CELEX: 32014M7333
Language: en
Date: 2014-11-14 00:00:00
Title: Commission Decision of 14/11/2014 declaring a concentration to be compatible with the common market (Case No COMP/M.7333 - ALITALIA / ETIHAD) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 14.11.2014
C(2014) 8708 final

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|To the notifying parties:                                              |                                                                       |
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Dear Sir/Madam,

Subject:    Case M.7333 – ALITALIA/ ETIHAD
Commission decision pursuant to Article 6(1)(b) in conjunction with Article 6(2) of Council Regulation No 139/2004[1]

TABLE OF CONTENTS

1.    THE PARTIES      5

2.    THE OPERATION    6

3.    THE CONCENTRATION      6

3.1.  New Alitalia     6
3.2.  Alitalia Loyalty 8
3.3.  Interrelated transaction    8

4.    EU DIMENSION     9

5.    ETIHAD'S INVESTMENTS IN OTHER CARRIERS 9

5.1.  airberlin  9
5.2.  Jet Airways      10
5.3.  Darwin Airline   10
5.4.  Air Seychelles, Aer Lingus, and Virgin Australia   11
5.5.  "Etihad Airways Partners"   11
5.6.  Conclusion 12

6.    MARKET DEFINITION      12

6.1.  Overview of Parties' activities   12
6.1.1.      Air transport of passengers 12
6.1.2.      Air transport of cargo      13
6.1.3.      Other activities 13
6.2.  Air transport of passengers 14
6.2.1.      Origin and destination approach (O&D)  14
6.2.1.1.    Demand-side considerations  14
6.2.1.2.    Supply-side considerations  15
6.2.1.3.    Conclusion 15
6.2.2.      Distinction between groups of passengers     15
6.2.3.      Markets for direct flights and indirect flights   16
6.2.4.      Airport substitutability    18
6.2.4.1.    Framework of assessment     18
6.2.4.2.    Airport-by-airport assessment    18

7.    COMPETITIVE ASSESSMENT 26

7.1.  Methodology for calculating market shares    26
7.2.  Conceptual framework   26
7.2.1.      Treatment of joint ventures for the assessment of the Transaction  27
7.2.2.      Minority shareholdings      27
7.2.3.      Treatment of codeshare agreements      29
7.3.  Filters    33
7.4.  Direct/direct overlaps 35
7.4.1.      Presentation of the routes  35
7.4.2.      Direct/direct overlaps between Alitalia (including where relevant its Transatlantic JV partners) and  Etihad  (including  Air  Serbia
and EEP)    36
7.4.2.1.    Abu Dhabi–Milan  36
7.4.2.2.    Abu Dhabi–Rome   39
7.4.2.3.    Belgrade–Milan   42
7.4.2.4.    Belgrade–Rome    44
7.4.2.5.    Abu Dhabi–Munich, Abu Dhabi–Paris, Athens–Rome, Barcelona–Rome, Belgrade–Brussels, Bucharest–Rome, Budapest–Rome, Frankfurt–Rome,  La
Valetta–Rome, Milan–Rome, Munich–Rome, Rome–Sofia, Rome–Tirana, and Rome–Venice      47
7.4.3.      Direct/direct overlaps between Alitalia (including where relevant its Transatlantic JV partners) and Darwin Airline   50
7.4.3.1.    Florence–Geneva  51
7.4.3.2.    Bolzano/Bozen–Rome, Geneva–Rome, and Geneva–Venice      53
7.4.4.      Direct/direct overlaps between Alitalia (including where relevant its Transatlantic JV partners) and airberlin or Jet Airways    54
7.5.  Direct/indirect overlaps    57
7.5.1.      Presentation of the routes  57
7.5.2.      Direct/indirect overlaps of Alitalia and its Transatlantic JV partners with Etihad and Air Serbia    58
7.5.3.      Direct/indirect overlaps of Alitalia (including its Transatlantic JV partners) with airberlin and/or Jet Airways      61
7.5.3.1.    Low combined market shares  62
7.5.3.2.    Low increment brought about by the Transaction    63
7.5.3.3.    Significant competitor(s)   66
7.6.  Indirect/indirect overlaps  70
7.6.1.      Indirect/indirect overlaps of Alitalia with Etihad and Air Serbia  71
7.6.2.      Indirect/indirect overlaps of Alitalia (including its Transatlantic JV partners) with airberlin and Jet Airways 72
7.7.  The integration of New Alitalia with Etihad, Air Serbia, Darwin Airlines, and the EEP     73
7.7.1.      New Alitalia's cooperation with Etihad, Air Serbia, Darwin Airline, and the EEP     74
7.7.2.      Strengthening of Abu-Dhabi's role as a hub for flights from Europe to Africa, Asia, and Oceania      76
7.7.3.      Other issues     76
7.7.3.1.    Etihad's economic and financial power  76
7.7.3.2.    The Linate Decree     77
7.8.  Other markets (vertical relationships) 78
7.8.1.      Maintenance, repair and overhaul (MRO) services   78
7.8.2.      Flight Training Services    79
7.8.3.      Ground Handling Services    79
7.8.4.      In-flight Catering    79
7.8.5.      Loyalty Programs 79
7.8.6.      Assessment 80
7.8.7.      Conclusion 80

8.    Commitments      80

8.1.  Description of the main elements of the Final Commitments     81
8.1.1.      Slot release on the route where serious doubts arise    81
8.1.2.      The Slot Commitment   81
8.1.2.1.    Grandfathering rights 82
8.1.2.2.    Ranking of the prospective entrants applying for Slots  82
8.1.3.      The SPA Commitment    82
8.1.4.      Fare combinability agreements    82
8.1.5.      Interlining agreements      82
8.1.6.      Frequent flyer programmes   83
8.1.7.      Monitoring Trustee    83
8.1.8.      Fast track dispute resolution    83
8.2.  Analysis of the Final Commitments 83
8.2.1.      The Slot Commitment   84
8.2.1.1.    Structure and design of the Final Commitments     84
8.2.1.2.    Conclusion 85
8.2.2.      The SPA Commitment    86
8.2.2.1.    The market test  86
8.2.2.2.    Conclusion 86
8.2.3.      Other Commitments     86
8.3.  Overall conclusion on the Final Commitments  86

9.    Conditions and obligations  87

10.   CONCLUSION 87

 0. On 29 September 2014, the Commission received a notification of a proposed concentration pursuant to Article 4 of the Merger  Regulation  by
    which the undertakings Alitalia Compagnia Aerea Italiana S.p.A. ("Alitalia", Italy) and Etihad  Airways  PJSC  ("Etihad",  the  United  Arab
    Emirates) acquire within the meaning of Article 3(1)(b) of the Merger Regulation joint control of New Alitalia (Italy), a newly incorporated
    joint venture which will receive […] Alitalia's operating business as a going concern, by way of purchase of shares (the  "Transaction").[2]
    In the context of the Transaction, Etihad will acquire sole control over Alitalia Loyalty S.p.A. ("Alitalia Loyalty", Italy),  a  subsidiary
    of Alitalia active in the management of Alitalia's frequent flyer programme ("FFP"). Alitalia and Etihad are  jointly  referred  to  as  the
    "Notifying Parties".

THE PARTIES

 0. Alitalia is Italy's national carrier active in domestic and international air transport.  Alitalia  is  a  member  of  the  SkyTeam  Airline
    Alliance ("SkyTeam") and part of a transatlantic joint venture together with Delta and Air France/KLM (the "Transatlantic  Joint  Venture").
    Alitalia has its hub at the Leonardo Da Vinci airport in Fiumicino, Rome, and in 2013  it  transported  24  million  passengers.  Alitalia's
    current shareholders include Air France/KLM, Atlantia, Intesa Sanpaolo, Poste Italiane,[3] and UniCredit.

 0. Alitalia Loyalty is a wholly owned subsidiary of Alitalia  fully  dedicated  to  the  operation  and  development  of  Alitalia's  FFP,  the
    "MilleMiglia Programme".

 0. Etihad is the national airline of Abu Dhabi. As at June 2014, Etihad had a fleet of 102 aircraft serving 103 destinations. In 2012 and  2013
    Etihad transported 10.3 and 11.5 million passengers respectively.[4] In 2012, Etihad achieved a turnover of approximately EUR  3.6  billion,
    an EBIT of EUR 125 million and net profits of EUR 25 million. In 2013 Etihad's turnover amounted to  EUR  4.5  billion,  EBIT  was  EUR  157
    million, and net profits EUR 47 million.[5]

 0. The Etihad group includes Air Serbia (formerly Jat Airways),[6] the flag carrier and main airline of Serbia, which Etihad  jointly  controls
    together with the Serbian Government.[7] Etihad holds a 49% interest in Air Serbia  and  […]  the  Government  of  Serbia,  which  owns  the
    remaining 51% of Air Serbia's equity.[8]

 0. Alitalia, Etihad, and Air Serbia are referred to as the "Parties".

THE OPERATION

 0. In the context of the Transaction, Alitalia will transfer […] the assets and certain liabilities relating to its existing airline operations
    to New Alitalia. Etihad will subscribe 49% of New Alitalia's share capital against a contribution of EUR  388  million,  the  remaining  New
    Alitalia shares will be held by Alitalia through Alitalia MidCo, a newly incorporated holding company. Alitalia  will  be  Alitalia  MidCo's
    only shareholder.

 0. Furthermore, Etihad will purchase from New Alitalia 75% of the shares in Alitalia Loyalty.  The  remaining  25%  of  the  share  capital  of
    Alitalia Loyalty will be held by New Alitalia. Etihad will also purchase five slots at the London Heathrow Airport which will be leased back
    to New Alitalia.

THE CONCENTRATION

1 New Alitalia

 0. The Transaction consists in the acquisition of joint control by Alitalia and Etihad over New Alitalia, a newly  incorporated  company  which
    will receive […] Alitalia's operating business as a going concern.

 0. Etihad's voting rights at New Alitalia's shareholders meeting will be capped at 49.9% of the total votes cast at each meeting and all  votes
    in excess will be discarded.[9] As a result, Alitalia will always hold the absolute majority at New Alitalia's shareholders meeting.

 0. The Board of Directors of New Alitalia will consist of [Details regarding New Alitalia's Board of Directors][10]

 0. The Board of Directors will be responsible for the management of New Alitalia.[11][Information regarding the appointment of  New  Alitalia's
    CEO and CFO and the approval of its budget, business plan, and major expenditures][12] [13]

 0. Furthermore, Etihad will hold a number of veto rights aimed at the protection of its interest as a minority shareholder of New Alitalia.

 0. Joint control over a joint venture may exist even where there is no equality between the two parent companies in votes or in  representation
    in decision-making bodies.[14] Furthermore, joint control may occur on a  de  facto  basis  where  strong  common  interests  exist  between
    shareholders to the effect that they would not act against each other in exercising their rights in relation to the joint venture.[15]

 0. Post-Transaction a commonality of interests is likely to exist between Alitalia and Etihad  regarding  the  operation  of  New  Alitalia.  A
    commonality of interests among the shareholders of a joint venture is more likely when  they  purchase  their  shareholdings  in  the  joint
    venture "by means of a concerted action".[16] In the present case,  the  Transaction  was  preceded  by  intense  negotiations  between  the
    Notifying Parties which lasted several months. Furthermore, the commercial strategy and corporate structure  of  New  Alitalia  reflect  the
    common understanding of Alitalia and Etihad. Therefore, the Transaction is the result of a "concerted action" of Alitalia and Etihad.

 0. [Information regarding the appointment of New Alitalia's CEO and CFO][17] [18] [19] [20]

 0. [Information regarding New Alitalia's governance structure][21] [22]

 0. […]. This is a strong indication that the Notifying Parties have a common vision regarding New Alitalia's commercial strategy and are likely
    to jointly implement it. Furthermore, it also suggests that post-Transaction Alitalia will likely cooperate with  Etihad  and  use  Etihad's
    expertise and knowledge of the airline sector to develop New Alitalia's commercial strategy.

 0. Finally, Etihad will represent an important financial and commercial partner of Alitalia. Etihad, together with Alitalia, will  finance  the
    start-up phase of New Alitalia which will last at least until 2017 when the Notifying Parties expect  New  Alitalia  to  become  profitable.
    Furthermore, Alitalia and Etihad have entered into a Commercial Cooperation Agreement (the "CCA") which will be transferred to New  Alitalia
    in the context of the Transaction. The CCA aims at developing synergies between New Alitalia and Etihad and its equity  partners'[23].  […].
    New Alitalia will use Abu Dhabi as the hub for […]. Furthermore, it is envisaged that […].[24] This will expand the  range  of  destinations
    served by New Alitalia and allow it to rationalise the destinations it serves and to create network  synergies.[25]  In  addition,  the  CCA
    provides that New Alitalia and Etihad will implement  joint  procurement  initiatives  which  are  expected  to  generate  significant  cost
    synergies.

 0. Based on the foregoing, there is a strong indication that the Notifying Parties will act jointly in New Alitalia  as  they  share  a  common
    strategic view regarding the future of the company and of its commercial cooperation with Etihad. Furthermore, Alitalia and Etihad will have
    an important role in the financing of New Alitalia's operations.

 0. Taking into account the elements described in the preceding recitals and notably (i) the concerted action between the Notifying Parties that
    lead to the entry of Etihad in New Alitalia, (ii) New Alitalia's corporate governance, which seems to facilitate the reaching  of  a  common
    position between the Notifying Parties on the strategic decisions, (iii) the  Notifying  Parties'  common  vision  on  the  future  business
    strategy of New Alitalia and (iv) the financial links described above, the Commission considers that a commonality of interests is likely to
    exist between Alitalia and Etihad regarding the operation of New Alitalia so that they will not vote against each other in exercising  their
    rights in New Alitalia.

 0. Therefore, New Alitalia will be de facto jointly controlled by Alitalia and Etihad for the purposes of the Merger Regulation.

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

2 Alitalia Loyalty

 0. Post-Transaction, Etihad will hold the majority of the voting rights at Alitalia Loyalty's shareholders' meeting […].

 0. Therefore, Alitalia Loyalty will be solely controlled by Etihad.

3 Interrelated transaction

 0. Pursuant to the Jurisdictional Notice, the acquisition of joint control of one part of an undertaking and sole control of another part is in
    principle regarded as two separate concentrations under the Merger Regulation. However, those transactions constitute one  concentration  if
    they are interdependent and if the undertaking acquiring sole control is also acquiring joint control.[26]

 0. In the present case, both conditions are satisfied. Etihad will acquire joint control over New  Alitalia  and  sole  control  over  Alitalia
    Loyalty. [The link between Etihad's acquisition of shareholdings in Alitalia Loyalty and New Alitalia][27]

 0. Therefore, Etihad's acquisition of sole control over Alitalia Loyalty and joint control over New Alitalia constitute one concentration under
    the Merger Regulation and will be assessed together in the present decision.

EU DIMENSION

 0. The undertakings concerned have a combined aggregate world-wide turnover of more  than  EUR  5  000  million  (Etihad:  EUR  4 647  million;
    Alitalia: EUR 3 521 million). They have an EU-wide turnover in excess of EUR 250  million  (Etihad:  EUR  […]  million;  Alitalia:  EUR  […]
    million) and they do not achieve more than two-thirds of their aggregate EU-wide turnover within the same EU Member  State.  Therefore,  the
    notified operation has an EU dimension according to Article 1(2) of the Merger Regulation.[28]

ETIHAD'S INVESTMENTS IN OTHER CARRIERS

 0.  Over the recent years Etihad acquired the following shareholdings in other carriers:[29]

    a) 29.21% in airberlin (Germany);[30]

    b) 4.99% in Aer Lingus (Ireland);[31]

    c) 24.0% in Jet Airways (India);[32]

    d) 21.24% in Virgin Australia (Australia); and

    e) 40% in Air Seychelles (Seychelles).

 0. In addition, Etihad has provided financing to Darwin Airline (Switzerland) which, subject to regulatory approvals, could be converted into a
    33% shareholding in Darwin Airline.

1 airberlin

 0. airberlin is the second largest airline in Germany and serves 128 destinations worldwide. It carried more than 31.5  million  passengers  in
    2013 and offers a global route network through several bilateral partnerships and through its membership of the oneworld airline alliance.

 0. airberlin offers both scheduled and charter flights as a full service carrier in a hub network system. It has two  German  hubs,  Dusseldorf
    and Berlin-Tegel as well as two hubs abroad, Vienna and Palma de Mallorca. The airberlin group includes Niki, a carrier  based  in  Austria,
    which is solely controlled by airberlin.[33]

 0. airberlin's net worth generated with Etihad accounted for [0%–5%] of airberlin's total revenues generated in 2013 and first half 2014;  over
    the same period, airberlin's net worth generated with the oneworld alliance partner airlines amounted to a similar  range  of  Air  Berlin's
    total revenues. airberlin's net worth to be generated with Alitalia is estimated to amount to [0%–5%] of airberlin's total  revenues  to  be
    generated in 2015. Finally, airberlin's total net worth to be generated with Etihad, the oneworld alliance partner airlines and Alitalia  is
    estimated to account for [5%–10%] of airberlin's total revenues to be generated in 2015.[34]

 0. The Notifying Parties submit that airberlin will continue to determine its commercial strategy independently of Etihad and  therefore  there
    is no actual or potential reduction of competition on the routes served by airberlin brought about by the Transaction.

 0. However, Etihad is airberlin's single biggest shareholder and the two carriers also have a […] commercial cooperation agreement.  Therefore,
    the Commission assessed the overlaps between the activities of Alitalia and airberlin in section 7.4 and following of this decision.

2 Jet Airways

 0. Jet Airways is the second largest Indian airline. Its main hub is Mumbai,  India,  with  secondary  hubs  at  Delhi,  Kolkata,  Chennai  and
    Bengaluru (all in India).

 0. The Notifying Parties submit that Etihad has neither sole nor joint control over  Jet  Airways,  which  remains  majority  owned  by  Indian
    nationals.

 0. Nonetheless, Etihad has entered into a commercial cooperation agreement with  Jet  Airways  […].  Therefore,  the  Commission  assessed  the
    overlaps between the activities of Alitalia and Jet Airways in section 7.4 and following of this decision.

3 Darwin Airline

 0. Darwin Airline is a regional carrier with its main operating base at Geneva Airport, Switzerland and currently  operating  under  the  trade
    mark "Etihad Regional" under a license agreement with Etihad. Darwin Airline operates mainly scheduled  flights  and  to  a  limited  extent
    charter flights using a fleet with limited range and capacity.[35]

 0. For the last financial year (2013) Darwin Airline's worldwide turnover was CHF […] million (approx. EUR […]  million).[36]  [Description  of
    the commercial position of Darwin Airline][37].

 0. Etihad entered into a financing agreement with Darwin Airlines and it is envisaged that Etihad's credit would convert at some point  into  a
    33% shareholding in Darwin Airlines. The contemplated conversion of the loan into equity is subject to regulatory clearance from  the  Swiss
    Civil Aviation Authority (FOCA).[38]

 0. [The Parties' views on the extent to which Darwin Airline competes with the Parties].

 0. Etihad and Darwin Airline entered into a licence agreement […][39] [40] [41] [42]

 0. The Commission was already confronted in the past with franchise agreements between airlines[43] in which the franchisor had no shareholding
    in the franchisee; in those cases the Commission considered that the airline under a franchising  contract  was  not  a  competitor  of  the
    franchisor.

 0. In the case at hand, [description of the several factors relating to Etihad and Darwin Airline], indicate  that  Darwin  Airline  cannot  be
    considered as fully independent from Etihad.

 0. Therefore, the Commission assessed the overlaps between Alitalia and Darwin Airline in section 7.4 and following of this decision.

4 Air Seychelles, Aer Lingus, and Virgin Australia

 0. Air Seychelles is not present with its own aircraft on the  routes  on  which  Alitalia  operates.  Furthermore,  Air  Seychelles  sells  an
    insignificant number of tickets as marketing carrier on some routes on which it codeshares with Etihad. Thus, including  Air  Seychelles  in
    the overlap assessment did not result in any additional relevant overlap with Alitalia.[44]

 0. Furthermore the Transaction does not give raise to any overlap with Virgin Australia.[45]

 0. Regarding Aer Lingus, Etihad's shareholding is minor, less than 5%, and Etihad does not  have  (i)  any  specific  rights  attached  to  its
    shareholding, or (ii) any financial commitments, loans, or other financial contributions to or with Aer Lingus.[46]

 0. Therefore, the positions of these three carriers will not be analysed any further in this decision.

5 "Etihad Airways Partners"

 0. "Etihad Airways Partners" is a new brand[47] launched by Etihad in October 2014 to bring together six airlines in which Etihad holds equity.
    The current participant airlines are Etihad Airways, airberlin,  Jet  Airways,  Air  Serbia,  Air  Seychelles  and  Darwin  Airline  (Etihad
    Regional). According to the Notifying Parties, the brand concept is an umbrella for bilateral airline cooperation  between  Etihad  and  its
    equity partners and between those equity partners themselves and will not change any of the existing cooperations.

 0. The Etihad Airways Partners scheme includes extensive marketing, ongoing network alignment between the various hubs  and  maximising  flight
    connectivity. It will also concern interior design, catering, inflight entertainment and customer service.

 0. Partner airlines of Etihad (including Air Serbia, airberlin, Darwin Airline, Jet Airways, Air Seychelles, Aer Lingus, Virgin Australia,  and
    also 47 codeshare partners) contributed 21 percent of Etihad Airways' total passenger revenues in 2013, a rise of 30 percent vs 2012.

