of MRO services to third parties.
(458) In light of the above considerations and all evidence available to it, the
       Commission concludes that the Transaction does not raise does not raise serious
       doubts as to its compatibility with the internal market due to vertical effects in the
       market for the provision of MRO services, under any plausible market definition.
5.4.3. Conclusion
(459) In light of the above considerations and all evidence available to it, the
       Commission concludes that the Transaction does not raise serious doubts as to its
       compatibility with the internal market with respect to the markets for MRO
       services, under any plausible market definition.
5.5.   Conclusion
(460) In light of the above considerations and all evidence available to it, the
       Commission concludes that the Transaction does not raise serious doubts as to its
       compatibility with the internal market with respect to the markets for passengers
       air transport services, under both the O&D the airport-by-airport approaches,
       cargo air transport services and MRO services, under any plausible market
       definition.
376 Form CO, paragraph 1610.
377 Form CO, paragraph 1607.
                                                90
 ---pagebreak--- 6.      CONCLUSION
(461) For the above reasons, the European Commission has decided not to oppose the
      notified operation and to declare it compatible with the internal market and with
      the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of
      the Merger Regulation and Article 57 of the EEA Agreement.
                                                   For the Commission
                                                   (Signed)
                                                   Margrethe VESTAGER
                                                   Member of the Commission
                                             91