6 Conclusion

 0. Based on the foregoing, the Commission included airberlin and Jet  Airways  in  its  competitive  assessment  of  the  Transaction.  In  the
    following, airberlin and Jet Airways are referred to collectively as Etihad's Equity Partners ("EEP"). Darwin Airline is  also  included  in
    the Commission's competitive assessment of the Transaction, whereas the position of Air Seychelles, Aer Lingus, and Virgin Australia is  not
    material in the Commission's competitive assessment.

MARKET DEFINITION

1 Overview of Parties' activities

 0. The Notifying Parties submit that the relevant product markets for the purpose of the Transaction are (i) air passenger services,  (ii)  air
    cargo services, (iii) maintenance, repair and overhaul (MRO),  (iv)  flight  simulator  training,  (v)  ground  handling  and  (vi)  loyalty
    programmes.

1 Air transport of passengers

 0. The Parties' activities primarily overlap in the area of air transport of passengers. Alitalia's domestic and  international  air  passenger
    services are carried out through mainly offering scheduled flights through its home hub Rome – Fiumicino,  its  secondary  hub  at  Milan  –
    Linate and other airports in Italy by Alitalia, Alitalia Cityliner and Air One. Etihad's air passenger services are  carried  out  primarily
    through offering scheduled flights from its home hub in Abu Dhabi (the United Arab Emirates), which includes short and medium-haul  services
    within Middle East as well as long-haul services to North America, Europe, Africa, Australia and Asia.

 0. In addition, according to the Air Services Agreement in place between Italy and the  United  Arab  Emirates,[48]  Alitalia  is  one  of  the
    designated carriers entitled to operate flights on  the  routes  between  Italy  (Rome  and/or  Milan)  and  airports  in  the  United  Arab
    Emirates.[49] Reciprocally, under the terms of the same agreement, Etihad can provide scheduled air transport services between  airports  in
    the United Arab Emirates and Rome and/or Milan airports. However Etihad is not entitled to provide air transport services  within  Italy  or
    between EU airports.[50]

2 Air transport of cargo

 0. The Parties offer air transport of cargo services. Alitalia carries cargo in the belly hold of its passenger aircraft, as  well  as  in  the
    aircraft of its codeshare partners. Alitalia does not operate  regular  dedicated  cargo  flights.[51]  Most  sales  of  cargo  capacity  on
    international and intercontinental flights are handled by the dedicated Air France/KLM[52] offices (except for some  countries  where  sales
    are handled by qualified local agents). Sales of cargo capacity on domestic flights are handled by AirCargo.[53]

 0. Etihad operates through its Etihad Cargo brand (on Etihad Cargo dedicated flights). Additionally, since 2004, Etihad Cargo has carried cargo
    in the belly hold of its own passenger aircraft, as well as in the aircraft of its code-share partners. Etihad Cargo also  offers  worldwide
    Air Cargo charter flights.

 0. The overlap in the Parties' activities in the provision of air transport of cargo services does not lead  to  any  affected  market[54]  and
    will, therefore, not be discussed any further.

3 Other activities

 0. The Parties are active to a limited extent on other markets such as ground-handling, maintenance, repair and overhaul (MRO) services, flight
    simulator training, catering, and loyalty programs. However, none of these activities lead to an affected market under any plausible  market
    definition and will, therefore, not be discussed any further in this market definition section (but see Section 7.8 for  the  assessment  of
    possible vertical relationships).

2 Air transport of passengers

1 Origin and destination approach (O&D)

1 Demand-side considerations

 0. In its decisional practice, the Commission has traditionally defined the relevant market for scheduled passenger air transport  services  on
    the basis of the "point of origin/point of destination" ("O&D") city-pair approach.[55] Such a market definition  reflects  the  demand-side
    perspective whereby passengers consider all possible alternatives of travelling from a city of origin to a city of destination,  which  they
    do not consider substitutable for a different city pair. As a result, every combination of a point of origin and a point of  destination  is
    considered a separate market.

 0. The Notifying Parties do not object to this approach.[56] However, the Notifying Parties submit[57] that in the case  of  network  carriers,
    and in particular for O&D's where significantly more passengers are connecting passengers rather travelling on the  O&D,  the  O&D  analysis
    needs to be balanced. The Notifying Parties argue that this approach does not allow distinguishing the situation of  O&D  routes  connecting
    hub and non-hub airports from that of routes connecting two hubs (hub-to-hub connection). In  the  first  case,  the  number  of  passengers
    travelling on an O&D between the non-hub and hub airports might be insufficient to warrant direct flights, absent the presence of passengers
    connecting to other flights at the hub. According to the Notifying Parties, while on these routes their market share might appear high,  the
    number of passengers transported on the O&D is very low and operating on certain  O&D's  is  only  viable  because  of  the  presence  of  a
    significant number of connecting passengers on each flight. This situation is to be distinguished from the case of O&D's where the  majority
    of passengers travel specifically on that O&D only and not behind and beyond routes.

 0. However, it follows from the O&D approach that connecting passengers are not part of the same market as O&D passengers.

 0. In addition, a large majority among all groups of respondents to the market investigation has confirmed the relevance of  the  O&D  approach
    for the purpose of analysing the competitive effects on the overlap routes.[58] A large majority of respondents to the market  investigation
    has also confirmed that this approach is appropriate to capture the competition effects  between  the  Notifying  Parties,  Etihad's  Equity
    Partners, and their competitors.[59]

2 Supply-side considerations

 0. The Commission has in its practice taken into consideration the network competition between airlines.[60] This is particularly  relevant  on
    the supply-side, as network carriers build their network and decide to fly essentially on  routes  connecting  to  their  hubs.  While  some
    network carriers argued that competition between carriers takes place on the network level,[61] in line  with  the  Commission's  notice  on
    market definition and with the Commission's decision practice,[62] the  Commission  has  given  pre-eminence  to  demand-side  substitution,
    whereby it considered that customers still need transportation from one point to another and that competition still takes place  on  an  O&D
    city-pair basis.

 0. Some respondents to the market investigation have taken the view that network competition should be taken into account too.[63]

3 Conclusion

 0. In light of the above, the effects of the Transaction will be primarily assessed on the basis of the  city  pair  O&D  approach,  while  all
    substitutable airports will be included in the respective points of origin and destination provided that they are perceived as substitutable
    by travellers. The question of airport substitutability will be examined for relevant O&D routes in Section 6.2.4. Network competition  will
    be taken into account in the Commission's analysis of Etihad's minority shareholdings in Section 7.7.

2 Distinction between groups of passengers

 0. The Commission has traditionally found that a distinction may be drawn between time sensitive ("TS"  or  premium)  passengers  and  non-time
    sensitive ("NTS" or non-premium) passengers.[64] Time sensitive passengers  tend  to  travel  for  business  purposes,  require  significant
    flexibility with their tickets (such as cost-free cancellation and modification of the time of departure,  etc.)  and  tend  to  pay  higher
    prices for this flexibility. Non-time sensitive customers travel predominantly for leisure purposes or to visit friends and relatives,  book
    long time in advance, do not require flexibility with their booking and are generally more price-sensitive.

 0. While the Notifying Parties do not explicitly object to the Commission's approach of distinguishing between  TS  and  NTS  passengers,  they
    consider[65] that the range of services offered does not  reflect  time  sensitivity  but  instead  reflects  particular  customers'  travel
    preferences, ability to pay, and need or desire for greater space and comfort. The ticket flexibility would therefore be the only  parameter
    indicating time sensitivity and in any event many time sensitive passengers might purchase a fixed outbound and a flexible return date.

 0. A large majority of respondents in the market investigation has confirmed the Commission's approach of distinguishing between time sensitive
    and non-time sensitive passengers, acknowledging that this distinction was relevant for the assessment of the Transaction.[66]

 0. Some respondents[67] have nonetheless indicated that the distinction between time sensitive and non-time  sensitive  passengers  has  become
    blurred; passengers are becoming increasingly price-sensitive in times of slow economic growth[68] and more corporate customers apply lowest
    fare policies.[69]

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

3 Markets for direct flights and indirect flights

 0. On a given O&D pair, passengers can travel either by way of a direct[70] flight between the point of origin and the point of destination  or
    by way of an "indirect" flight on the same O&D pair but via an intermediate destination.[71]

 0. The level of substitutability of indirect flights for direct flights largely depends on the duration of the flight. As a general  rule,  the
    longer the flight, the higher the likelihood that indirect flights exert a competitive constraint on direct flights.[72]

 0. When defining the relevant O&D markets for air transport services, the Commission has considered in previous decisions[73] that with respect
    to short-haul routes (generally below 6 hours flight duration) indirect/indirect flights do not generally provide a  competitive  constraint
    to direct/direct flights absent exceptional circumstances (for example the direct connection does not allow for a one-day return trip or the
    share of indirect flights in the overall market is significant).

 0. The Commission has in its practice[74] 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 system).

 0. The Notifying Parties submit[75] that where short-haul routes are served by less than two flights per day, indirect routes are considered to
    be substitutable and will exercise a competitive constraint to direct flights.

 0. The respondents in the market investigation have demonstrated strong support for the distinction between direct  and  indirect  flights  for
    both short and long haul flights.[76] A large majority of respondents to the market investigation confirmed  that  indirect  services  could
    constitute competitive alternatives to direct services as identified above.[77] A majority of the respondents also confirmed  that  indirect
    services with a greater difference in duration constituted a smaller competitive constraint to direct services than indirect services with a
    shorter difference in duration.[78]

 0. However, for the assessment of the Transaction, the conclusion on whether or not direct and indirect flights belong to the same  market  can
    be left open as the outcome of the Commission's competitive assessment would not change under any plausible alternative market definition.

4 Airport substitutability

1 Framework of assessment

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

 0. In order to correctly capture the competitive constraint that flights from and to two (or more) different airports exert on  each  other,  a
    detailed analysis is necessary by taking into consideration the specific characteristics of the  case  at  hand.[79]  Passengers  take  into
    account a number of elements like travel time, travel costs, flight times/schedules/frequencies and the quality of service when it comes  to
    choosing between air transport services to and from different airports. The passenger's choice for one or the  other  airline  service  will
    ultimately be driven by a combination of these elements.

 0. The Commission's approach is to analyse the question of airport substitutability from the perspective of customers using  the  technique  of
    bundling evidence.

 0. The evidence used to characterise airport substitutability includes inter alia a  comparison  of  distances  and  travelling  times  to  the
    indicative benchmark of 100 km/1 hour driving time,[80] the outcome of the market investigation (views of the airports, the competitors, and
    other market participants), and any other relevant element), and the Notifying Parties' practices in terms of monitoring.

 0. Airport substitutability cannot be assessed in the abstract but can only be determined  taking  into  account  the  characteristics  of  the
    passengers travelling on the routes at stake.

 0. In the present case, airport substitutability is particularly relevant for the routes to and  from  Rome  (Fiumicino  and  Ciampino),  Milan
    (Linate and Malpensa) and New York (JFK and Newark) and Abu Dhabi (substitutability with Dubai airports).

2 Airport-by-airport assessment

1 Rome airports

 0. Rome is served by two main airports: Fiumicino (FCO) and Ciampino (CIA). FCO is Italy's largest airport with 36.2 million passengers  served
    in 2013. In terms of passenger numbers FCO is Europe's sixth busiest airport and the word's 34th busiest airport in 2013.  CIA  is  a  joint
    civilian, commercial and military airport and had passenger traffic of 4.7 million in 2013.

 0. The notifying parties submit that the two airports are substitutable for both TS and NTS passengers.[81]

 0. CIA is located 15 kilometres i.e. 26 minutes by car and 40 minutes by bus away from the Rome city centre. FCO is located 32 kilometres  i.e.
    32 minutes by car and 32 minutes by rail away from the Rome city centre.

 0. On the basis of the 100 km or 1 hour driving time benchmark,[82] FCO and CIA appear prima facie to be substitutable from the demand side for
    point-to-point scheduled passenger air transport services.

 0. In the Ryanair/Aer Lingus I & III cases,[83] the Commission concluded that these two airports were substitutable for Ryanair and Aer  Lingus
    passengers from Dublin.[84]

 0. The Commission's market investigation showed that a majority of competitors operating on the affected route share  the  view  that  the  two
    airports are substitutable for  TS  and  NTS  point-to-point  passengers.[85]  Customers  and  travel  agencies  responding  to  the  market
    investigation questionnaire were tied on whether FCO and CIA were substitutable for NTS and TS passengers.[86]

 0. However, given that the assessment of the Transaction would not change materially regardless of whether FCO and CIA  are  considered  to  be
    part of the same market or not, the question of substitutability between these airports can be left open.

2 Milan airports

 0. Milan is served by three airports: Malpensa (MXP), Linate (LIN) and Bergamo Orio Al Serio (BGY).

 0. MXP is the busiest and largest airport of Milan and has a capacity of handling 28 million passengers annually. In 2012 it served 18  million
    passengers. It is the second busiest airport in Italy in terms of passenger transit services (after FCO). MXP acts as a base  for  long-haul
    flights and low-cost carriers, with 76 operating airlines offering flights to a number of destinations across Europe,  Africa,  America  and
    Asia.

 0. LIN is the city airport of Milan, serving 9 million passengers in 2012. LIN has one operational passenger terminal,  handling  predominantly
    domestic and short-haul international flights to destinations within Europe.

 0. BGY served about 12 million passengers in 2012 and is predominantly served by low cost carriers ("LCCs") and charter airlines.

 0. The Notifying Parties submit that the three airports are substitutable for both TS and NTS passengers.[87]

 0. LIN is located 11 kilometres i.e. 25 minutes by car and 20 minutes by bus away from the Milan city centre. MXP is located 45 kilometres i.e.
    50 minutes by car and 40 minutes by rail away from the Milan city centre. BGY is located 54 kilometres i.e. 52 minutes by car away from  the
    Milan city centre.[88]

 0. On the basis of the 100 km or 1 hour drive time benchmark,[89] LIN, MXP and BGY appear prima facie to be substitutable from the demand  side
    for point-to-point scheduled passenger air transport services.

 0. In the Ryanair/Aer Lingus I & III cases,[90] the Commission concluded that the three airports are substitutable for Ryanair and  Aer  Lingus
    passengers from Dublin.[91]

 0. The market investigation has unequivocally confirmed that LIN and MXP are substitutable for NTS passengers, e.g. on  flights  from/to  Milan
    to/from Abu Dhabi.[92] For TS passengers, results were more mixed with respondents being tied on the question of whether TS passengers would
    switch from LIN to MXP; respondents confirmed however that TS passengers would switch from MXP to LIN.[93]

 0. However, given that the assessment of the Transaction would not change materially regardless of whether LIN and MXP  are  considered  to  be
    part of the same market or not, the question of substitutability between these airports can be left open.

 0. The substitutability of BGY with the other airports in Milan can be left open given that the assessment of the Transaction would not  change
    materially regardless of whether BGY is considered to be part of the same market.

3 New York airports

 0. New York has three airports, namely John F. Kennedy International Airport ("JFK"), Newark Liberty International Airport  ("Newark")  and  La
    Guardia.  There are no flights to and from La Guardia relevant for the assessment of the Transaction.

 0. The Notifying Parties consider that transatlantic services between JFK or Newark and Brussels should be considered to be part  of  the  same
    market.[94] Besides, the Notifying Parties referred to previous decisions where the Commission found  that  transatlantic  services  between
    London and JFK or Newark were part of the same market.[95]

 0. JFK is located 31 kilometres i.e. 30 minutes by car, 52 minutes by bus and 75 minutes by rail away from the New York City centre. Newark  is
    located 21 kilometres i.e. 22 minutes by car and 24 minutes by rail away from the New York City centre.[96]

 0. The market investigation has unequivocally confirmed that JFK and Newark are  substitutable  for  NTS  passengers.[97]  For  TS  passengers,
    results were more mixed with respondents being tied on the question of whether TS passengers would switch from JFK to Newark; a majority  of
    the respondents confirmed however that TS passengers would switch from Newark to JFK.[98]

 0. However, given that the assessment of the Transaction would not change materially regardless of whether JFK and Newark are considered to  be
    part of the same market or not, the question of substitutability between these airports can be left open.

4 Abu Dhabi and Dubai airports

 0. The Notifying Parties submit that there are various airports servicing customers travelling to Abu Dhabi, namely Abu Dhabi Airport  ("AUH"),
    Dubai International ("DXB"), and Dubai World Central[99] ("DWC").[100]

 0. AUH is the primary airport of the Emirate of Abu Dhabi, which is the capital of the United Arab Emirates. AUH is the second largest  airport
    in the UAE (after DXB) and served over 16 million passengers in 2013.[101] Currently the majority of its terminal spaces are used by  Etihad
    which is the UAE's second largest carrier after Emirates.[102]  It  currently  has  42  operating  airlines  to  93  destinations  across  6
    continents. AUH was ranked 102nd largest airport in the world in 2013.[103]

 0. DXB is the main airport for Dubai and a major airline hub in the Middle East. In 2013 DXB handled 66 million passengers making  it  the  7th
    busiest airport in the world by passenger traffic and the busiest airport in the world by international passenger traffic. According to  the
    Notifying Parties, between 2012 and 2013, passenger numbers increased by approximately 8.7 million. DXB is operated by  the  Dubai  Airports
    Company and is the home base of Dubai's international airlines: Emirates, FlyDubai, and Emirates SkyCargo.

 0. The Notifying Parties are of the view that all competitors providing services between Italy and UAE from AUH and DXB can and do represent  a
    competitive restraint on the Notifying Parties' own services.[104] They consider that a significant proportion of the Dubai population  does
    not live in Dubai city centre itself but lives around Dubai Marina, for whom the distance and driving  time  to  AUH  would  be  99  km  and
    approximately 54 minutes. For those passengers it would take half an hour longer to get to AUH than DBX (which is  situated  north  east  of
    Dubai city centre) and passengers would therefore consider flying from either airport.

 0. The Notifying Parties add that the area between Abu Dhabi and Dubai is relatively sparsely populated,[105] which may increase the  catchment
    area of both AUH and DXB. In their view, in addition to the geographical factor such as distance, the excellent road  connection  should  be
    taken into account when assessing the substitutability of two airports, which is clearly easier and faster than across-town connections like
    in London.[106]

 0. The Notifying Parties note[107] that the geography between the AUH and DXB  airports  is  significantly  different  from  nearly  all  other
    previous cases where substitutability was examined by the Commission insofar as there is a major 6 lane (and  140km/h  high  speed)  highway
    connecting the cities which was only recently completed. This highway is straight, well-conditioned and unconstrained by high density  urban
    and metropolitan feeder roads. Traffic flows are much higher than for motorways connecting similar sized cities around the world. In view of
    the airport parking facilities and services and/or chauffeur services, the ease of road connection will be particularly relevant  for  time-
    sensitive passengers.

 0. The Notifying Parties also submit that the catchment area for long-haul flights is larger than on short-haul flights.[108] Furthermore,  DXB
    is the largest airport in the UAE and the most significant hub, offering passengers more routes and more frequencies. It therefore exercises
    a clear competitive constraint on AUH. The Notifying Parties have sought to  demonstrate  the  impact  on  Etihad  from  competing  airlines
    operating from DXB, in particular Emirates.[109] Two routes between the UAE and Europe have been identified where Etihad was  the  incumbent
    operator from AUH and Emirates the subsequent entrant (from DXB): Abu-Dhabi–Dublin (AUH–DUB) and Abu Dhabi–Geneva (AUH–GVA).

                                                   Chart 1: Evolution of fares on AUH–GVA[110]

[…]

                                                   Chart 2: Evolution of fares on AUH–DUB[111]

[…]

 0. The Notifying Parties considered that Charts 1 and 2 show that, as soon as Emirates entered the route (June 2011 for the AUH–GVA  route  and
    January 2012 for the AUH–DUB route), a significant drop in Etihad's average fares took place, for both TS and NTS passengers. In particular,
    for TS passenger (for which business class fares represent the bulk of the purchased fares:

     a. On AUH/DXB–Dublin: average prices for business class passengers dropped by [10-20]% in the 12 months following Emirates'  entry  compared
        to the 12 months before entry.

     b. AUH/DXB–GVA: while the Notifying Parties do not have the data before 2011, a 12 month comparison cannot be  made,  but  the  chart  would
        strongly suggest that the drop was of an approximately equivalent magnitude as for AUH/DXB–Dublin.

 0. A distinction between time-sensitive and non-time sensitive passengers does not apply to the AUH and DXB airports according to the Notifying
    Parties because both airports are served by the same type of carrier (no low cost carriers or charter carriers)  and  they  offer  the  same
    quality of airport and airline services to time-sensitive and non-time sensitive passengers. Time-sensitive passengers should therefore  not
    be treated any different from non-time sensitive passengers when assessing the airport substitutability for AUH and DXB.[112]

 0. The Notifying Parties conclude that both airports should be considered as substitutable for all categories of passengers.[113]

 0. The Commission has not previously assessed the substitutability of AUH and DXB airports.

 0. Regarding the 100 km or 1 hour drive time first proxy used to assess airport  substitutability  from  the  demand  side  for  point-to-point
    scheduled passenger air transport services,[114] while the distance between AUH and Abu Dhabi city centre is approximately 35 km and  has  a
    driving time of approximately 30 minutes; the distance between DXB and Abu Dhabi city centre is approximately 153 km and has a driving  time
    of approximately 1 hour 30 minutes.[115] However, it has to be considered that for the proportion of the Dubai population which lives South-
    West of Dubai, the distance and driving time to AUH would be around 100 km and approximately 50–60 minutes. For those  passengers  it  would
    take half an hour longer to get to AUH than DBX (which is situated north east of Dubai city centre) and passengers would therefore  consider
    flying from either airport. Furthermore, the road between Dubai and AUH is a 6 lane 140km/h  speed  highway,  which  would  not  cross  high
    density urban and metropolitan feeder roads.[116]

 0. Abu Dhabi is well connected with AUH and DXB. In particular, Etihad offers bus and chauffeur services between Dubai and AUH airport. The bus
    services are provided free of charge to anyone with a valid Etihad or EEP ticket and passengers do not need to have booked them as  part  of
    the ticket booking process. In addition, for economy-class passengers regular complementary shuttle bus services are provided between  Dubai
    International Airport and Abu Dhabi by Emirates.[117] As for other connections to DXB, there  is  a  FlyDubai  bus  service  which  connects
    passengers between Abu Dhabi and DXB which departs at 6.30am and 3.00pm each day and has a journey time of two hours. These services  appear
    convenient at least for NTS passengers.

 0. Moreover, as regards TS passengers, Etihad provided free chauffeur services to around 206,000 of its  first  and  business  class  customers
    which travelled to Abu Dhabi, as well as Dubai and elsewhere in the UAE.[118] Of those services, [20-30]% of the chauffeured  journeys  were
    to Dubai (approx. [40 000 -  50 000] passengers).[119] Similarly, Emirates also provides a complementary  private  driver  service  for  its
    first class and business class passengers to anywhere in Dubai and Abu Dhabi.

 0. Besides, a significant proportion of passengers flying on Etihad originate from Dubai, as indicated e.g. by the fact that some  [10-20]%  of
    Etihad's UAE frequent flyer programme members are based in Dubai.

 0. In a route-specific manner, based on MIDT data, as many as [20-30]% of the UAE sales on the DXB–FCO route would originate from  the  Emirate
    of Abu Dhabi.[120]

 0. In the market investigation, a majority of respondents who either operate or book flights to Abu Dhabi or Dubai from  Italy  have  confirmed
    that AUH and DXB are substitutable for NTS passengers. For TS passengers however, respondents did not in  general  regard  AUH  and  DXB  as
    substitutable.[121]

 0. Air France/KLM for instance commented that "a significant proportion of passengers would switch from Abu Dhabi International to  both  Dubai
    airports in case of a price increase of 5 to 10%".[122] Emirates likewise held that "when looking at demand substitutability (which  has  to
    be done on a case by case basis) this may result in the relevant market being broader than  a  city  pair.  For  example,  the  United  Arab
    Emirates is a small country comprising […] seven emirates with multiple airports within close proximity to one another. There are good roads
    linking a number of these airports. Therefore in some instances, when looking at Rome to Abu Dhabi, it may be that the  relevant  market  is
    broader (for example, Rome-Abu Dhabi / Dubai)".[123]

 0. Emirates stated[124] also that "AUH and DXB would be substitutable especially when there are more flights being  scheduled  to/from  DXB  in
    comparison with flights being scheduled to/from AUH. In such cases travelling via Dubai and being able to choose  among  the  several  daily
    frequencies available could be considered as a viable option, especially if a passenger has time constraints.  Between  the  UAE  and  Rome,
    Etihad /Alitalia are operating 2 flights per day while Emirates operates currently on a double daily basis and will increase its frequencies
    to three daily flights as of the winter 2014/2015 IATA season". [The Parties' plans regarding the frequencies on routes to AUH][125]

 0. Besides, the Notifying Parties, and Etihad in particular, appear to monitor the relevant routes, especially the frequencies, traffic  flows,
    and pricing of Emirates (operating from DXB) and Qatar Airways (operating indirect services between Rome and Abu  Dhabi,  via  Doha,  having
    sizeable market shares) when operating their services on the Italy–UAE routes.[126]

 0. Charts 1 and 2 above are also indicative of airport substitutability between AUH and DXB for time-sensitive, non-time sensitive  passengers,
    and all passengers.

 0. Therefore, the Commission concludes that for NTS and all passengers AUH and DXB are substitutable for long haul flights between Italy (Rome,
    Milan) and Abu Dhabi.

 0. For the very small number of TS passengers flying on FCO–AUH and MXP–AUH, the market investigation indicates eventually mixed  results.  The
    question can however be left open because the outcome of the assessment of the Rome–AUH and Milan–AUH routes would not change regardless  of
    the exact market definition.[127]

COMPETITIVE ASSESSMENT

1 Methodology for calculating market shares

 0. The Commission has previously used Marketing Information Data Tapes ("MIDT") data as the best available proxy to estimate market shares  for
    air transport of passengers.[128]

 0. However, the Notifying Parties have submitted data on market size and market shares on the basis of IATA data for each relevant  O&D  route.
    The data were primarily obtained from the Passenger Intelligence Services tool ("PaxIS") developed by IATA's Business Intelligence  Service.
    Since it does not cover all ticket sales (in particular, "LCCs") and most direct airline sales  do  not  go  through  the  BSP),  IATA  uses
    statistical modelling to estimate total passenger numbers for airlines operating on a route ("PaxIS PLUS").

 0. The Commission is of the view that PaxIS Plus data is appropriate for the assessment of the case.[129]

 0. The Notifying Parties submit in particular that ticket flexibility  will  be  the  parameter  indicating  time  sensitivity  of  passengers.
    Moreover, due to lack of data, the Notifying Parties have estimated the number of TS passengers  that  fly  with  LCCs.[130]  The  Notifying
    Parties' approach to estimate the number of TS passengers that fly with LCCs appears appropriate for the assessment of the case.

2 Conceptual framework

 0. Prior to analysing the competitive impact of the Transaction, the conceptual framework for  the  assessment  must  be  determined.  In  this
    respect, the Transaction raises the following conceptual issues:

    a) The first issue concerns the treatment of the joint-ventures to which Alitalia belongs for  the  purpose  of  both  the  determination  of
       affected markets and the competitive assessment.

    f) The second issue concerns the treatment of the minority shareholdings held by Etihad in the EEP.

    g) The third issue relates to the treatment of code-share agreements concluded between relevant carriers for the purpose of the determination
       of the relevant framework for the assessment of the effects of the proposed concentration on the numerous routes covered  by  these  code-
       share agreements.

1 Treatment of joint ventures for the assessment of the Transaction

 0. Prior to assessing the impact of the Transaction on the relevant markets, a  preliminary  question  must  be  addressed:  the  treatment  of
    Alitalia's Joint Ventures with Air France–KLM and Delta (the "JVs") for the purposes of both the determination of affected markets  and  the
    competitive assessment of the Transaction.

 0. Alitalia is a member of the Italy-France Joint Venture and the Italy-Netherlands Joint Venture with  Air  France–KLM.[131]  The  parties  to
    these JVs agree on coordination of their network, scheduling, commercial policies and they also share the economic results of the JVs.

 0. Furthermore, Alitalia is a member of the  Transatlantic  Joint  Venture  with  Air  France–KLM  and  Delta.  Within  the  framework  of  the
    Transatlantic JV[132] the members fully coordinate their operations with regard to  capacity,  schedule,  pricing  and  revenue  management;
    moreover members also share profits and losses.

 0. In accordance with previous cases,[133] the assessment of the Transaction will be carried out on the routes operated directly by Alitalia as
    well as by Alitalia's partners in the JVs to the extent that they fall within the scope of the JVs.

2 Minority shareholdings

 0. The Commission also assessed whether the links created by the Transaction between New Alitalia, on the one  hand,  and  airberlin  ,and  Jet
    Airways on the other hand (in which Etihad holds minority shareholdings), would give rise to serious doubts as to the compatibility  of  the
    Transaction with the internal market. Furthermore, the Commission took into account the fact that in the future the three carriers, that  is
    New Alitalia, airberlin and Jet Airways, may enter into a commercial cooperation agreement similar to that establishing  the  framework  for
    the cooperation between Alitalia and Etihad, the competitive impact of which is discussed in Section 7.7 of this decision.

 0. Acquiring a non-controlling minority shareholding in a competitor may lead  to  non-coordinated  anti-competitive  effects  because  such  a
    shareholding may increase the acquirer's incentive and ability to unilaterally raise prices or restrict output. If a firm  has  a  financial
    interest in its competitor's profits, it may decide to "internalise" the increase in those profits, resulting from a reduction  in  its  own
    output or an increase in its own prices. This anti-competitive effect may materialise whether the minority shareholding is  passive  (giving
    it no influence in the target's decisions) or active (giving it some influence over the target's decisions).[134]

 0. The acquisition of a non-controlling minority shareholding may also raise competition concerns when the acquirer uses its position to  limit
    the competitive strategies available to the target, thereby weakening it as a competitive force. The Commission and Member States have found
    that competition concerns are more likely to be serious when a non-controlling minority shareholding possesses some degree of influence over
    the target firm's decisions.[135]

 0. Non-controlling minority shareholdings in competitors  may  also  lead  to  coordinated  anti-competitive  effects  by  impacting  a  market
    participant's ability and incentive to tacitly or explicitly coordinate in order to achieve supra-competitive profits.[136]

 0. The Notifying Parties consider that the EEP will compete vigorously against New Alitalia. The EEP  have  a  responsibility  vis-à-vis  their
    shareholders (Etihad is not the majority shareholder) and both airberlin and Jet Airways must operate in their best interests.[137]

 0. Etihad's position in New Alitalia and as a minority shareholder in airberlin and Jet Airways and the financial interest in  the  profits  of
    the three carriers that would result from it could arguably create an incentive for Etihad and provide it with the means to induce the three
    carriers to engage in a unilateral or a  coordinated  manner  in  profit  maximisation  behaviours  aimed  at  raising  prices  or  restrict
    output.[138] Furthermore, Etihad's minority shareholding in  airberlin  and  Jet  Airways  may  give  rise  to  serious  doubts  as  to  the
    compatibility of the Transaction with the internal market if Etihad were to  have  the  ability  to  limit  the  competitive  strategies  of
    airberlin and Jet Airways, thereby weakening each of them as a competitive constraint on New Alitalia.[139]

 0. However, the Commission considers that Etihad's minority shareholdings in airberlin and Jet Airways do not raise serious doubts  as  to  the
    compatibility of the Transaction with the internal market for the following reasons.

 0. First, as explained in greater detail in Section 7.4 of this decision, there are only two routes, Rome–Vienna  and  Milan–Vienna,  on  which
    Alitalia and airberlin both operate, while Alitalia's and Jet Airways' direct operations give rise to only  one  overlap,  that  is  on  the
    Brussels–New York route. On each of those routes, however, as further explained in Section 7.4 of this decision, the  Transaction  does  not
    lead to serious doubts as to its compatibility with the internal market in particular because  the  merged  entity  would  face  competitive
    constraints from other competitors active on the routes.

 0. In addition, a majority of corporate customers and travel agents that have responded to the market investigation  have  indicated  that  the
    Transaction will have a positive effect on passengers travelling on the routes where the activities of Alitalia, airberlin and  Jet  Airways
    give rise to direct/direct, direct/indirect as well as indirect/indirect overlaps.[140]

 0. Furthermore, as explained above in recital 150, Alitalia's, airberlin's and Jet Airways' direct operations overlap only on 3 routes. Due  to
    the limited gains that would result from Etihad's possible strategy of trying to align the commercial strategies of New Alitalia,  airberlin
    and Jet Airways only on those routes and the risks that such commercial strategies might not be successful because of the reactions of other
    competitors on these routes, the Commission considers that Etihad's incentives to induce New Alitalia, airberlin, and Jet Airways to act  in
    a way that may have a material adverse effect on competition are limited.

 0. Finally, Etihad will only be a jointly controlling shareholder of New Alitalia together with  Alitalia  and  therefore  strategic  decisions
    concerning the commercial behaviour of New Alitalia will have to be agreed with Alitalia. In this respect, it must be  noted  that  Alitalia
    will have the absolute majority of the votes at New Alitalia's shareholders meeting and board of  directors  and  will  therefore  be  in  a
    position to block all initiatives that are not in Alitalia's interest.

 0. Concerning the routes on which the operations of Alitalia, airberlin and Jet Airways give rise  to  overlaps  between  direct  and  indirect
    flights as well as between indirect flights, those are unlikely candidates for anti-competitive effects  in  connection  with  the  minority
    shareholding held by Etihad. 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.  Therefore,  post-
    Transaction any attempt of New Alitalia, airberlin and Jet Airways to raise prices on such routes on the basis of the minority  shareholding
    held by Etihad would likely be short lived and ineffective.

 0. In light of the above and the evidence available to it, the Commission considers that the Transaction does not raise serious  doubts  as  to
    its compatibility with the internal market in relation to the minority shareholdings of Etihad in Jet Airways and airberlin.  The  potential
    effects on competition that may arise from Alitalia's cooperation with Etihad and the EEP are discussed in Section 7.7 of this decision.

3 Treatment of codeshare agreements

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

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

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

 0. Codeshare agreements are a common feature of the air passenger transport industry and it is not unusual for carriers to have in place at any
    given time a substantial number of agreements with multiple carriers. Alitalia in  this  respect  is  no  exception  and  it  currently  has
    codeshare agreements with Etihad as well as airberlin, Air Serbia, Darwin Airline, and Jet Airways.[141]

 0. On the routes on which the activities of Alitalia, on the one hand, and Etihad, Air Serbia, and the EEP, on the  other,  overlap  due  to  a
    unilateral codeshare, the Transaction could give to serious doubts as to its compatibility with the internal market[142] only if (i) despite
    the codeshare agreements, the operating carrier and the marketing carrier exert a significant constraint on each other as actual competitors
    for the sales of seats on the operating carrier's flights; or (ii) there is a significant likelihood that the marketing carrier  would  grow
    into an effective competitive force, e.g. by starting to operate on the route with its own aircraft.[143]  In  particular,  anti-competitive
    effects may occur where the marketing carrier is very likely to incur the necessary sunk costs to enter the relevant codeshare route  as  an
    operating carrier in a relatively short period.[144]

 0. Alitalia entered into free flow codeshare agreements with airberlin, Darwin Airline, Etihad, and Jet Airways. The codeshare between Alitalia
    and Air Serbia is a blocked space agreement.[145] On all of the routes on which Alitalia codeshares with Etihad, Air Serbia, Darwin Airline,
    and the EEP, only one of the codeshare partners operates, the sole exceptions  being  the  Rome–Abu-Dhabi,  Rome–Belgrade,  and  Rome–Geneva
    routes on which the codeshare is parallel. The effects of the Transaction on the Rome–Abu-Dhabi, Rome–Belgrade, and Rome–Geneva  routes  are
    assessed in Section 7.4 of this decision. The characteristics of the codeshare agreements between Alitalia, on the one hand, and Etihad, Air
    Serbia, Darwin Airline, and the EEP, on the other, are summarised in Table 1 below.

    Table 1: Codeshare agreements among Alitalia and Etihad, Air Serbia, Darwin Airline, and the EEP
|Alitalia codeshare partner                 |Free Flow / Blocked Space                  |Parallel / Unilateral                        |
|airberlin                                  |Free-flow                                  |Various routes connecting Italy to Germany   |
|                                           |                                           |and Austria as well as certain locations     |
|                                           |                                           |within Italy: unilateral                     |
|Air Serbia                                 |Hard-block                                 |Rome–Belgrade: parallel                      |
|                                           |Soft-block                                 |Milan–Belgrade: unilateral                   |
|Darwin Airline                             |Free-flow                                  |Rome–Geneva: parallel                        |
|                                           |                                           |Florence–Geneva, Venice–Geneva,              |
|                                           |                                           |Rome–Bolzano/Bozen: unilateral               |
|Etihad                                     |Free-flow                                  |Rome–Abu-Dhabi: parallel                     |
|                                           |                                           |Milan–Abu-Dhabi unilateral                   |
|Jet Airways                                |Free-flow                                  |Rome–Abu-Dhabi: unilateral*                  |

                                                                      * […]
                                               Source: Annex 2.2(a) and Annex 6.3(d) to the Form CO

 0. Under the codeshare agreements between Alitalia and airberlin, Darwin Airline, Etihad, and Jet Airways, the  marketing  carriers  receive  a
    commission for each of the tickets it sells.[146] Alitalia and Air Serbia pay instead a fixed fee for each ticket  they  purchase  from  one
    another under their blocked space codeshare agreement.

 0. Pursuant to the codeshare agreements between Alitalia and Etihad, Air Serbia, Darwin Airline, and the EEP, the marketing carrier is free  to
    set prices for the tickets it sells. Furthermore, no provision in the agreements limits the marketing carrier's ability to sell tickets at a
    fare lower than that of the operating carrier. However, in practice the marketing carrier normally sells tickets at a price that is close to
    or higher than the one of the operating carrier.[147]

 0. Incentives for the marketing carrier to price aggressively are limited. In a free flow codeshare, the commission received from the marketing
    carrier is normally a percentage of the fare it charges for the tickets it sells. Therefore, the higher the price  at  which  the  marketing
    carrier sells tickets the greater his commission will be. Likewise, in the soft block codeshare between Alitalia  and  Air  Serbia  Alitalia
    purchases tickets from Air Serbia at a fix price and the higher the price at which Alitalia manages to sell  its  tickets  the  greater  its
    profit margin will be. In addition, the risk of unsold tickets essentially lies on Air Serbia. Alitalia can return any unsold tickets to Air
    Serbia up to […] before the departure of the flight and the likelihood that Alitalia would keep unsold tickets in its inventory so close  to
    the departure date is very low.

 0. The likelihood that the marketing carrier would represent a material competitive constraint for the operating carrier is further limited  by
    the operating carrier's ability to terminate the codeshare agreement if the marketing carrier started to  offer  fares  substantially  lower
    than the operating carrier, thus depriving the marketing carrier of any  benefit  of  an  aggressive  pricing  policy.[148]  A  majority  of
    respondents to the market investigation have indicated that indeed competition between Alitalia and Etihad, airberlin,  Air  Serbia,  Darwin
    Airline, and Jet Airways on the routes on which they are present through an unilateral codeshare is limited, very limited, or nil.[149]

 0. Based on the foregoing, the Commission has come to the view that in the unilateral codeshares between Alitalia and  Etihad,  airberlin,  Air
    Serbia, Darwin Airline, and Jet Airways the marketing carrier does not exert more than a residual constraint on the operating carrier.

 0. Furthermore, the Commission's analysis has confirmed that Alitalia would not be a likely entrant on the  routes  where  it  markets  flights
    operated by airberlin, Air Serbia, Darwin Airline, and Etihad. Similarly, the Commission's analysis has confirmed  that  airberlin  and  Jet
    Airways would not be likely entrants on the routes where they market flights operated by Alitalia. Moreover, there are no  routes  on  which
    Air Serbia and Darwin Airlines are marketing carriers in a unilateral codeshare with Alitalia.

 0. [Alitalia's business plan and plans regarding entry on new routes].[150] Therefore, the loss of potential  competition  resulting  from  the
    unilateral codeshare agreement between Alitalia and Etihad appears at most very limited.  Furthermore,  airberlin  pre-Transaction  was  not
    planning to enter on the routes on which it codeshares with Alitalia nor is Jet Airways likely to become a potential constraint to  Alitalia
    on the Rome–Abu-Dhabi route because operating such route would not be in line with its business model.

 0. Therefore, on the routes on which the activities of Alitalia, Etihad, Air Serbia, Darwin  Airline,  and  the  EEP  overlap  only  due  to  a
    unilateral codeshare, the Transaction does not raise serious doubts as to its compatibility with the internal market  as  a  result  of  the
    elimination of potential competition.

 0. The routes on which the activities of Alitalia, Etihad, Air Serbia, Darwin Airline, and the EEP overlap because of codeshares  are  included
    in the Commission's assessment conducted in Section 7.4.2 and following.

3 Filters

 0. Consistent with its previous practice,[151] the Commission has applied the following filters to exclude likely unproblematic routes from the
    scope of its investigation (all criteria must have been met in the 4 last completed IATA seasons[152] and for all passenger segments  for  a
    route to be excluded under the filters):

      a) For direct/indirect overlaps:

            i) the Parties' (including Darwin Airline's and the EEP's) combined market share was below 25%; or

           ii) one of the Parties (including Darwin Airline and the EEP) had a market share below 2%; 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;[153] or

            v) the route was below the HHI thresholds of paragraph 20 of the Horizontal Merger Guidelines.[154]

      b) For indirect/indirect overlaps:

            i) the Parties' (including Darwin Airline's and the EEP's) combined market share was below 25%; or

           ii) one of the Parties (including Darwin Airline and the EEP) had a market share below 2%; 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.[155]

 0. There have been no filters for direct/direct overlaps, therefore the general rules apply (there  is  no  affected  market  if  the  Parties'
    (including Darwin Airline's and the EEP's) combined market share is below 20%).

 0. As a result of the above criteria the Notifying Parties submitted overall that 142 O&D pairs, including direct/direct,  direct/indirect  and
    indirect/indirect overlaps, would be affected by the Transaction.

 0. The Commission verified whether the filters were applied consistently and concluded that, in addition to the routes already filtered out  by
    the Notifying Parties, also the Brindisi–Nuremberg and Palermo–Vienna routes could both be classified as  indirect/indirect  routes  and  be
    filtered out because they are short haul routes below 15 000 passengers per year.

 0. Moreover, after having verified the seasonal data submitted by the Notifying Parties, the Commission has reclassified some overlaps from the
    original classification submitted by the Notifying Parties. Table 2 provides an overview of those changes.

                                                   Table 2: Overview of route reclassification

|Overlap                  |Notifying Parties    |Commission            |Changes                                                      |
|direct/direct            |32                   |34                    |2 routes added from D/I[156]                                 |
|direct/indirect          |67                   |59                    |2 routes moved to D/D,[157]                                  |
|                         |                     |                      |5 routes moved to I/I,[158]                                  |
|                         |                     |                      |1 filtered out[159]                                          |
|indirect/indirect        |43                   |47                    |5 routes added from D/I,[160]                                |
|                         |                     |                      |1 route filtered out[161]                                    |
|Total                    |142                  |140                   |2 routes filtered out[162]                                   |

  4 Direct/direct overlaps

1 Presentation of the routes

 0. For the last four IATA seasons, the Transaction gives rise to the following 34 direct/direct overlaps:

                                              Table 3: 34 direct/direct overlap routes at city pair

|Abu Dhabi–Milan           |Belgrade–               |Cambridge–              |Milan–                    |Rome–Sofia              |
|                          |Brussels                |Milan                   |New Dehli                 |                        |
|Abu Dhabi–                |Belgrade–Milan          |Florence–Geneva         |Milan–Rome                |Rome–Tirana             |
|Munich                    |                        |                        |                          |                        |
|Abu Dhabi–Paris           |Belgrade–Rome           |Frankfurt–Rome          |Milan–Vienna              |Rome–Trapani            |
|Abu Dhabi–Rome            |Bolzano/Bozen–Rome      |Geneva–Rome             |Munich–Rome               |Rome–Venice             |
|Ancona–Rome               |Brussels–               |Geneva–Venice           |Palma de Mallorca–Valencia|Rome–Vienna             |
|                          |New York                |                        |                          |                        |
|Athens–Rome               |Bucharest–Rome          |La Valetta–Rome         |Paris–Berlin              |Rome–Zurich             |
|Barcelona–Rome            |Budapest–Rome           |Lugano–Rome             |Rimini–Rome               |                        |

                                                     Source: Annex 6.3(c)(iii) to the Form CO

 0. The Ancona–Rome, Cambridge–Milan, Lugano–Rome, Rimini–Rome and Rome–Trapani routes have been discontinued for  non-merger  specific  reasons
    and will not be further assessed.

 0. The Rome–Zurich route is not an affected route under any market segmentation over the  last  two  IATA  seasons  and  will  not  be  further
    considered in this decision.[163]

 0. The remaining 28 overlaps as detailed in Table 3 above  arise  as  a  result  of  either:  (i)  Alitalia's  (including  where  relevant  its
    Transatlantic JV partners') and Etihad's (including Air Serbia's and EEP's market shares) market shares; or (ii) Alitalia's (including where
    relevant its Transatlantic JV partners') and Darwin Airline's market shares; or (iii) Alitalia's (including where relevant its Transatlantic
    JV partners') and airberlin's or Jet Airways' market shares.

 0. These three categories of overlaps will be assessed in Sections 7.4.2, 7.4.3 and 7.4.4 below.

 0. Two competitors considered, without further substantiating their concerns, that there is a risk of not sufficient competition on most of the
    overlapping routes as a result of the Transaction, as on many of those routes Alitalia, Etihad, Air Serbia, airberlin, Darwin  Airline,  Aer
    Lingus and Jet Airways would be the only direct serving airlines and entry barriers for new entrants might be too high.[164] A  majority  of
    customers considered, however, that the Transaction would have a positive impact (in terms of  prices,  level  of  services,  etc.)  on  the
    competitive situation on all the  overlap  routes  (that  is  to  say  direct/direct,  direct/indirect,  and  indirect/indirect  overlapping
    routes).[165]

2 Direct/direct overlaps between Alitalia (including where relevant its Transatlantic JV partners) and Etihad (including Air Serbia and EEP)

 0. The Transaction gives rise to 18 direct/direct overlaps as a result of Alitalia's (including where relevant its Transatlantic JV  partners')
    and Etihad's (including Air Serbia's and EEP's) market shares.  Those  overlapping  routes  are:  Abu  Dhabi–Milan,  Abu  Dhabi–Munich,  Abu
    Dhabi–Paris, Abu Dhabi–Rome, Athens–Rome, Barcelona–Rome, Belgrade–Brussels, Belgrade–Milan, Belgrade–Rome,  Bucharest–Rome,  Budapest–Rome,
    Frankfurt–Rome, La Valetta–Rome, Milan–Rome, Munich–Rome, Rome–Sofia, Rome–Tirana, and Rome–Venice. On  three  routes  from  Abu  Dhabi,  in
    addition to Alitalia and Etihad, airberlin, Jet Airways, Virgin Australia and Air Seychelles are also selling  tickets,  however  they  only
    sold a limited number of the tickets. Nonetheless their passengers' numbers have been included in the calculations.

 0. The route-by-route assessment for Abu Dhabi–Milan, Abu Dhabi–Rome, Belgrade–Milan, and Belgrade–Rome routes will be  conducted  in  Sections
    7.4.2.1, 7.4.2.2, 7.4.2.3 and 7.4.2.4 respectively.

 0. The remaining 14 routes Abu Dhabi–Munich, Abu Dhabi–Paris, Athens–Rome, Barcelona–Rome,  Belgrade–Brussels,  Bucharest–Rome,  Budapest–Rome,
    Frankfurt–Rome, La Valetta–Rome, Milan–Rome, Munich–Rome, Rome–Sofia, Rome–Tirana, and Rome–Venice  routes  will  be  assessed  together  in
    Section 7.4.2.5.

1 Abu Dhabi–Milan

1 Presentation of the route

 0. The overlap between Alitalia and Etihad on this route arises because of operations on the Milan Malpensa (MXP)–Abu Dhabi (AUH) airport pair.
    The Notifying Parties submit that, at the Milan end, the Linate (LIN) and Malpensa (MXP) airports are substitutable and that, at  the  other
    end, the Abu Dhabi (AUH) and the Dubai (DXB) airports are substitutable (see Section 6.2.4). The Parties only operate between Milan Malpensa
    (MXP) and Abu Dhabi (AUH).

 0. Etihad started its direct operations from Milan Malpensa (MXP) to Abu Dhabi (AUH) in 2007. On 28 March 2010,  Etihad  and  Alitalia  entered
    into a free sell codeshare agreement enabling Alitalia to market the flights as an Alitalia flight  (operated  by  Etihad).  This  codeshare
    agreement was expanded in November 2012.

 0. Alitalia intends to enter on the route as an operating carrier codesharing with Etihad as of  the  summer  2015  IATA  season.  [Details  of
    Alitalia's entry plans].[166]

 0. When flights to/from all airports (MXP, LIN and BGY) in Milan and to/from Abu Dhabi/Dubai are included, in the summer 2013  IATA  season,  a
    total of [80 000 - 90 000] passengers (among whom significantly less than half, only [20 000 - 30 000], were TS passengers) travelled on the
    Milan–Abu Dhabi route on a direct O&D basis. In the winter 2013/2014 IATA season, a total of [70  000  -  80  000]  passengers  (among  whom
    significantly less than half, only [20 000 – 30 000], were TS passengers) travelled on the Milan–Abu Dhabi route. Etihad offered on  average
    one daily flight while Emirates offered three daily flights 7 days a week on this route during these two seasons.

 0. When only flights between Milan Malpensa (MXP) and Abu Dhabi are included, in the summer 2013 IATA season a total  of  [10  000  –  20  000]
    passengers (among whom less than half, only [<3 000], were TS passengers) travelled on the Milan Malpensa (MXP)–AUH route on  a  direct  O&D
    basis. In the winter 2013/2014 IATA season, a total of [5 000 – 10 000] passengers (among whom less  than  half,  only  [<3  000],  were  TS
    passengers) travelled on the Milan–AUH route. Etihad offered on average 7 weekly flights.

2 Assessment of the route

 0. On a market which would include flights from all Milan airports (MXP, LIN and BGY) to Abu Dhabi (AUH) and Dubai (DXB), the Transaction would
    not lead to any affected markets in any of the last four IATA seasons irrespective of the split between TS and NTS passengers.  The  largest
    operator on such market was Emirates with market shares above [80-90]%. As mentioned in Section 6.2.4, the Commission concluded that for NTS
    passengers and all passengers AUH and DXB are substitutable for long haul flights between Italy (Rome, Milan) and Abu Dhabi. Therefore, only
    flights between Milan Malpensa (MXP) and Abu Dhabi (AUH), and only for the TS passenger segment, will be assessed in the following.

 0. Set out in Table 4 below is the relevant IATA passenger data and market share calculations relating to direct flights on the Milan–AUH route
    for the summer 2013 and winter 2013/2014 IATA seasons.

                                          Table 4: Milan (MXP) –Abu Dhabi airport - Direct flights only
|Carrier                  |Itinerary      |Summer '13                                         |Winter '13/'14                                     |
|                         |Type           |                                                   |                                                   |
|                     |              |All                                            |TS                                                          |
|                           |Type                                                        |All                                                       |
|                           |All                 |TS                |Non-TS              |All                 |TS            |Non-TS                |
|Alitalia                   |[5 000 -10 000]     |[<1 000]          |[5 000 -10 000]     |[<5 000]            |[<1 000]      |[<5 000]              |
|                           |[20-30]%            |[5-10]%           |[20-30]%            |[10-20]%            |[0-5]%        |[10-20]%              |
|Air Serbia                 |[5 000 -10 000]     |[<3 000]          |[5 000 -10 000]     |[5 000 -10 000]     |[<1 000]      |[5 000 -10 000]       |
|                           |[20-30]%            |[50-60]%          |[10-20]%            |[20-30]%            |[50-60]%      |[20-30]%              |
|TOTAL                      |[10 000 - 20 000]   |[<3 000]          |[10 000 - 20 000]   |[10 000 - 20 000]   |[<1 000]      |[10 000 - 20 000]     |
|                           |[40-50]%            |[60-70]%          |[40-50]%            |[30-40]%            |[50-60]%      |[30-40]%              |
|EasyJet                    |[20 000 - 30 000]   |[<3 000]          |[20 000 - 30 000]   |[20 000 - 30 000]   |[<1 000]      |[20 000 - 30 000]     |
|                           |[50-60]%            |[30-40]%          |[50-60]%            |[60-70]%            |[40-50]%      |[60-70]%              |
|TOTAL                      |[20 000 - 30 000]   |[<3 000]          |[20 000 - 30 000]   |[20 000 - 30 000]   |[<1 000]      |[20 000 - 30 000]     |
|COMPETITORS                |[50-60]%            |[30-40]%          |[50-60]%            |[60-70]%            |[40-50]%      |[60-70]%              |
|COMBINED TOTAL             |[40 000 - 50 000]   |[<5 000]          |[30 000 - 40 000]   |[30 000 - 40 000]   |[<3 000]      |[30 000 - 40 000]     |
|                           |[90-100]%           |[90-100]%         |[90-100]%           |[90-100]%           |[90-100]%     |[90-100]%             |

                                                 Source: Source: Annex 6.3.c. (ii) to the Form CO

 0. As can be seen from Table 6 above, Alitalia's and Air Serbia's combined market shares were smaller than easyJet's market shares in  the  all
    passengers and the NTS passenger segment in both the summer 2013 and winter 2013/2014 IATA seasons. For the TS segment, despite the  Parties
    having a higher combined market share, easyJet still managed to attract a significant share. In any event the number  of  TS  passengers  is
    very limited in both seasons.

 0. easyJet is not selling tickets on this route for the summer 2015 IATA season. Therefore Air Serbia and Alitalia would be the  only  carriers
    operating on this route.

 0. The responses from the market investigation are mixed as to the question whether there would remain sufficient  competition  on  this  route
    post-Transaction to prevent the merged entity from raising prices.[182]

 0. Nevertheless, as discussed above in Section 7.2., no material competition exists between the Parties pre-Transaction due to the "soft block"
    codeshare agreement between Alitalia and Air Serbia. Alitalia has a pre-allocated number of seats on Air Serbia operated flights  but  these
    can be returned to Air Serbia until […] prior to departure at no cost to Alitalia.[183] The unsold seats are managed by  Air  Serbia,  which
    can sell them until the departure of flight and which will bear the cost of unsold seats. Accordingly, Alitalia in principle does  not  sell
    seats within […] of the departure time. Therefore Alitalia does not run any commercial risk. Alitalia has no material incentive in  adopting
    a more aggressive commercial strategy and charge prices lower than those of Air Serbia. For the tickets that it sells, Alitalia has  limited
    incentives to charge less than a price which consists of the minimum amount per seat that it has to return to Air Serbia (fixed amount)  and
    the airport taxes.[184] In reality, Alitalia would sell tickets above that amount (to include its margin and to capture the different  price
    points of customers) and, in any event, if it did lower its price it  would  undermine  the  operating  carrier's,  that  is  Air  Serbia's,
    incentive to continue the codeshare. The Commission's market investigation confirmed that the competitive pressure exerted by  a  unilateral
    codeshare is not significant in the context of the Transaction, including on the Belgrade-Milan route.[185]

3 Conclusion

 0. In light of the above and of the other available evidence, 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 the Milan–Belgrade route.

2 Belgrade–Rome

1 Presentation of the route

 0. The overlap between the activities of Alitalia and Air Serbia on this route arises  because  of  their  operations  on  the  Rome  Fiumicino
    (FCO)–Belgrade (BEG) airport pair. Neither the Notifying Parties, nor their partners  or  competitors  offer  direct  and  indirect  flights
    between Belgrade and Rome Ciampino.

 0. The Rome–Belgrade route is served by both Alitalia and Air Serbia. Etihad entered into a codeshare agreement with Air Serbia which allows it
    to offer tickets for the Belgrade–Rome route. However, Etihad's sales are negligible for both the summer  2013  and  winter  2013/2014  IATA
    seasons.

 0. Approximately [100 000 -200 000] passengers travelled on the Rome–Belgrade route in the summer 2013 and winter 2013/2014  IATA  seasons,  of
    which [50-60]% travelled on the O&D route.[186] In the summer 2013 IATA season, a total of [40 000 – 50 000] passengers, including [<3  000]
    TS passengers, travelled on the O&D route.[187] In the winter 2013/14 IATA season, [20 000 – 30  000]  passengers,  including  [<3  000]  TS
    passengers, travelled on the O&D route.[188] For each of these seasons and within each category of passengers (NTS and TS),  at  least  [90-
    100]% of passengers travelled direct.[189]

 0.  In the summer 2013 IATA season, Alitalia and Air Serbia operated 7 weekly (roundtrip) frequencies each. In the winter 2013/14 IATA  season,
    Alitalia operated 10 weekly frequencies while Air Serbia operated around 7 weekly frequencies.[190] In the summer 2014 IATA season, Alitalia
    operated around 11 weekly frequencies while Air Serbia operated around 9 weekly frequencies.[191]

 0. Alitalia and Air Serbia have operated a parallel hard block codeshare agreement on the Rome–Belgrade route which allows them to sell tickets
    for each other's flights.

 0. Wizzair used to operate on the route but discontinued its operations in September 2012.[192]

 0. Rome is served by two airports, Rome Ciampino and Rome Fiumicino. As explained above in Section 6.2.7.2.1, the Notifying Parties submit that
    the two airports are substitutable for both time-sensitive and non-time-sensitive passengers.[193] Airport substitutability between airports
    in Rome could only be relevant for the assessment of entry projects by the Parties' potential  competitors  because  the  Parties  are  both
    flying from Rome Fiumicino and are the only carriers currently active on this route. However, as explained  below  entry  on  the  route  by
    competitors appears unlikely. Therefore, it is not necessary to determine whether Rome Fiumicino is substitutable with Rome Ciampino.

2 Assessment of the route

 0. Table 7 below illustrates the market position of the Parties in the summer 2013 and winter 2013/2014 IATA seasons.

                                                      Table 7: Route Rome Fiumicino–Belgrade
|Carrier                      |Itinerary         |Summer '13                                    |Winter '13/'14                                |
|                             |Type              |                                              |                                              |
|                             |                  |All            |TS             |Non-TS         |All            |TS             |Non-TS         |
|Alitalia                     |DO, DC            |[30 000 - 40   |[<1 000]       |[30 000 - 40   |[10 000 - 20   |[<1 000]       |[10 000 - 20   |
|                             |                  |000]           |[40-50]%       |000]           |000]           |[20-30]%       |000]           |
|                             |                  |[60-70]%       |               |[60-70]%       |[50-60]%       |               |[60-70]%       |
|                             |                  |               |               |               |               |               |               |
|Etihad                       |DC                |[<1 000]       |[<1000]        |[<1 000]       |[<1 000]       |[<1 000]       |[<1 000]       |
|                             |                  |[0-5]%         |[0-5]%         |[0-5]%         |[0-5]%         |[0-5]%         |[0-5]%         |
|                             |                  |               |               |               |               |               |1              |
|Air Serbia                   |DO, DC            |[10 000 - 20   |[<3 000]       |[10 000 - 20   |[5 000 -10 000]|[<3 000]       |[5 000 -10 000]|
|                             |                  |000]           |[50-60]%       |000]           |[40-50]%       |[70-80]%       |[30-40]%       |
|                             |                  |[30-40]%       |               |[30-40]%       |               |               |               |
|TOTAL                        |                  |[40 000 - 50   |[<3 000]       |[40 000 - 50   |[20 000 - 30   |[<3 000]       |[20 000 - 30   |
|                             |                  |000]           |[90-100]%      |000]           |000]           |[90-100]%      |000]           |
|                             |                  |[90-100]%      |               |[90-100]%      |[90-100]%      |               |[90-100]%      |

                                                     Source: Annex 6.3.c. (ii) to the Form CO

 0. During the summer 2014 IATA season, easyJet was active on the route and achieved a market share of approximately  [30-40]%  for  the  period
    going from April to July 2014. In the same period, Air Serbia and Alitalia held a share of [30-40]% each and therefore held a combined share
    of [60-70]%.[194] However, easyJet is no longer selling tickets for flights between Rome and Belgrade and stopped operating on the route  in
    the course of October 2014, so that Air Serbia and Alitalia are the only carriers currently active on this route.

 0. Rome Fiumicino is a coordinated airport with slot shortage during peak times. In the summer 2013 IATA season, peak times at  Rome  Fiumicino
    included 05:00 to 06:55, 10:00 to 10:55, and 18:00 to 18:55 for arrivals and 07:00 to  07:55,  11:00  to  11:55,  and  19:00  to  19:55  for
    departures.[195] In the winter 2013/2014 IATA season, peak times at Rome Fiumicino included 12:00 to 12:55 and 19:00 to 19:55  for  arrivals
    and 13:00 to 13:55 and 20:00 to 20:55 for departures.[196] On average,  slot  requests  by  new  entrants  for  peak  times  could  only  be
    accommodated within approximately 60 minutes of the initial slot request.[197] The capacity at Rome Fiumicino is expected to  increase  over
    the next three years.[198] In the summer 2013 and winter 2013/2014 IATA seasons, Alitalia, Etihad and the EEP have been allocated on average
    approximately [50-60]% of total slots at Rome Fiumicino.[199]

 0. A majority of respondents to the market investigation that expressed a view on the degree of competition that would  remain  on  this  route
    post-Transaction raised concerns that competitive constraints on the Parties would be insufficient to prevent them from raising prices.[200]

 0. Furthermore, assessing the evidence collected in the market investigation, the Commission is of the view that no competitor would have post-
    Transaction entry projects which could be considered at this stage as likely, timely and  sufficient  enough  to  constitute  a  competitive
    constraint on the merged entity, and to offset the serious doubts as to its compatibility with the internal market to which the  Transaction
    would give rise.

 0. The number of TS passengers in the summer 2013 and winter 2013/2014 IATA seasons  amounted  to  [<5  000].  Therefore,  the  market  for  TS
    passengers on the Rome–Belgrade route may not represent a substantial part of the internal market.

3 Conclusion

 0. In the light of the above and the evidence available to it, the Commission considers that the  Transaction raises serious doubts as  to  its
    compatibility with the internal market on the Rome–Belgrade route, at least for all passengers as well as NTS passengers.

3  Abu  Dhabi–Munich,  Abu  Dhabi–Paris,  Athens–Rome,  Barcelona–Rome,  Belgrade–Brussels,  Bucharest–Rome,  Budapest–Rome,  Frankfurt–Rome,  La
       Valetta–Rome, Milan–Rome, Munich–Rome, Rome–Sofia, Rome–Tirana, and Rome–Venice

 0. Table 8 below illustrates the market position of the  Parties  on  the  Abu  Dhabi–Munich,  Abu  Dhabi–Paris,  Athens–Rome,  Barcelona–Rome,
    Belgrade–Brussels, Bucharest–Rome, Budapest–Rome, Frankfurt–Rome, La Valetta–Rome,  Milan–Rome,  Munich–Rome,  Rome–Sofia,  Rome–Tirana  and
    Rome–Venice routes in the summer 2013 and winter 2013/2014 IATA seasons for all types of passengers combined.

                                                  Table 8: Other direct/direct overlaps between
                   Alitalia (including where relevant its Transatlantic JV partners) and Etihad (including Air Serbia and EEP)
                                          Summer 2013 and Winter 2013/2014 IATA seasons – All passengers

|Route             |City/       |Summer '13                                                 |Winter '13/'14                                         |
|                  |airport pair|                                                           |                                                       |
|                       |              |Passengers                     |Alitalia market share          |
|Alitalia               |DC            |[5 000-10 000]                 |[<5 000]                       |
|                       |              |[30-40]%                       |[40-50]%                       |
|                       |              |                               |                               |
|Darwin Airline         |DO            |[5 000-10 000]                 |[<5 000]                       |
|                       |              |[60-70]%                       |[50-60]%                       |
|                       |              |                               |                               |
|TOTAL                  |              |[10 000-20 000]                |[5 000 – 10 000]               |
|                       |              |[90-100]%                      |[90-100]%                      |
|                       |              |                               |                               |

                      Key: DO: Direct Operated, DC: Direct Codeshare Source: Annexes 6.3.c.(i) and 6.3.c.(ii) to the Form CO

 0. Whilst Alitalia and Darwin Airline have a combined market share  of  [90-100]%  in  the  summer  2013  and  winter  2013/2014  IATA  seasons
    irrespective of the market segment considered, Alitalia markets this route only via an existing free-flow unilateral codeshare  with  Darwin
    Airline and there is nothing to prevent Darwin Airline from offering a codeshare to other carriers taking into consideration the  fact  that
    the codeshare with Alitalia is not exclusive.

 0. Even though Alitalia's market share as a result of a codeshare with Darwin Airline appears rather high ([30-40]% and [40-50]% in the  summer
    2013 and winter 2013/2014 IATA seasons respectively), Alitalia, as Italy's national  carrier,  has  a  share  of  traffic  within  Italy  of
    approximately [40-50]% in 2013.[212] In addition, Darwin Airline is approximately ten times smaller than Alitalia  in  terms  of  passengers
    carried in 2013 (whilst Darwin Airline carried approximately [2 000 000 – 3 000 000] passengers,  Alitalia  carried  24  million  passengers
    during the same year).[213] Therefore, the unilateral codeshare with Darwin Airline gives the possibility  to  Alitalia  (as  the  marketing
    carrier) to expand its network by allowing it to reach destinations to which it does not fly its own aircraft while Darwin Airline  benefits
    from Alitalia's strong customer base in Italy.[214]

 0. The market investigation produced inconclusive results with regard to the question of  whether  there  will  be  sufficient  competition  to
    prevent the merged entity from raising prices post-Transaction on the Florence–Geneva  route.[215]  However,  there  has  been  no  material
    competition between Alitalia and Darwin  Airline  pre-Transaction  due  to  the  codeshare  between  Alitalia  and  Darwin  Airline  on  the
    Florence–Geneva route, which is a free-flow unilateral codeshare.[216] Due to this code sharing agreement, already pre-Transaction, Alitalia
    has not run any commercial risk since it was not obliged to purchase a minimum amount of seats from Darwin Airline. As explained in  Section
    7.2 and supported by information obtained by the Commission in the course of  the  market  investigation  carried  out  in  this  case,  the
    competitive pressure exerted by a free flow unilateral codeshare is not significant.

1 Conclusion

 0. In the light of the above and of the other available evidence, the Commission considers that the Transaction  does  not  raise  any  serious
    doubts as to its compatibility with the internal market with respect to the Florence–Geneva route under any possible market definition.

4 Bolzano/Bozen–Rome, Geneva–Rome, and Geneva–Venice

 0. Table 10 below illustrates the market position of Alitalia and Darwin Airline  on  the  Bolzano/Bozen–Rome,  Geneva–Rome  and  Geneva–Venice
    routes in the summer 2013 and winter 2013/2014 IATA seasons for all types of passengers combined.

                                        Table 10: Other direct/direct overlaps between Alitalia and Darwin
                                           Summer 2013 and Winter 2013/14 IATA seasons – All passengers

|Route             |City/airport    |Summer '13                                              |Winter '13/'14                                        |
|                  |pair            |                                                        |                                                      |
|                 |                 |Passengers                                                |Alitalia market share                                     |
|                    |                            |Passengers                  |Alitalia market share       |airberlin or Jet Airways    |
|                    |                            |                            |                            |market share                |
|AMS–SKG             |Amsterdam–Thessaloniki      |Air Serbia                  |[30-40]%                    |[10-20]%                    |
|KUL–MIL             |Kuala Lumpur–Milan          |Etihad                      |[10-20]%                    |[20-30]%                    |
|MIL–MNL             |Milan–Manila                |Etihad                      |[30-40]%                    |[20-30]%                    |
|PAR–SKG             |Paris–Thessaloniki          |Air Serbia + airberlin[277] |[20-30]%                    |[10-20]%                    |

                                                      Source: Annex 6.3(c)(v) to the Form CO

 0. Given the relatively modest market shares on these routes, the presence  of  strong  competitors  (such  as  Emirates  and  Qatar  on  Kuala
    Lumpur–Milan, Lufthansa and Aegean  on  Amsterdam–Thessaloniki,  Emirates  and  Singapore  Airlines  on  Milan–Manila,  with  market  shares
    significantly higher than the increment on all of these routes) and the fact that no concerns were raised with regard to any of them  during
    the market investigation,[278] it is concluded that with  regard  to  the  Amsterdam–Thessaloniki,  Kuala  Lumpur–Milan,  Milan–Manila,  and
    Paris–Thessaloniki routes the Transaction does not raise serious doubts as to its compatibility with the internal market.

3 Indirect/indirect overlaps of Alitalia (including its Transatlantic JV partners) with airberlin and Jet Airways

 0. The activities of Alitalia and its Transatlantic JV Partners also overlap on several routes with those of airberlin and/or Jet Airways.

 0. However, as stated in Section 7.2.2, those routes are unlikely to give rise to anti-competitive effects  in  connection  with  the  minority
    shareholding held by Etihad. 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.  Therefore,  post-
    Transaction any attempt of New Alitalia, airberlin and Jet Airways to raise prices on such routes on the basis of the minority  shareholding
    held by Etihad would likely be short lived and ineffective.

 0. In addition, on 22 of those routes,[279] the combined market shares of Alitalia, its Transatlantic JV partners, airberlin  and  Jet  Airways
    are fairly modest and did not exceed [50-60]% in any of the last four IATA seasons in any passenger segment; on all of those 22 routes there
    will be sizable competitors, such as the Star Alliance Transatlantic JV, the oneworld joint venture, Lufthansa, IAG or  Air  France-KLM.  On
    none of those routes has the market share of the largest competitor been below [20-30]% in the last two IATA seasons. Those competitors will
    continue to exert a significant constraint post-Transaction, both in the TS and NTS segments. Furthermore, no concerns were  raised  in  the
    market investigation with regard to any of those routes.[280]

 0. Moreover, on six of the indirect/indirect overlap routes, despite the combined market shares of Alitalia,  its  Transatlantic  JV  partners,
    airberlin and Jet Airways being high (above [50-60]% in at least one segment in any of the past four IATA seasons),  the  increment  brought
    about the Transaction is low (below [10-20]% in any of the past four IATA seasons):  Frankfurt–Lamezia  Terme,  Florence–New  York,  Lamezia
    Terme–Vienna, Madrid–Naples, Naples–New York, Palma de Mallorca–Venice. Furthermore, no concerns were raised  in  the  market  investigation
    with regard to any of those routes.[281]

 0. Lastly, on the remaining two routes, Catania–Vienna and Moscow–Naples, the  combined market  shares  of  Alitalia  and  airberlin  fluctuate
    considerably between seasons (on Moscow–Naples between [50-60]% and [70-80]% and on Catania–Vienna between [40-50]% and [80-90]%).  On  both
    routes, however, there are strong competitors, such as the Lufthansa and Air France–KLM. Furthermore, no concerns have been brought  forward
    in the course of the market investigation.[282]

 0. In light of all the above and the other available evidence, the Commission considers that the Transaction does not raise serious  doubts  as
    to its compatibility with the internal market with respect  to  those  indirect/indirect  overlap  routes[283]  under  any  possible  market
    definition.

5 The integration of New Alitalia with Etihad, Air Serbia, Darwin Airlines, and the EEP

 0. As discussed above in section 5 of this decision, in recent years Etihad acquired minority shareholdings or otherwise financed in  a  number
    of carriers with the aim of building a connecting network and to encourage, where possible, the carriers it has invested in to co-operate on
    codeshares and joint purchasing.

 0. As a result of the Transaction, New Alitalia would be linked indirectly, through Etihad, with the various carriers  of  which  Etihad  is  a
    shareholder. In order to fully take into account the possible effects of Etihad's shareholdings in New Alitalia, Air Serbia, and in the  EEP
    as well as Etihad's influence over Darwin Airline, the Commission assessed all overlaps between Alitalia and airberlin, Air  Serbia,  Darwin
    Airlines, and Jet Airways in its O&D analysis.[284] On the basis of that analysis the Commission has excluded serious doubts on  all  routes
    where the activities of Alitalia (including its Transatlantic JV partners) and Etihad, Air Serbia, Darwin Airline, and/or the  EEP  overlap,
    with the exception of the Rome–Belgrade route where the Commission identified serious doubts.

 0. However, some respondents to the market investigation, and in particular certain competitors, raised  concerns  that  the  O&D  approach  to
    market definition would not allow to fully analyse the effects that the Transaction may have on Alitalia, Etihad, Air Serbia, Darwin Airline
    and the EEP' network and on Abu-Dhabi's role as a hub for flights from Europe to Africa, Asia, and Oceania.

 0. The framework for the cooperation between New Alitalia and Etihad is established in the CCA (see recital Error! Reference source not  found.
    above) and will be entered into by the Parties in the context of the Transaction. The CCA does not regulate  the  relationship  between  New
    Alitalia, Air Serbia, Darwin Airline and the EEP. […].[285]

 0. […][286]

 0. Pursuant to the terms of the CCA, New Alitalia will be using Abu Dhabi airport as […]  hub  for  scheduled  flights  to  […].  However,  New
    Alitalia will continue to cooperate with its existing partners and to operate to destinations within the Exclusive Territory  that  are  not
    served by Etihad, Air Serbia, Darwin Airline, and the EEP. Furthermore, subject to Etihad's consent, New Alitalia will be entitled to  enter
    into new codeshare agreements relating to the Exclusive Territory with third parties.[287]

 0. In the present section, the Commission will assess the possible impact of the Transaction in addition to  what  has  already  been  analysed
    under the O&D approach and relating to (i) the future cooperation among New Alitalia, Etihad, Air Serbia, Darwin Airline and the  EEP,  (ii)
    the strengthening of Abu Dhabi's role as a hub for flights from Europe to Asia and  Africa,  and  (iii)  other  potential  issues  that  the
    Transaction may raise.

1 New Alitalia's cooperation with Etihad, Air Serbia, Darwin Airline, and the EEP

 0. As mentioned above in Section 7.2.3 of this decision, Alitalia has entered into codeshare agreements with Etihad as well as with Air Serbia,
    Darwin Airline and Jet Airways. Those agreements pre-date the Transaction and, as such,  are  unrelated  to  the  Transaction.  Furthermore,
    Alitalia has recently entered into a codeshare agreement with airberlin. Discussions between  the  two  carriers  regarding  such  agreement
    started at the latest in the first quarter of 2013 and were concluded in August 2014 following Alitalia's release from a  restriction  under
    its SkyTeam agreement, which made it possible to finalise the code share agreement.[288] Therefore airberlin's and  Alitalia's  decision  to
    enter into a codeshare agreement does not appear to be linked to the Transaction.  However,  even  assuming  that  the  codeshare  agreement
    between Alitalia and airberlin were related to the Transaction, as discussed in Section 7.2.2 of this decision it is unlikely that agreement
    would, as a result of the Transaction, have a material impact on competition.

 0. [Description of terms of an agreement between Etihad and New Alitalia]

 0. Indeed, the networks of Alitalia, Etihad, Air Serbia, Darwin Airline and the EEP are to a very large  extent  complementary.  Alitalia,  Air
    Serbia, Darwin Airline and the EEP operate from different hubs and with a different regional focus. Overlaps between Alitalia,  on  the  one
    hand, and Etihad, airberlin, Air Serbia, Darwin Airlines and Jet Airways, on the other hand, are very limited. Alitalia  currently  directly
    operates on over one hundred and eighty routes and on only five of those Etihad, Air Serbia, Darwin Airline, and/or the EEP are also  active
    through direct flights. Overall the overlaps between Alitalia, Etihad, Air Serbia, Darwin Airline and the EEP represent approximately [0-5]%
    of the total routes operated by Alitalia.

       Table 16: Overlaps among the networks of Alitalia and Etihad, Air Serbia, Darwin Airline, and the EEP
|Airline                   |Total DO Routes               |Overlap DO routes with Alitalia   |% of DO routes that overlap with |
|                          |                              |                                  |Alitalia                         |
|Alitalia                  |[…]                           |-                                 |                                 |
|Etihad                    |[…]                           |1 (FCO–AUH)                       |[0-5]%                           |
|Air Serbia                |[…]                           |1 (BEG–FCO)                       |[0-5]%                           |
|Darwin Airline            |[…]                           |1 (FCO–GVA)                       |[0-5]%                           |
|airberlin                 |[…]                           |2 (FCO–VIE MIL–VIE)               |[0-5]%                           |
|Jet Airways               |[…]                           |0                                 |0                                |

       Source: Notifying Parties' reply to RFI 9 of 8 October 2014, question 2.

 0. Furthermore, the total number of passengers transported by Alitalia, Etihad, Air Serbia, Darwin Airline and the EEP ([100 000 000 – 200  000
    000] passengers) represents only a fraction of those transported by the main alliances among carriers such as SkyTeam ([500 000 000-600  000
    000] passengers,) Star Alliance ([600 000 000 – 700 000 000] passengers) and oneworld  ([300  000  000  –  400  000  000]  passengers).  The
    Notifying Parties estimate that in 2013 Alitalia, Etihad, Air Serbia, Darwin Airline and the EEP together transported approximately  [5-10]%
    of total passengers worldwide. In the same period, Star Alliance transported [30-40]%, Sky Team [30-40]%, and  oneworld  [10-20]%  of  total
    passengers worldwide. Therefore, significant alternative networks are available for passengers in addition to the one that Etihad is in  the
    process of establishing.

 0. In 2012, Alitalia held an overall share of approximately [40-50]% for domestic flights in Italy, of  [10-20]%  for  flights  from  Italy  to
    European destinations, and of [10-20]% for flights from Italy to intercontinental destinations.[289] When looking at the  footprint  of  the
    networks of Alitalia, Etihad, Air Serbia, Darwin Airline, and the EEP, most overlaps relate to flights connecting Italy to Austria, Germany,
    and Switzerland. The Lufthansa Group, one of the main airline groups in the world and the largest in Europe, has a very significant presence
    in each of Germany, Austria and Switzerland[290] and currently represents,  and  will  continue  to  represent  post-Transaction,  a  strong
    competitive constraint on Alitalia, Etihad, Air Serbia, Darwin Airline and the EEP.

 0. It follows that New Alitalia's cooperation with Etihad, Air Serbia, Darwin Airline and the EEP   will  mainly  extend  the  reach  of  their
    respective networks, thus pursuing the same goals and strategy that other bigger carriers pursue (even to a larger extent) by  participating
    in alliances. However, such cooperation is unlikely to have a material impact on competition  as  a  result  of  the  Transaction  and  will
    therefore not give rise to serious doubts as to the compatibility of the Transaction with the internal market.

2 Strengthening of Abu-Dhabi's role as a hub for flights from Europe to Africa, Asia, and Oceania

 0. The CCA will strengthen Abu Dhabi airport's position as a hub for flights from Europe to Asia, Africa, and Oceania as it will  receive  some
    feeding traffic from New Alitalia. However, European passengers wishing to reach destinations in Asia, Africa, and  Oceania  have  at  their
    disposal a wide range of alternative hubs that they can use, including airports located in Europe and outside of Europe.

 0. In 2013, the Abu Dhabi airport had a total of 16.5  million  passengers,  of  which  approximately  9  million  were  in  transit  to  other
    destinations.  Abu Dhabi airport ranks at number 102 worldwide in terms  total  passengers  handled.[291]  In  2014,  the  total  number  of
    passengers handled by Abu Dhabi airport is expected to increase to 20 million while the total capacity at the airport will double  over  the
    next three years.[292]

 0. In terms of passengers handled Abu Dhabi is a much smaller airport than the main EU hubs such as London (72 million passengers),  Paris  (62
    million passengers) and Frankfurt (58 million passengers), as well as the main airport in the  Middle  East,  Dubai  International[293]  (66
    million passengers).[294] Even if a significant share of Alitalia's 24 million passengers were to transit through Abu  Dhabi  airport,  this
    would merely bring the number of total passenger handled by the Abu Dhabi airport closer to that of  other  main  hubs  in  the  region  and
    worldwide.

 0. Therefore, any strengthening of the competitive position of the Abu Dhabi airport that may result from the Transaction will not give rise to
    serious doubts as to the compatibility of the Transaction with the internal market.

3 Other issues

1 Etihad's economic and financial power

 0. Some European carriers made the argument that Etihad is controlled and financed by a state with vast resources (Abu Dhabi). More  generally,
    the issues raised by those European carriers relate overall to the competition with Etihad and with the other  Gulf  carriers  which,  those
    European carriers claim, are subsidised by their home state. However, those  European  carriers  did  not  substantiate  their  concerns  by
    providing evidence of Etihad having received subsidies or Etihad having been able in the past to use these alleged  subsidies  in  an  anti-
    competitive fashion.

 0. In addition, the outcome of the Commission's assessment of the Transaction under the Merger Regulation would not change when applying  “deep
    pocket” considerations. New Alitalia will be de facto jointly controlled by Alitalia and Etihad and therefore Etihad cannot  decide  on  its
    own that New Alitalia would adopt any particular commercial strategy, let alone a very aggressive or even a short term loss making strategy.
    Indeed, the Notifying Parties have a common vision regarding New Alitalia's commercial strategy and are  likely  to  jointly  implement  it.
    Etihad and Alitalia would jointly have to bear New Alitalia's losses and would each have to contribute to the re-financing of  New  Alitalia
    in line with their respective shareholdings. Etihad will contribute to New Alitalia's  financing  in  proportion  to  its  49%  shareholding
    whereas Alitalia will have to contribute for the remaining 51% of the shareholding.

 0. Consequently, the economic and financial power of Etihad would not materially alter the competitive analysis of any of the  overlap  routes.
    [295] In addition, the mere alleged fact that Etihad possesses a strong financial capacity, is not per se indicative of competition concerns
    and does, as such, not give rise to serious doubts as to the compatibility of the Transaction with the internal market.

2 The Linate Decree

 0. By Ministerial Decree n. 15 of 3 March 2000 ("Decree n. 15"), a scheme for the Milan  airport  system  (that  is  the  airports  of  Linate,
    Malpensa and Bergamo Orio al Serio) was introduced. The Decree n. 15 designated Milan Malpensa as the hub airport and identified  Linate  as
    the national and Community airport for point to point connections. With that new air traffic distribution, Linate received the specific role
    of maintaining the Milan–Rome shuttle service, the connections with southern Italy and with the main European Union airports, identified  on
    the basis of traffic volumes developed during the year 1999. In 2001, the Decree n. 15 was modified to allow  one  daily  return  flight  to
    capital cities irrespective of the volume of passengers, and two daily return flights to European Union hubs with yearly  passenger  traffic
    of more than 40 million.

 0. On 1 October 2014, the Italian Ministry for Infrastructure and Transport adopted Decree No. 237 (the "Linate Decree") which removes some  of
    these restrictions, mainly those linked to the volume of passengers, the daily limits imposed on traffic to capital cities and  hubs,  while
    maintaining the requirement of point-to-point connections, the use of narrow body aircrafts and the geographical limit  to  destinations  in
    the EU (thus excluding flights from Linate to hubs at non-EU capital cities such as Istanbul or Moscow). The Linate Decree similarly  leaves
    unchanged Linate's current capacity (maximum 18 movements per hour).[296]

 0. [Details of information contained in the Transaction Implementation Agreement].[297] Certain competitors raised  concerns  that  the  Linate
    Decree favours New Alitalia and, potentially, Etihad, Air Serbia, Darwin Airline and the EEP, as  Alitalia  currently  holds  a  significant
    share of total slots at Milan Linate and will thus be the carrier that can launch more rapidly and more  easily  new  intra-European  routes
    to/from Milan Linate, an airport considered more attractive than the other airports serving Milan.[298]

 0. However, carriers competing with New Alitalia, Etihad, Air Serbia, Darwin Airline and the EEP will also  benefit  from  the  Linate  Decree,
    perhaps with a delay of one IATA season, and will have the possibility of launching new  routes  to/from  Linate.  Even  assuming  that  New
    Alitalia, Etihad, Air Serbia, Darwin Airline and the EEP could launch new routes to/from Linate more  easily  than  their  competitors,  the
    Linate Decree will not have a material effect on competition for flights to/from Milan  Malpensa  and  Milan  Linate  as  a  result  of  the
    Transaction.

 0. Assuming that Milan Linate were substitutable with Milan Malpensa,[299] New Alitalia's competitors would have ample capacity at  the  latter
    airport, which is not slot constrained, to initiate the operation of flights competing with those additional flights that New  Alitalia  may
    launch from Milan Linate following the adoption of the Linate Decree.[300] If instead Milan Linate and Milan Malpensa were part of different
    geographic markets, any transfer of flights by New Alitalia from Milan Malpensa to Milan Linate would only have the effect of  (i)  reducing
    competition on the relevant O&D routes for other carriers operating from Milan Malpensa, and of (ii) launching new flights from Milan Linate
    towards destinations that were not served from that airport before.

 0. Therefore, the Commission considers that any competitive impact that may be linked to the Linate Decree, to the  extent  that  it  would  be
    related to the Transaction, does not give rise to serious doubts as to the compatibility of the Transaction with the internal market.

6 Other markets (vertical relationships)

 0. As discussed in Section 6.1.3, the Parties are active to a limited extent on markets which are vertically linked with  the  market  for  air
    transport of passengers, including maintenance, repair and overhaul (MRO) services, flight simulator  training,  ground-handling,  catering,
    and loyalty programs.

1 Maintenance, repair and overhaul (MRO) services

 0. Alitalia is active in MRO at the Rome Fiumicino (FCO) and Milan Malpensa (MXP) airports. Alitalia conducts  line  maintenance  for  its  own
    aircraft and for a number of third parties (including Etihad in FCO and MXP) and  it  outsources  heavy  maintenance  services  to  external
    suppliers.[301] Etihad is active in the provision of both line and heavy maintenance. However, Etihad  does  not  provide  line  maintenance
    services or heavy maintenance services in the EU, the sole exception being the provision of line maintenance  at  Dublin  airport.  Etihad's
    only third party client for light maintenance at Dublin airport is Etihad. Darwin Airline self-supplies line maintenance services at  Geneva
    and Zurich airports and airberlin provides line maintenance services for its own aircraft and third  parties  at  Düsseldorf  (DUS),  Munich
    (MUC) and Berlin Tegel (TXL) airports. Air Serbia, Darwin Airline and airberlin outsource heavy maintenance services to external suppliers.

2 Flight Training Services

 0. Alitalia owns three Full Flight Simulators ("FFS") which are located at Rome Fiumicino (FCO). Alitalia also operates FSS owned by  CAE  Inc.
    which are used to provide training to third parties. In addition, Alitalia also uses third parties' FFS to ensure its  pilots  can  maintain
    their licenses or train for aircraft for which it does not own or operate FFS. Etihad owns four FFS all of which are located in  the  United
    Arab Emirates. […]. Etihad provides flight training services in Abu Dhabi (AUH) to its own pilots and those of its EEP. […].

3 Ground Handling Services

 0. Alitalia performs ground handling services for its own operations (self-handling) at  Milan  Linate,  Reggio  Calabria  and  Rome  Fiumicino
    airports. In addition, Alitalia offers its ground handling services to third parties at Rome  Fiumicino.  Etihad  provides  ground  handling
    services in Abu Dhabi (AUH). Air Serbia has a wholly owned subsidiary Su-Port which provides ground  handling  services  at  Belgrade  (BEG)
    airport to Air Serbia, Etihad and Darwin Airline. Neither the EEP nor Darwin Airline provide ground-handling services in the EEA.

4 In-flight Catering

 0. Alitalia does not provide any catering services and has outsourced all of its catering  requirements  to  third  parties.  Etihad  does  not
    provide any catering services in the EEA.[302] Air Serbia sources catering services and does not offer catering services to  third  parties.
    Therefore, the Transaction does not lead to any vertical links in relation to the market for in-flight catering in the EEA.

5 Loyalty Programs

 0. Both Alitalia and Etihad operate FFPs. Alitalia Loyalty is a company dedicated to the operation  and  development  of  Alitalia's  FFP,  the
    MilleMiglia Programme. On 31 December 2013, MilleMiglia had 1.1 million active members and a total of 4.45 million registered  members.[303]
    Etihad has been operating the Etihad Guest FFP since 2006. Etihad Guest now has more than 2.5 million members. In 2012, Etihad acquired  70%
    of airberlin's loyalty programme, Topbonus[304] and in 2014 Etihad acquired 50.1% of Jet Privilege, Jet Airways' loyalty programme.[305]

6 Assessment

 0. The Transaction does not give rise to any horizontally affected market in relation to  MRO  services,  flight  simulator  training,  ground-
    handling, catering, and loyalty programs. Likewise, the Transaction does not give rise to any vertically affected market.[306]

 0. The Notifying Parties were not in a position to provide market share estimates for MRO services provided  by  airberlin  at  the  Düsseldorf
    (DUS), Munich (MUC) and Berlin Tegel (TXL) airports. However, it seems very unlikely that airberlin will have the ability and the  incentive
    to engage in input or customer foreclosure. Furthermore, any foreclosure by airberlin in the MRO segment at Düsseldorf (DUS),  Munich  (MUC)
    and Berlin Tegel (TXL) airports would not materially affect competition. Lufthansa Technik and  other  MRO  providers  are  also  active  at
    Düsseldorf (DUS), Munich (MUC) and Berlin Tegel (TXL) airports and exercise a significant constraint on airberlin. Furthermore, in  addition
    to airberlin, a number of carriers fly to/from Düsseldorf (DUS), Munich (MUC) and Berlin Tegel (TXL) airports and  are  potential  customers
    for MRO services.

 0. A majority of competitors that have expressed a view as to whether the Transaction would have an impact on the  markets  for  MRO  services,
    flight-training services, ground handling services and for loyalty programmes have considered such an impact to be limited.[307]

7 Conclusion

 0. In light of the above and of the 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 market for MRO services, flight-training services, ground handling  services  and
    for loyalty programmes under any plausible market definitions.

Commitments

 0. In order to address the serious doubts raised by the Transaction on the Rome (Fiumicino)–Belgrade route,  the  Notifying  Parties  submitted
    commitments on 27 October 2014. On 28 October 2014, the Commission launched a  market  test  in  order  to  gather  the  opinion  of  market
    participants. Following the market test, an improved version of the commitments was submitted by the Notifying Parties on 10  November  2014
    (the "Final Commitments"). As will be shown below, the Commission considers these Final Commitments suitable to entirely remove the  serious
    doubts identified.

 0.  The  Final  Commitments  aim  at  reducing  the  barriers  to  entry  and  facilitating  entry  for  a  prospective  entrant  on  the  Rome
    (Fiumicino)–Belgrade route. Specifically, the Notifying Parties undertake to make available slots  to  allow  the  operation  of  two  daily
    frequencies on the Rome (Fiumicino)–Belgrade route (the "Slot Commitment"). By providing for the release of sufficient slots to operate  two
    daily frequencies on the Rome (Fiumicino)–Belgrade route, the Final Commitments would enable (i) a  new  entrant  to  operate  daily  return
    flights on the route or (ii) entry by more than one carrier on that route.  Moreover,  the  Final  Commitments  attempt  to  make  the  Slot
    Commitment very attractive by giving access to the full range of airport infrastructure including  parking  and  access  to  gates,  and  by
    allowing the new entrant to enter into a Special Prorate Agreement ("SPA") with the Parties (New Alitalia, Etihad and Air Serbia) (the  "SPA
    Commitment"), a fare combinability agreement, an interlining agreement, and have access to the Parties' FFPs.[308]

 0. The main aspects of the Final Commitments are summarised below.

1 Description of the main elements of the Final Commitments

1 Slot release on the route where serious doubts arise

 0. Under the Final Commitments, the Parties will make available slots to allow a prospective entrant to operate two daily  frequencies  on  the
    Airport Pair (the "Slots"). The "Airport Pair" is defined as the Rome (Fiumicino)–Belgrade airport pair. Slots  are  defined  in  the  Final
    Commitments as the permission given to the prospective entrant to use the full range of airport infrastructure including parking and  access
    to gates at the airport that is necessary to operate an air service at the airport on a specific date and time for the purpose of landing or
    take-off in accordance with the EU Slot Regulation, or equivalent legislation.

2 The Slot Commitment

 0. The Parties will make Slots available within twenty (20) minutes of either side  of  the  time  requested  by  the  prospective  entrant.  A
    prospective entrant shall be eligible to obtain Slots from the Parties pursuant to the Final Commitments only if it can demonstrate that  it
    has exhausted all reasonable efforts to obtain the necessary slots to operate on the Airport Pair through the normal steps  of  the  general
    slot allocation procedure. The prospective entrant shall be deemed not to have exhausted all reasonable efforts to  obtain  necessary  slots
    if, among others: (a) slots at Rome (Fiumicino) and Belgrade airport were available for the time requested and  were  not  accepted  by  the
    prospective entrant, (b) slots at Rome (Fiumicino) or Belgrade airport were obtained to  operate  on  the  Rome  (Fiumicino)–Belgrade  route
    outside the 20 minutes time window provided for in the Final  Commitments  and  the  prospective  entrant  did  not  give  the  Parties  the
    opportunity to exchange those slots for Slots under the Final Commitments; or (c) the prospective entrant has not  exhausted  its  own  slot
    portfolio at Rome (Fiumicino) and Belgrade airport.

1 Grandfathering rights

 0. The Slots obtained by a prospective entrant under the Final Commitments must be used to provide a non-stop scheduled passenger air transport
    service operated on the Rome (Fiumicino)–Belgrade route and cannot be used on another city pair unless the prospective entrant has  operated
    such service during 4 consecutive IATA seasons (the "Utilization Period"). Once the Utilization Period has elapsed, the prospective  entrant
    will be entitled to use the Slots to operate any O&D route ("grandfathering"). Grandfathering is subject  to  approval  of  the  Commission,
    advised by the Monitoring Trustee.

2 Ranking of the prospective entrants applying for Slots

 0. Under the Final Commitments, the Commission, advised by the Monitoring Trustee, will collect bids  for  the  Slots  and  assess  whether  an
    applicant is a viable existing or potential competitor with the ability, resources and commitment to operate services on the Airport Pair in
    the long term as a viable and active competitive force.

 0. The Commission will rank the bids received and will give preference to the applicant which will exert the most effective overall competitive
    constraint on the Airport Pair.

3 The SPA Commitment

 0. In addition to the Slot commitment, the Parties will enter into an SPA with any requesting carrier (irrespective  of  whether  such  carrier
    commenced non-stop services on the basis of slots obtained from the Parties under the Final Commitments) for all traffic, provided that part
    of the journey involves the Airport Pair.

 0. The requesting carrier may select for the Airport Pair up to a maximum of fifteen (15) behind/beyond routes for each of the Parties.

 0. The requesting carrier may select the fare class(es) to which the SPA will apply, provided that that on the Airport Pair each selected  fare
    class is included in at least one existing special prorate agreement which the relevant Party has agreed with any other carrier with  regard
    to the routes concerned (subject to certain exclusions).

 0. The SPA shall be on terms which are at least as favourable as the terms agreed by the relevant  Party  under  an  existing  special  prorate
    agreement with any other carrier for the same route and in the same fare class (subject to certain exclusions).

4 Fare combinability agreements

 0. The Parties will, at the request of any carrier which operates or has started to operate a non-stop  service  on  Rome  (Fiumicino)–Belgrade
    route (whether or not such service uses Slots released to that carrier pursuant to the Final Commitments),  enter  into  an  agreement  that
    arranges for fare combinability on the Airport Pair across all classes of tickets. Such agreement will provide for the possibility for  such
    requesting carrier (or travel agents), to offer a return trip on the Airport Pair comprising a non-stop service  provided  one  way  by  the
    Parties and a non-stop service provide the other way by the requesting carrier.

5 Interlining agreements

 0. At the request of any airline operating a new service on the Airport Pair or which increases the number of non-stop frequencies it  operates
    on the Airport Pair in accordance to the Final Commitments, the Parties will enter into an Interline Agreement concerning the  Airport  Pair
    when they offer connection flights.

6 Frequent flyer programmes

 0. At the request of any airline operating a new service on the Airport Pair or which increases the number of non-stop frequencies it  operates
    on the Airport Pair in accordance to the Final Commitments that does not have a comparable FFP of its own and does not participate in any of
    the Parties' FFPs, the Parties will allow it to be hosted in their FFPs for the Airport Pair on which it has commenced or increased service.

7 Monitoring Trustee

 0. A Monitoring Trustee shall be appointed by the Notifying Parties to monitor the correct execution of the Final Commitments, subject to prior
    approval by the Commission. The Monitoring Trustee, which shall be independent from the Parties, must be familiar with the airline  industry
    and the slot allocation and exchange procedures, and have the experience and competence necessary for this appointment.

 0. The Parties will be under the obligation to provide the Monitoring Trustee with such assistance and information,  including  copies  of  all
    relevant documents, as the Monitoring Trustee may reasonably require in carrying out its mandate. In particular, the Monitoring Trustee will
    have full and complete access to any of the Parties' books,  records,  documents,  management  or  other  personnel  facilities,  sites  and
    technical information necessary to fulfil its duties under the Final Commitments.

8 Fast track dispute resolution

 0. The Final Commitments also provide that the agreements concluded to implement the Final Commitments will provide for  a  fast-track  dispute
    resolution procedure as described in the Final Commitments. If the prospective entrant or the requesting carrier has reason to believe  that
    the Parties are failing to comply with the requirement of the Final Commitments vis-à-vis that  party,  the  fast-track  dispute  resolution
    procedure in the Final Commitments will apply.

2 Analysis of the Final Commitments

 0. As set out in the Commission Notice on Remedies,[309] the Commission assesses  the  compatibility  of  a  notified  concentration  with  the
    internal market on the basis of its effect on the structure of competition in the European  Union.  Where  a  concentration  raises  serious
    doubts which could lead to a significant impediment to effective competition, the Parties may seek to modify  the  concentration  so  as  to
    resolve the serious doubts identified by the Commission with a view to having the concentration cleared.

 0. According to the European Union Courts' case law, commitments must be likely to eliminate all competition  concerns  identified  and  ensure
    competitive market structures. In particular, contrary to those entered into after the Commission initiated proceedings, commitments offered
    prior to the initiation of proceedings are not intended to prevent a significant impediment on effective competition but rather  to  clearly
    dispel all serious doubts in that regard. The Commission enjoys a broad discretion in assessing whether such commitments constitute a direct
    and sufficient response capable of dispelling any such doubts.

 0. In assessing whether or not the Final Commitments will maintain effective competition, the Commission considers inter alia the  type,  scale
    and scope of the remedies offered by reference to the structure and the particular characteristics of the market in which  the  Commission's
    serious doubts as to the compatibility of the Transaction  with  the  internal  market  arise.  It  should  be  highlighted,  however,  that
    commitments offered prior to the initiation of proceedings can only be accepted when the competition problem that  the  concentration  gives
    rise to is readily identifiable and can easily be remedied.

 0. Concerning the suitability of commitments aiming at facilitating entry of a new competitor, the Commission Notice on  Remedies  states  that
    "[o]ften, a sufficient reduction of entry barriers is not achieved by individual measures, but by […] a commitments package aimed at overall
    facilitating entry of competitors by a whole range of different measures".

 0. In airline cases, commitments are acceptable to the Commission where it is sufficiently clear that actual entry  by  new  competitors  would
    occur and where such entry would eliminate any serious doubts as to the compatibility of the concentration with the internal market. In this
    respect, account must be taken of the facts existing at the time  when  the  decision  is  adopted  and  not  in  the  light  of  subsequent
    events.[310]

 0. The Final Commitments constitute a comprehensive package which takes into consideration past experience with commitments in merger cases  in
    the aviation sector.

 0. For the reasons set out below and on the basis of the available evidence, the Commission has concluded that the  Final  Commitments  address
    the serious doubts identified in this decision. As such, the Commission comes to the conclusion that the Final Commitments entered  into  by
    the Notifying Parties are sufficient to eliminate any serious doubts as to the compatibility of the Transaction with the internal market.

1 The Slot Commitment

1 Structure and design of the Final Commitments

 0. The Final Commitments take account of the fact that slot congestion is a material entry barrier on the Rome  (Fiumicino)–Belgrade  route  in
    particular at Rome (Fiumicino). Rome (Fiumicino) is a coordinated airport with slot shortage during peak times (see  Section  7.4.2.4).  The
    Final Commitments do not contain any specific limitation regarding the number of Slots to be released at peak hours. Furthermore, the  Final
    Commitments also provide for access to the relevant airport infrastructure, including parking and gates that are necessary to operate on the
    Airport Pair.

 0. Therefore, the Final Commitments are designed to and will effectively remove this entry barrier and foster sufficient,  timely,  and  likely
    entry on the Rome (Fiumicino)–Belgrade route.

 0. Should Slots (and access to infrastructure) be necessary at Belgrade airport (which for the time being is not congested),  the  new  entrant
    would also have access to Slots and the relevant infrastructure in that airport under the Final Commitments.

 0. The Slots offered for free under the Slot Commitment exceed the increment brought about by the Transaction because in the Final  Commitments
    the Parties have taken into account the fact that they codeshare on each other's flights and thus can offer a number of frequencies that  is
    greater than the increment resulting from the Transaction.

 0. The attractiveness of the Slots at Rome (Fiumicino) airport is  enhanced  by  the  Final  Commitments  due  to  the  prospect  of  acquiring
    grandfathering rights without any territorial restriction after four IATA seasons. The Commission considers that the possibility to  acquire
    grandfathering rights after a relatively short period materially improves the incentive of new entrants to operate on the Rome  (Fiumicino)-
    Belgrade route.

 0.  A  majority  of  respondents  to  the  market  test  expressing  an  opinion  welcomed  the  commitment  to  release  Slots  for  the  Rome
    (Fiumicino)–Belgrade route, thereby facilitating new entry.[311]

 0. In addition, it should be noted that some of the Parties' main competitors already have operations at one  or  even  both  of  the  airports
    concerned.

 0. Moreover, in the past competitors were able to attain considerable market  shares  on  the  Rome  (Fiumicino)-Belgrade  route  with  limited
    frequencies. For instance, easyJet acquired a [30-40]% market share (all passengers) on the route in the summer  2014  IATA  season  with  3
    weekly frequencies– at the same time, the Parties operated 19 weekly frequencies.[312]

2 Conclusion

 0. Without the Slot commitments a new entrant at Rome (Fiumicino) would  have  no  guarantee  of  obtaining  the  required  slot  pair  at  the
    appropriate times, allowing for an optimised rotation of aircraft on the  Rome  (Fiumicino)–Belgrade  route.  By  contrast,  with  the  Slot
    commitment, the Slot allocation mechanism in the Final Commitments ensures that a prospective new entrant will in  all  probability  receive
    the requested Slots in an appropriate window of +/- 20 minutes from the initial request.

 0. In light of the above and the available evidence, in particular the market test,  during  which  some  airlines  expressed  an  interest  in
    obtaining Slots under the Final Commitments and indicated likely and timely entry on the Rome  (Fiumicino)-Belgrade  route,  the  Commission
    concludes that the Slot commitment is a key element in facilitating timely and likely entry on  the  Rome  (Fiumicino)–Belgrade  route.  The
    scope of entry will suffice to dispel the serious doubts identified on that route (on all possible passenger segments).

2 The SPA Commitment

1 The market test

 0. Under the SPA offered by the Notifying Parties, an applicant can select up to 15 behind / beyond  routes.  A  majority  of  all  respondents
    expressing an opinion in the market test  regarded  those  terms  as  appropriate.[313]  Some  respondents  indicated  that  the  number  of
    beyond/behind routes foreseen in the Commitments (15) might be arbitrarily chosen.[314] However the 15  largest  connecting  routes  of  the
    Parties altogether represent a significant proportion (about [50-60]%)[315] of the Parties' own feed that they currently  receive  on  their
    Rome (Fiumicino)–Belgrade non-stop services. The Commission therefore deems the number of 15 beyond/behind routes  appropriate  under  these
    circumstances.

 0. While competitors considered that it would likely not be the determining factor on whether  to  operate  on  the  route,  other  respondents
    expressing an opinion stated that the SPA commitment on the Rome (Fiumicino)–Belgrade route increased the likelihood that  new  entry  would
    take place on that route.[316] The Commission therefore considers that the SPA is a relevant element  for  sustainable  operations  on  that
    route.

2 Conclusion

 0. In light of the above and of the other available evidence, the Commission concludes that the SPA is likely to  increase  the  likelihood  of
    sustainable entry on the Rome (Fiumicino)–Belgrade route in a timely manner.

3 Other Commitments

 0. As regards other provisions of the Final Commitments, such as the possibility for a new entrant to enter into a fare combinability agreement
    with the Parties and/or to participate in the Parties' FFPs, respondents to  the  market  test  considered  those  provisions  generally  as
    potentially additional, although not critical, incentives for a new entrant.[317]

 0. The Commission considers that such substantial additional elements reinforce the other commitments and further increase  the  likelihood  of
    sustainable entry on the Rome (Fiumicino)–Belgrade route.

3 Overall conclusion on the Final Commitments

 0. In this case, several competitors responding to the market test expressed an interest in entering the Rome (Fiumicino)–Belgrade route in the
    coming four to six IATA seasons.

 0. Overall a large majority of all respondents expressing an opinion in the market test expressed the view that the Final  Commitments  clearly
    dispelled the serious doubts the Commission identified as regards the compatibility of the Transaction with the internal market with respect
    to the Rome (Fiumicino)–Belgrade route.[318]

 0. Moreover, credible interest concerning likely and timely entry on that route was  expressed  during  the  market  test  of  the  commitments
    submitted on 27 October 2014.

 0. In the light of the above and the available evidence, the Commission therefore considers that the Final Commitments will lead to sufficient,
    timely and likely entry on the Rome (Fiumicino)–Belgrade route.

 0. It therefore follows that the Final Commitments are sufficient to eliminate all serious doubts as to the compatibility  of  the  Transaction
    with the internal market identified in this decision.

Conditions and obligations

 0. Under the first sentence of the second subparagraph of Article 6(2) of the Merger Regulation, the Commission  may  attach  to  its  decision
    conditions and obligations intended to ensure that the undertakings concerned comply with the commitments they have entered  into  vis-à-vis
    the Commission with a view to rendering the concentration compatible with the internal market.

 0. The achievement of the measure that gives rise to the structural change of the market is a condition, whereas the implementing  steps  which
    are necessary to achieve this result are generally  obligations  on  the  Notifying  Parties.  Where  a  condition  is  not  fulfilled,  the
    Commission's decision declaring the concentration compatible with the internal market no longer stands.  Where  the  undertakings  concerned
    commit a breach of an obligation, the Commission may revoke the clearance decision in accordance with Article 8(6) of the Merger Regulation.
    The undertakings concerned may also be subject to fines and periodic  penalty  payments  under  Articles  14(2)  and  15(1)  of  the  Merger
    Regulation.

 0. In accordance with the distinction described above, the decision in this case is conditioned on the full compliance  with  the  requirements
    set out in sections 1, 2, 3, 4, and 5 of the Final Commitments (conditions), whereas the other sections of the Final Commitments  constitute
    obligations on the Notifying Parties.

 0. The detailed text of the Final Commitments is annexed to the present decision. The full text of the Final Commitments forms an integral part
    to this decision.

CONCLUSION

 0. For the above reasons, the Commission has decided not to oppose the Transaction as modified by the  Final  Commitments  and  to  declare  it
    compatible with the internal market and with the EEA Agreement, subject to full compliance with the conditions and obligations laid down  in
    the Final Commitments annexed to the present decision. This decision is adopted in  application  of  Article  6(1)(b)  in  conjunction  with
    Article 6(2) of the Merger Regulation.

      For the Commission
            (Signed)
                                             Margrethe VESTAGER
                                             Member of the Commission

                                                         Case M. 7333 – Alitalia / Etihad
                                                      COMMITMENTS TO THE EUROPEAN COMMISSION

Pursuant to Article 6(2) of Council Regulation (EC) No 139/2004 ("Merger Regulation"), Alitalia Compagnia Aerea Italiana S.p.A. ("Alitalia") and
Etihad Airways PJSC ("Etihad"), (together with Alitalia, "Parties") hereby enter into the following  Commitments  ("Commitments")  in  order  to
enable the European Commission ("Commission") to declare the acquisition of joint control by the Parties  over  New  Alitalia  ("Concentration")
compatible with the internal market and the functioning of the EEA Agreement by a decision pursuant to Article 6(1)(b) of the Merger  Regulation
("Decision").

The Commitments shall take effect upon the date of adoption of the Decision and subject to Closing of the  Transaction.  The  Parties  commit  to
procure that the Commitments will be binding on any successor company arising from the Concentration.

This text shall be interpreted in light of the Decision to the extent that the Commitments are attached as conditions  and  obligations,  in  the
general framework of European Union law, in particular in light of the Merger Regulation, and by reference to the Commission Notice  on  remedies
acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004 ("Remedies Notice").

Definitions

For the purpose of the Commitments, the following terms shall have the following meaning:

   Airport Pair: The airport pair consisting of FCO-BEG.

   Applicant: Any airline interested in obtaining Slots from the Parties in accordance with these Commitments.

   BEG: Belgrade Nikola Tesla Airport, Serbia.

   Commitment(s): The Slot Commitment for the Airport Pair and/or, as relevant, the commitment relating to Fare Combinability Agreements  and/or,
   as relevant, the commitment relating to Special Prorate Agreements and/or, as relevant, the  commitment  relating  to  Interlining  Agreements
   and/or, as relevant, the commitment granting the Prospective Entrant access to the Parties’ Frequent Flyer Programme on the Airport Pair.

   Competitive Air Service: A non-stop scheduled passenger air transport service operated on the Airport Pair.

   Closing of the Concentration: The day on which the Concentration closes. On that date Etihad will subscribe to New Alitalia shares.

   Effective Date: The date of the adoption of the Decision pursuant to the Merger Regulation.

   Etihad's Equity Partners:  Etihad's existing and future equity and strategic partners, currently being Air Serbia, airberlin, Darwin Airlines,
   Air Seychelles, Jet Airways, Virgin Australia and Aer Lingus.

   EU Slot Regulation: Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for the allocation of slots at Community airports (OJ
   L 14 of 22.01.1993), as amended.

   Fare Combinability Agreement(s): An agreement by which a New Air Service Provider, or travel agents, is able to offer a  return  trip  on  the
   Airport Pair comprising a non-stop service provided one way by the Parties.

   Fast-Track Dispute Resolution Procedure: This term has the meaning given in Clause 7.

   FCO: Rome Fiumicino airport, Italy.

   FFP Agreement(s): An agreement by which an airline operating a Frequent Flyer Programme allows another airline to participate in that FFP.

   Frequency(ies): A round-trip on the Airport Pair.

   Frequent Flyer Programme (or FFP): A programme offered by an airline to reward customer loyalty under which members of  the  programme  accrue
   points for travel on that airline which can be redeemed for free air travel and other products or services, as well as allowing other benefits
   such as airport lounge access or priority bookings.

   General Slot Allocation Procedure: The slot allocation procedure for FCO and, as relevant, BEG as set out in the EU Slot Regulation  and  IATA
   Worldwide Slot Guidelines (including participation at the IATA Slot Conference to try to improve slots and allocation by the slot  coordinator
   from the waitlist following the Slot Handback Deadline), and equivalent procedures for slot allocation at BEG.

   Grandfathering: This term has the meaning given in Clause 1.2.8.

   IATA: The International Air Transport Association.

   IATA Season: The IATA Summer Season begins on the last Sunday of March and ends on the Saturday before the last Sunday of  October.  The  IATA
   Winter Season begins on the last Sunday of October and ends on the Saturday before the last Sunday of March.

   IATA Slot Conference: The industry conference of airlines and airport coordinators worldwide  to  solve  scheduling  issues  where  there  are
   discrepancies between the slots requested by the airlines and allocated by the airport coordinators. The IATA Slot Conference for  the  Winter
   Season takes place in June, and the one for the Summer Season in November.

   ICC:  International Chamber of Commerce.

   Indemnified Party: This term has the meaning given in Clause 6.2.8.

   Interlining Agreement(s): It is an agreement between two or more airlines under which the contracting  airlines  accept  each  other's  travel
   documents (e.g. tickets).

   Key Terms: The following terms that shall be included in the Applicant’s formal bid for Slots: timing of the Slot, number of  frequencies  and
   IATA Seasons to be operated (year-round service or seasonal).

   Miles: The credits awarded by an airline to members of its FFP. Such credits include standard reward points only and do not  include  tier  or
   status points.

   Misuse: This term has the meaning given in Clause 1.2.10.

   MITA Manual: Multilateral Interline Traffic Agreements Manual published by IATA.

   Monitoring Trustee: An individual or institution, independent of the Parties, who is approved by the Commission and appointed jointly  by  the
   Parties and who has the duty to monitor the Parties’ compliance with the conditions and obligations attached to the Decision.

   New Air Services Provider: An airline that is not an Etihad Equity Partner and which commences a new non-stop service on the Airport  Pair  or
   which increases the number of non-stop Frequencies it operates on the Airport Pair  in accordance with the Commitments.

   New Alitalia: New Alitalia as defined in the Decision and any successor thereof.

   Parties: as the case may be, Alitalia New Alitalia, Etihad and Air Serbia, each being referred to as “Party”.

   Prospective Entrant: Any Applicant that is able to offer a Competitive Air Service on the Airport Pair that  is  independent  and  unconnected
   with the Parties, (and excluding for the avoidance of doubt any Etihad Equity Partner).

   For the avoidance of doubt, the Prospective Entrant shall comply with the following requirements:

      (a) it must be independent of and unconnected with the Parties.

      For the purpose of the Commitments, an airline shall not be deemed to be independent of and unconnected to the Parties when, in particular:

        (i)      it is an associated carrier belonging to the same holding company as one of the Parties; or

        (ii)     the airline co-operates with the Parties on the Airport Pair(s) concerned in the provision of passenger air transport services,
           except if this cooperation is limited to agreements concerning servicing, deliveries, lounge usage or other secondary activities
           entered into on an arm’s length basis; and

      (b)   it must have the intention to begin or increase regular non-stop operations on the Airport Pair; and

      (c)   to that effect, it needs a Slot or several Slots for the operation of a Competitive Air Service which  competes  with  those  of  the
        Parties.

   Published Fare: It refers to applicable IATA fares published by the Parties in ATPCo in reservation booking designator (or selling classes): Y
   and J for European short haul city pairs.

   Q/YQ/YR Surcharge: Charges paid in addition to the base fare amount of a ticket which are allocated to the Q, YQ or YR IATA ticket coding  and
   which are used in particular to recover carrier-imposed charges.

   Requesting Air Services Provider: This term has the meaning given in Clause 3.1.

   Requesting Party: This term has the meaning given in Clause 7.2.

   Slot Commitment: This term refers to the commitment set out in Clause 1 to make slots available for the operation of one or more   Competitive
   Air Service on the Airport Pair.

   Slot Handback Deadline: 15 January for the IATA Summer Season and 15 August for the IATA Winter Season.

   Slot Release Agreement: An agreement between any of the Parties and a Prospective Entrant that provides for the exchange of Slot(s)  with  the
   Prospective Entrant according to the principles laid down in Clause 1 of the Commitments.  For the avoidance of doubt, with respect  to  Slots
   at Rome (FCO) airport, the Slot Release Agreement shall abide by the EU Slot Regulation and any exchange pursuant to this agreement  shall  be
   confirmed by the slot coordinator. With respect to Slots at BEG airport, the Slot Release Agreement shall comply with the applicable laws  and
   regulations of Serbia, and shall be subject to approval of the BEG slot coordinator or equivalent.

   Slot Release Procedure: This term has the meaning given in Clause 1.2.1.

   Slot Request Submission Deadline: The final date for the request for slots to the slot coordinator as set  out  in  the  IATA  Worldwide  Slot
   Guidelines.

   Slot(s):  For FCO, and for BEG, the permission given to the Prospective Entrant to use the full  range  of  airport  infrastructure  including
   parking and access to gates at the airport that is necessary to operate an air service at the airport on a specific  date  and  time  for  the
   purpose of landing or take-off in accordance with the EU Slot Regulation, or equivalent legislation.

   Special Prorate Agreement(s): An agreement between two or more airlines on the apportionment of through-fares on journeys  with  two  or  more
   legs operated by different airlines.

   Straight Rate Prorate: Method of allocating fares between airlines participating in a connecting passenger itinerary  under  which  fares  are
   allocated between the airlines in proportion to their shares of the prorate mileage for the entire journey.

   TFEU: The Treaty on the Functioning of the European Union.

   Time Window: The period of twenty (20) minutes either side of the Slot time requested by the Prospective Entrant.

   Utilisation Period: The Term has the meaning given in Clause 1.2.7 and shall be four (4) consecutive IATA Seasons.

   Working Days: Working days  are all days other than Saturdays, Sundays and Commission holidays as published in the  Official  Journal  of  the
   European Union.

       Slots

1 Airport Pair

   1. The Parties undertake to make Slots available at FCO (and at BEG), to allow one or more Prospective Entrant(s) to operate or increase up to
      double daily Frequencies on the Airport Pair. For the avoidance of doubt, the airport infrastructure (including gates and  parking  spaces)
      related to the Slots used to operate flights on the Airport Pair at FCO airport by the Parties currently is and will reasonably  remain  in
      the H zone. Accordingly, the infrastructure the Prospective Entrant(s) will obtain from the airport manager at FCO as a result of the  Slot
      Release Agreement will be at least on the same terms as that of the Parties.

   2. If the Prospective Entrant that has obtained Slots under the Slot Release Agreement ceases to meet the conditions set out in paragraph  (a)
      of the definition of a Prospective Entrant (i.e. it ceases to be independent of and unconnected to one of the Parties), the  Parties  shall
      make slots available to Prospective Entrants pursuant to Clause 1.1.1 of the Commitments as of the next relevant IATA Season.

2 Conditions pertaining to Slots

   1. Each Prospective Entrant shall comply with the following procedure to obtain Slots from the Parties ("Slot Release Procedure").

   2. The Prospective Entrant wishing to commence/increase a Competitive Air Service on the Airport Pair shall:

      (i)   apply to the relevant slot coordinator for the necessary Slots, where applicable, through the General Slot Allocation Procedure, and

      (ii)  notify its request for Slots to the Monitoring Trustee, within the period foreseen in Clause 1.3.1 below.

      The Prospective Entrant shall be eligible to obtain Slots from the Parties pursuant to these Commitments only if it can demonstrate that it
      has exhausted all reasonable efforts to obtain the necessary Slots to operate on the Airport  Pair  through  the  normal  workings  of  the
      General Slot Allocation Procedure.

   3. For the purposes of Clause 1.2, the Prospective Entrant shall be deemed not to have exhausted all reasonable efforts  to  obtain  necessary
      Slots if:

      (a)   FCO and BEG Slots were available through the General Slot Allocation Procedure within the Time Window but such Slots  have  not  been
          accepted by the Prospective Entrant; or

      (b)   FCO and BEG Slots for use to operate a Competitive Air Service, were available through the General Slot Allocation Procedure  outside
          the Time Window and the Prospective Entrant did not  give the Parties the opportunity to exchange those Slots for Slots within the Time
          Window; or

      (c)   it has not exhausted its own Slot portfolio at FCO and at BEG. For these purposes, a carrier will be deemed not to have exhausted its
          own Slot portfolio:

          (i)     If the carrier has Slots at the airport within the Time Window which are being leased-out to or exchanged with  other  carriers
              (unless that lease or exchange was concluded before the Effective Date or the carrier can provide reasonable  evidence  satisfying
              the Commission (following consultation with the Monitoring Trustee) that there are bona fide reasons for this  being  done  rather
              than its being a pretext to enable the carrier to present itself as needing Slots to operate a  Competitive  Air  Service  on  the
              Airport Pair); or

          (ii)    If the carrier has Slots at the airport which are outside the Time Window and which are leased-out to other carriers, in  which
              case the Prospective Entrant shall be entitled to apply for Slots from the Parties, but only if:

               • that lease was concluded before the Effective Date; or

               • it can provide reasonable evidence satisfying the Commission (following consultation with the Monitoring Trustee) that there are
                 bona fide reasons for leasing the Slot out in this way rather than using it itself; or

               • it gives the Parties an option to become the lessee of the leased-out Slot at the  earliest  possible  time  allowed  under  the
                 applicable lease (on terms substantially the same as that lease and for a duration that runs in parallel with the  Slot  Release
                 Agreement).

              For the purposes of Clause 1.2.3 (i) and (ii), the bona fide reasons for leasing out (or, as relevant, exchanging)  Slots  by  the
              Applicant shall include, but shall not be limited to, a situation where the Applicant can provide clear evidence of  an  intention
              to operate those Slots on a specific route and clear and substantiated evidence of its reasons for not currently doing so;

   4. If the Prospective Entrant obtains Slots through the General Slot Allocation Procedure but after the IATA Slot Conference:

      (a)   which are within the Time Window; or

      (b)   which (in the case of Slots obtained at both ends of the  route)  are  not  compatible  with  the  planned  flight  duration  of  the
          Applicant's operation on the Airport Pair,

          the Prospective Entrant shall remain eligible to obtain Slots from the Parties provided that it gives an option to the Parties  to  use
          the obtained Slots on terms substantially the same as the terms of the Slot Release Agreement, and for a duration that runs in parallel
          with the Slot Release Agreement.

   5. Without prejudice to these Commitments (and, particularly, to this Clause 1), the Parties shall not be obliged to honour any  agreement  to
      make available the Slots to the Prospective Entrant if:

      (a)   The Prospective Entrant has not exhausted all reasonable efforts to obtain the necessary Slots to operate a Competitive  Air  Service
          on the Airport Pair with the meaning of Clause 1.2.3; or

      (b)   The Prospective Entrant has been found to be in a situation of Misuse (as described in Clause 1.2.10 below).

   6. The Parties undertake to make available Slots within the Time Window. In the event that the Parties do  not  have  Slots  within  the  Time
      Window, they shall offer to release the Slots (and the rights to use the related airport infrastructure subject to the  applicable  general
      conditions at FCO airport and BEG airport) closest in time to the Prospective Entrant's request.  The Parties do not have to offer Slots if
      the Slots which the Prospective Entrant could have obtained through the General Slot  Allocation  Procedure  are  closer  in  time  to  the
      Prospective Entrant's request than the Slots that the Parties have. The arrival and departure Slot times shall be  such  as  to  allow  for
      reasonable aircraft rotation, taking into account the Prospective Entrant's business model and aircraft utilisation constraints.

   Grandfathering of Slots

   7. As a general rule, the Slots obtained by the Prospective Entrant from the Parties as a result of the Slot Release Procedure shall  be  used
      only to provide a Competitive Air Service on the Airport Pair for which the Prospective Entrant has requested then from the Parties through
      the Slot Release Procedure. These Slots cannot be used on another city pair unless the Prospective Entrant has operated  the  airport  Pair
      for which these Slots have been transferred for a number of full consecutive IATA Seasons ("Utilisation Period").

   8. The Prospective Entrant will be deemed to have grandfathering rights for the Slots once the appropriate use of the Slots has been  made  on
      the Airport Pair for the Utilisation Period. In this regard, once the Utilisation Period has  elapsed,  the  Prospective  Entrant  will  be
      entitled to use the Slots obtained on the basis of these Commitments without restriction ("Grandfathering").

   9. Grandfathering is subject to approval of the Commission, advised by the Monitoring Trustee, in accordance with Clause 1.3. The Commission's
      approval shall be conditional on the Prospective Entrant committing that if it ceases to  use  the  Slots  in  question  for  the  purposes
      described in Clause 1.2.7, it will return the Slots in question to the Parties, or if the Parties do not want the return of the  Slots,  to
      the slot coordinator.

  10. During the Utilisation Period, "Misuse" shall be deemed to arise where a Prospective Entrant which  has  obtained  Slots  released  by  the
      Parties decides:

      (a)   not to commence services on the Airport Pair;

      (b)   to operate fewer weekly Frequencies than those to which it committed in the bid in accordance with Clause 1.3.7 on the  Airport  Pair
          or to cease operating on the Airport Pair unless such a decision is consistent with the "use it or lose it" principle in Article  10(2)
          of the EU Slot Regulation (or any suspension thereof), or in the case of Slots at BEG, any applicable minimum usage requirement imposed
          by order or regulation by BEG;

      (c)   to transfer, assign, sell, swap, sublease or charge any Slot released by the Parties on the basis  of  the  Slot  Release  Procedure,
          except for changes to the Slot which are within the Time Window and which have been agreed with the slot coordinator;

      (d)   not to use the Slots on the Airport Pair, as proposed in the bid in accordance with Clause 1.3.7; or

      (e)   not to use the Slots properly, this situation being deemed to exist where the Prospective Entrant (i) loses the series  of  Slots  at
          Rome (FCO) as a consequence of the principle of "use it or lose it" in Article 10(2) of the EU Slot Regulation or (ii) misuses the Slot
          at Rome (FCO) as described and interpreted in Article 14(4) of the EU Slot Regulation or (iii) with respect to Slots at BEG,  fails  to
          comply with any conditions imposed by the slot coordinator at BEG upon the use of the Slots.

  11. If the Parties or the Prospective Entrant that has obtained Slots under the Slot Release Procedure become aware of  or  reasonably  foresee
      any Misuse by the Prospective Entrant during the Utilisation Period, they shall immediately inform the other  Parties  and  the  Monitoring
      Trustee. The Prospective Entrant shall have thirty (30) days after such notice to cure the actual or potential Misuse. If the Misuse is not
      cured, the Parties shall have the right to terminate the Slot Release Agreement and the Slots shall be returned to the  Parties.  In  cases
      (a) and (b) of Clause  1.2.10, the Parties shall then use their best efforts to re-deploy the Slots in order  to  safeguard  grandfathering
      or, in the case Slots at BEG, to prevent loss of the Slots pursuant to any  applicable  minimum  usage  requirement  imposed  by  order  or
      regulation by BEG. If despite their best efforts, the Parties are not able to retain grandfathering for these Slots, or, in the case  Slots
      at BEG, to prevent loss of the Slots pursuant to any applicable minimum usage requirement imposed by order or regulation by BEG, or in case
      of a Misuse as defined in cases (c), (d) or (e) of Clause 1.2.10, the Prospective Entrant shall  provide  reasonable  compensation  to  the
      Parties as provided for in the Slot Release Agreement.

  12. The Slot Release Agreement may:

      (i)   contain prohibitions on the Prospective Entrant transferring its rights to the Slots to a third party, making the Slots available  in
          any way to a third party for the use of that third party, or releasing, surrendering, giving up or otherwise disposing of any rights to
          the Slots,

      (ii)  provide for reasonable compensation to the Parties in case of Misuse during the Utilisation Period. If for any reason (including, but
          without limitation, the insolvency of the Prospective Entrant) the Parties are unable to receive reasonable compensation for the  Slots
          being either lost or not returned within sufficient time for the Parties to preserve their grandfathering or in the case Slots at  BEG,
          to prevent loss of the Slots pursuant to any applicable minimum usage requirement imposed by order or regulation  by  BEG,  such  Slots
          shall be counted against the maximum number of Slots to be released in accordance with the Commitments.

  13. The Slot Release Agreement shall provide that the Prospective Entrant will be able to terminate the agreement  at  the  end  of  each  IATA
      Season without penalty, provided the Prospective Entrant notifies the termination of the agreement to the Parties in writing no later  than
      ten (10) working days after the IATA Slot Conference.

3 Selection procedure, role of Monitoring Trustee and approval by Commission

   1. At least seven (7) weeks before the Slot Request Submission Deadline, any airline wishing to obtain Slots from the Parties pursuant to  the
      Slot Release Procedure shall:

      (a)   inform the Monitoring Trustee of its proposed Slot Request (indicating the arrival and departure times);

      (b)   submit to the Monitoring Trustee the list of its leased out or exchanged Slots at any airport for which it seeks  Slots,  along  with
          the date at which the leases or exchanges were concluded.  The Monitoring  Trustee  or  the  Commission  may  also  request  additional
          information from the Applicant to enable assessment of its eligibility pursuant to Clause 1.3.4;

      (c)   indicate to the Monitoring Trustee if it has any confidentiality concerns which would justify keeping its identity  anonymous  vis-à-
          vis the Parties, in which case it must provide a reasoned explanation of those concerns together with its request for anonymity. In the
          event that such a request is made, the Monitoring Trustee shall:

          (i)     immediately inform the Commission of that request,

          (ii)    within one (1) week of that request advise the Commission whether or not that request should be granted, and

          (iii)   within three (3) weeks of the request, in consultation with the Commission, determine  whether  or  not  the  Applicant’s  Slot
              request may be treated anonymously (and, if so, to what extent, subject to what conditions and for what period).

      If the Applicant requests Slots at BEG, it shall at the same time also apply to the BEG slot coordinator in accordance with the  applicable
      rules and procedures.

   2. At least six (6) weeks before the Slot Request Submission Deadline, the Monitoring Trustee shall forward the Slot Request  to  the  Parties
      and to the Commission. Once informed of the Slot Request, the Parties may discuss with  the  Applicant  the  timing  of  the  Slots  to  be
      released. The Parties shall copy the Monitoring Trustee on all correspondence between the Parties and the Applicant which  relates  to  the
      Slot Release Procedure. The Parties shall not share any information about such discussions  with  other  Applicants  and  may  require  the
      Applicant not to share any such information with other Applicants. At least six (6) weeks before the Slot Request Submission Deadline,  the
      Monitoring Trustee shall also inform the relevant airport manager and the slot  coordinator  of  the  Slot  request  and,  subject  to  the
      Applicant’s consent, disclose to them any relevant information regarding the Slot request. The Monitoring Trustee  shall  ask  the  airport
      manager and the slot coordinator to inform it of any likely impediments to the satisfaction of  the  request,  in  particular  due  to  the
      availability of terminal facilities and infrastructure.

   3. If the Applicant has made a request for anonymity in accordance with Clause 1.3.1(c), the Monitoring Trustee and the slot coordinator shall
      not disclose to the Parties the identity of the Applicant. In such a case, the procedure set down in this  Clause  1.3  shall  apply,  save
      that, until the beginning of the IATA Slot Conference, any communication or correspondence between the Parties and the Applicant  shall  go
      through the Monitoring Trustee, who shall ensure the protection of the anonymity of the Applicant.

   4. After being informed of the Slot Request in accordance with Clause 1.3.2, the Commission (advised by the Monitoring Trustee)  shall  assess
      whether the Applicant meets the following criteria:

      (a)   the Applicant is independent of and unconnected to the Parties; and

      (b)   the Applicant has exhausted its own Slot portfolio at any airport for which it seeks Slots in accordance with Clause 1.2.3.

      If the Commission decides that the Applicant does not fulfil the above criteria, the Commission shall inform the Applicant and the  Parties
      of that decision at least two (2) weeks before the Slot Request Submission Deadline.

   5. At least one (1) week before the Slot Request Submission Deadline, the Parties shall indicate to the Monitoring Trustee and each  Applicant
      which Slots at each airport for which the Applicant seeks Slots they would release, if necessary, during the Time Window.

   6. By the Slot Request Submission Deadline, each Applicant shall send its request for Slots (at the same time(s) as  those  requested  through
      the Slot Release Procedure) to the slot coordinator in accordance with the General Slot Allocation Procedure, or equivalent procedure. .

   7. By the Slot Request Submission Deadline, each Applicant shall also submit its formal bid for the  Slots  to  the  Monitoring  Trustee.  The
      formal bid shall include at least:

      (a)   the Key Terms (i.e. timing of the Slot, number of frequencies and IATA Season(s) to be operated).

      (b)   a detailed business plan. This plan shall contain a general presentation of the company, including its history, its legal status, the
          list and a description of its shareholders and the two most recent yearly audited financial reports. The detailed business  plan  shall
          provide information on the plans that the company has in terms of access to  capital,  development  of  its  network,  fleet  etc.  and
          detailed information on its plans for the Airport Pair.  The latter should specify in detail planned operations  on  the  Airport  Pair
          over a period of at least two (2) IATA Seasons (size of aircrafts, seat configuration, total  capacity  and  capacity  by  each  class,
          number of frequencies operated, pricing structure, service offerings, planned time-schedule of  the  flights)  and  expected  financial
          results (expected traffic, revenues, profits, average fare by cabin class).  The Monitoring Trustee  and/or  the  Commission  may  also
          request any additional information and documents from the Applicant required for their assessment, including a copy of all  cooperation
          agreements the Applicant may have with other airlines.  Business secrets and confidential information will be kept confidential by  the
          Commission and the Monitoring Trustee and will not become accessible to the Parties, other undertakings or the public.

   8. Within ten (10) working days of receiving the applications the Parties may provide the Monitoring Trustee with a ranking of these offers.

   9. Having received the formal bid(s), the Commission (advised by the Monitoring Trustee) shall:

      (a)   assess whether each Applicant is a viable existing or potential competitor, with the ability, resources  and  commitment  to  operate
          services on the Airport Pair in the long term as a viable and active competitive force; and

      (b)   evaluate the formal bids of each Applicant, that meets (a) above, and rank these Applicants in order of preference.

  10. In conducting its evaluation in accordance with Clause 1.3.9, the Commission shall give preference to  the  Applicant  (or  combination  of
      Applicants) which will provide the most effective competitive constraint on the Airport Pair, without regard to the country  in  which  the
      Applicant(s) is licensed or has its principal place of business. Furthermore, the Commission shall take into account the  strength  of  the
      Applicant's business plan and in particular give preference to an Applicant meeting one or more of the following criteria:

        • year-round service over only IATA Summer or Winter Season service;

        • the greatest total number of Frequencies on the Airport Pair;

        • the largest capacity on the Airport Pair, as measured in seats for the entire IATA Season; and

        • a pricing structure and service offerings that would provide the most effective competitive constraint on the Airport Pair.

      If, following the Commission's evaluation, several Applicants are deemed to provide similarly  effective  competitive  constraints  on  the
      Airport Pair, the Commission shall rank these Applicants following any ranking provided by the Parties under Clause 1.3.8.

  11. In advance of the beginning of the IATA Slot Conference, the Monitoring Trustee shall inform each Applicant (if the latter did not  receive
      Slots within the Time Window) and the slot coordinator:

      (a)   whether the Applicant qualifies for the Slots Commitment; and

      (b)   the Applicant's ranking.

      In any case, the Applicant shall attend the IATA Slot Conference and try to improve its Slots. Following confirmation of  the  Commission's
      approval pursuant to Clause 1.3.9, the Applicants and the Parties shall be deemed to  have  agreed  the  Key  Terms  of  the  Slot  Release
      Agreement. The Key Terms may only be changed after such date by mutual agreement between the Applicant and the Parties  if  the  Monitoring
      Trustee confirms that the changes are not material or if the Commission (advised by the Monitoring Trustee) approves the changes.

  12. Within two (2) weeks of the end of the IATA Slot Conference, each Applicant shall inform the Monitoring Trustee and the Parties whether  it
      will commit to operate the Slots offered eventually by the Parties in case it has not obtained them through  the  General  Slot  Allocation
      Procedure.

  13. Within three (3) weeks of the end of the IATA Slot Conference, the Monitoring Trustee shall confirm to the highest ranked Applicant(s) that
      has provided the confirmation in accordance with Clause 1.3.12 that it is entitled to receive Slots from the  Parties.  The  Parties  shall
      offer the dedicated Slots for release to such Applicant. The Slot Release Agreement shall be subject to review by  the  Monitoring  Trustee
      and approval of the Commission. Unless both the Parties and the relevant Applicant agree to an extension and subject to Clause  1.2.3,  the
      Slot Release Agreement shall be signed and the Slot release completed within six (6) weeks after the IATA Slot  Conference,  and  the  slot
      coordinator shall be informed of the Slot exchange in order to obtain the required confirmation.

Fare Combinability Agreements

1 At the request of a New Air Services Provider which operates or, after the Effective Date,  has  started  to  operate  a  new  Competitive  Air
      Service on the Airport Pair (whether or not such service uses slots released to that carrier pursuant to  these  Commitments)  the  Parties
      shall enter into an agreement that arranges for fare combinability on the Airport Pair across all classes of tickets (i.e., first, business
and economy class tickets). This agreement will provide for the possibility for the New Air Services Provider,  or  travel  agents,  to  offer  a
      return trip on the Airport Pair comprising a non-stop service provided one way by the Parties or Air Serbia and a non-stop service provided
      the other way by the New Air Services Provider. At the request of the New Air Services Provider, the agreement shall apply in  relation  to
      all of the New Air Services Provider’s services on the Airport Pair.

2 Any such agreement shall be subject to the following restrictions:

      (a)   it shall provide for fare combinability on the basis of the Parties’ Published Fares  Where these provide for a published  round-trip
          fare, the fare can be comprised of half the round-trip fare of the relevant Party and half the round-trip fare of the New Air  Services
          Provider;

      (b)   it shall provide for the appropriate division or recovery of any applicable Q/YQ/YR Surcharges;

      (c)   it shall be limited to true origin and destination traffic on the Airport Pair operated by the New Air Services Provider; and

      (d)   it shall be subject to the MITA rules.

3 Subject to Clause 2.11, any term included in the agreement (for example, interline service charge, number  of  booking  classes  included)  can
      never be less favourable than the corresponding term in any Fare Combinability Agreement which the relevant Party and the New Air  Services
      Provider have in place as at the Effective Date.

4 Within four (4) weeks of the date of the request for a Fare Combinability Agreement by a New Air Services Provider, the Parties  shall  propose
      a draft Fare Combinability Agreement to the Monitoring Trustee in compliance with Clause 2. At the same  time,  the  Parties  shall  submit
      supporting evidence, as necessary, in particular with regard to Clause 2.3.

5 In the light of any comments made by the New Air Services Provider and after having  consulted  the  Commission,  the  Monitoring  Trustee  may
      request clarification and further evidence from the Parties. The Parties shall provide the  requested  clarification  and  evidence  within
      three (3) weeks of the request from the Monitoring Trustee, unless the Parties present bona fide reasons for the Commission to extend  this
      deadline.

6 If the Monitoring Trustee confirms that the clarification and evidence provided are  sufficient,  the  Parties  shall  revise  the  draft  Fare
      Combinability Agreement, as necessary, within  three (3) weeks of the confirmation from the Monitoring Trustee. If the  Monitoring  Trustee
      requests a second round of clarifications and evidence, the Parties shall proceed in accordance with Clause 2.5.

7 Upon the request of the New Air Services Provider, the draft Fare Combinability Agreement proposed by the  Parties  under  Clause  2.4  may  be
      applied provisionally without prejudice to subsequent negotiations on the Fare Combinability Agreement.

8 Subject to seat availability in the relevant fare category, the Parties shall carry a passenger holding a coupon issued by a New  Air  Services
      Provider for travel on the Airport Pair. The Parties may require that the New Air Services Provider or the  passenger,  where  appropriate,
      pay the (positive) difference between the fare charged by the Parties and the fare charged by the New Air Services Provider if the  Parties
      were not the original ticketed carrier on the Airport Pair.  In cases where the New Air Services Provider's fare is lower than the value of
the coupon issued by it, the Parties may endorse their coupon only up to the value of the fare charged by the New Air Services  Provider.  A  New
      Air Services Provider shall enjoy the same protection in cases where the Parties' fare is lower than the value of the coupon issued by  the
      Parties.

9 The Fare Combinability Agreement entered into pursuant to this Clause 2 for the particular Airport Pair shall have a duration up  to  five  (5)
      years at the choice of the New Air Services Provider. Thereafter, or if the New Air Services Provider elects  to  have  a  shorter  initial
      duration, it shall have a right to renew the agreement on an evergreen basis for further periods of one (1) year (i.e. rolled over  on  the
      same terms) as long as these Commitments are in force, provided it exercises its right of extension by informing the Parties in writing  no
      later than thirty (30) days before the expiry of the agreement. The New Air Services Provider also has a right to terminate the  agreement,
      at any time during the initial term or the extensions, upon thirty (30) days' written notice.

10 All agreements entered into pursuant to this Clause 2 for the Airport Pair shall lapse automatically in the event that the  New  Air  Services
      Provider ceases to operate the new or increased service on that the Airport Pair.

11 The conclusion of the Fare Combinability Agreement shall be subject to the approval  of  the  Commission,  once  the  Monitoring  Trustee  has
      released its advice, in particular as to whether its terms are reasonable.

Special Prorate Agreements

1 At the request of a New Air Services Provider, irrespective of whether the Competitive Air Service is commenced on the basis of Slots  obtained
from the Parties under the Commitments, the Parties shall enter into a Special Prorate Agreement  with  such  airline  (Requesting  Air  Services
      Provider) for traffic provided that part of the journey involves the Airport Pair on which the Competitive Air Service is offered.  At  the
      request of the Requesting Air Services Provider, the Special Prorate Agreement shall apply to all of the Requesting Air Services Provider's
      air services on the Airport Pair on which the Competitive Air Service is offered.

2 Subject to Clause 3.1, for each of the Parties with whom it proposes to enter a Special Prorate Agreement  pursuant  to  the  Commitments,  the
      Requesting Air Services Provider may select up to a maximum of fifteen (15) behind/beyond routes.

3 The Requesting Air Services Provider may select the fare class(es) to which the Special Prorate Agreement will  apply,  provided  that  on  the
      Airport Pair, each selected fare class is included in at least one existing Special Prorate Agreement which the relevant Party  has  agreed
      with any other carrier with regard to the routes concerned, excluding any agreements (or terms therein)  which  are  excluded  pursuant  to
      Clause 3.7 and any codeshare terms within an existing agreement. Subject to the previous sentence of this Clause 3.3, the  number  of  fare
      classes that the Requesting Air Services Provider may select shall be up to the maximum number of fare classes per cabin that is granted by
the relevant Party under an existing Special Prorate Agreement of the same type to any other carrier.

4 If the Special Prorate Agreement provides for Straight Rate Prorate terms:

      (a)   straight rate proration shall apply only to published fares;

      (b)   it shall include arrangements for the proration or remittance of any applicable Q/YQ/YR Surcharges; and

      (c)   it shall not prohibit the relevant Party from making adjustments to ATPCo chart 2 in accordance with  normal  business  practices  in
          managing Straight Rate Prorate agreements. Should the Requesting Air Services  Provider  believe  that  the  relevant  Party  has  made
          adjustments to ATPCo chart 2 which are not in accordance with normal business practices but rather an attempt by that Party to restrict
          the Requesting Air Services Provider's inventory access, it may ask the Monitoring Trustee  to  verify  whether  the  relevant  Party's
          adjustments comply with these Commitments.

5 Subject to the provisions of the remainder of this Clause 3, the Special Prorate Agreement shall:

      (a)   be on terms (rates and interline service charges) which are at least as favourable as the terms agreed by the relevant Party under an
          existing Special Prorate Agreement with any other carrier for the same route  (including the Airport Pair) and in the same  fare  class
          (other than any terms excluded by within existing Special Prorate Agreements and any terms excluded by virtue of Clause  3.7).  If  the
          relevant Party does not have an equivalent rate with any other carrier, the rate shall be determined in accordance with Clause 3.8;

      (b)   grant the Requesting Air Services Provider equivalent inventory access to that given to the other Parties; and

      (c)   ensure minimum connection times which are based on standard practices  at  the  airport  and  terminal  in  question  and  which  are
          reasonable.

6 Subject to Clause 3.17, any term included in the Special Prorate Agreement (for example, rates and interline service  charge,  number  of  fare
      and booking classes included) can never be less favourable than the corresponding term in any Special Prorate Agreement which the  relevant
      Party and the Requesting Air Services Provider have in place as at the Effective Date.  To take account of adjustments in fare class usage,
for the purposes of Clause 3.3 and Clause 3.5(a), the fare classes selected by the Requesting Air Services Provider need not  be  the  same  fare
      classes as those specified in any Special Prorate Agreement which is in place as at the Effective Date provided  that  the  requested  fare
      classes reasonably correspond to such specified fare classes.

7 For the purposes of Clause 3.3 and Clause 3.5(a), the relevant Party may exclude any existing Special Prorate Agreement which  that  Party  has
      with any other carrier which it would be unreasonable to include, for example because:

      (a)   the agreement is de minimis (e.g. because fewer than 1,000 flights were  flown  on  the  relevant  Party's  metal  pursuant  to  that
          agreement in the last financial year); or

      (b)   the agreement is obsolete.

      In addition, the Monitoring Trustee shall exclude any existing Special Prorate Agreements or any individual terms of such agreements  which
      the relevant Party has demonstrated, to the satisfaction of the Monitoring Trustee, that it would be unreasonable to include  because,  due
      to exceptional circumstances, the relevant agreements or terms are exceedingly favourable.

8 For the purposes of Clause 3.5(a):

      (a)   where a route is included in at least one existing Special Prorate Agreement which the relevant Party has with  another  carrier  and
          which has not been excluded pursuant to Clause 3.7, but is included in a different fare class to the one selected by the Requesting Air
          Services Provider, the terms will be calculated by applying a ratio of the average difference  in  fares  as  between  the  fare  class
          selected by the Requesting Air Services Provider and the fare class on which terms with another carrier are available;

      (b)   where the selected route is not included in any fare class in any existing Special Prorate Agreements which the  relevant  Party  has
          with other carriers, the rate on that route will be either the rate agreed by the  relevant  Party  and  the  Requesting  Air  Services
          Provider or the most favourable rate that applies to the most comparable route (considering factors such as yield and length  of  haul)
          which is included in an existing Special Prorate Agreement of the relevant Party. In the event that the relevant  Party  can  establish
          that clear and material differences exist between the selection route and the most comparable route, the Monitoring  Trustee  may  make
          appropriate adjustments to the rate.

9 Clauses 3.3 and 3.5(a) in conjunction with Clauses 3.7 and 3.8, shall, subject to Clause 3.17, be applied on the basis of the  more  favourable
      (to the Requesting Air Services Provider) of the following:

      (a)   Special Prorate Agreements (and the terms therein) between the relevant Party and any other carrier  as  existing  at  the  Effective
          Date, subject to reasonable indexation that takes account of standard industry practices (including practices between the Parties); and

      (b)   Special Prorate Agreements (and the terms therein) between the relevant Party and any other carrier as existing at the  date  of  the
          request for negotiation or re-negotiation of the Special Prorate Agreement.

10 The Special Prorate Agreement shall have up to five (5) years at the choice of the Requesting Air Services Provider.  Thereafter,  or  if  the
      Requesting Air Services Provider elects to have a shorter initial duration than that to which it is entitled pursuant to this Clause  3.10,
      it shall have a right to renew the agreement on an evergreen basis for further periods of one (1) year (i.e. rolled over on the same terms)
as long as these Commitments are in force, provided it exercises its right of extension by informing the Parties in writing no later than  thirty
      (30) days before the expiry of the agreement. The Requesting Air Services Provider also has a right to terminate the agreement, at any time
      during the initial term or the extensions, upon thirty (30) days' written notice.

11 Within four (4) weeks of the date of the request for a Special Prorate Agreement by a Requesting Air  Services  Provider,  the  Parties  shall
      propose a draft Special Prorate Agreement to the Monitoring Trustee in compliance with Clause 3. At the same time, the Parties shall submit
supporting evidence, as necessary.

12 In the light of any comments made by the Requesting Air Services Provider and after having consulted the Commission,  the  Monitoring  Trustee
      may request clarification and further evidence from the Parties. The Parties shall provide the requested clarification and evidence  within
      two (2) weeks of the request from the Monitoring Trustee, unless the Parties present bona fide reasons for the Commission  to  extend  this
      deadline.

13 If the Monitoring Trustee confirms that the provided clarification and evidence are sufficient, the Parties shall  revise  the  draft  Special
      Prorate Agreement, as necessary, within two (2) weeks of the confirmation from the Monitoring Trustee. If the Monitoring Trustee requests a
second round of clarifications and evidence, the Parties shall proceed in accordance with Clause 3.12.

14 Upon the request of the Requesting Air Services Provider, the draft Special Prorate Agreement proposed by the Parties under  Clause  3.11  may
      be applied provisionally without prejudice to subsequent negotiations on the Special Prorate Agreement.

15 All Special Prorate Agreements entered into pursuant to this Clause 3:

      (a)   shall lapse automatically in the event that the Requesting Air Services Provider ceases to operate non-stop Competitive  Air  Service
          on the Airport Pair,  and

      (b)   may with the agreement of the Monitoring Trustee, be subject to annual re-negotiation. Clause 3.9  (in  conjunction  with  the  other
          Clauses referred to therein) shall be applicable to each annual re-negotiation.

17 Should the Requesting Air Services Provider believe that the terms proposed by the relevant Party do not comply with this  Clause  3,  it  may
      ask the Monitoring Trustee to verify whether those terms comply with these Commitments.

18 The conclusion of the Special Prorate Agreement shall be subject to the approval of the Commission, once the Monitoring Trustee  has  released
      its advice, in particular as to whether its terms are reasonable.

19 For the avoidance of doubt, the Parties shall not deconcur the Requesting Air Services Provider from routes and fare classes  covered  by  the
      Special Prorate Agreement. The Parties shall also not deconcur the Requesting Air Services Provider from particular fare classes or  routes
      which it currently prorates under the IATA Multilateral Proration Agreement where the Requesting Air Services Provider's  rates  cover  the
      relevant Party's marginal costs of carriage.

Interlining Agreements

1 At the request of a New Air Service Provider, the Parties shall enter into an Interline Agreement concerning the Airport Pair operated  by  the
      New Air Service Provider when they offer connection flights.

2 Any such interline agreement shall be subject to the following restrictions:

      (i)   it shall apply to the business and economy class only;
      (ii)  it shall provide for interlining on the basis of the Parties’ published one-way fares when a one-way ticket is issued or half of  the
           Parties’ published round-trip fares when a round-trip ticket is issued;
      (iii) it shall be limited to true origin and destination traffic on the Airport Pair operated by the New Air Service Provider;
      (iv)  it shall be subject to the MITA rules and/or normal commercial conditions;
      (v)   it shall include the possibility for the New Air Service Provider, or travel agents, to  offer  a  return  trip  comprising  services
           provided one-way by the Parties and one-way by the New Air Service Provider.

3 Subject to seat availability in the relevant fare category, the Parties shall carry a passenger holding a coupon issued by a  New  Air  Service
      Provider for travel on the Airport Pair. However, to avoid abuse, the Parties may  require  that  the  New  Air  Service  Provider  or  the
      passenger, where appropriate, pay the (positive) difference between the fare charged by the Parties and the fare charged  by  the  New  Air
      Service Provider. In cases where the New Air Service Provider’s fare is lower than the value of the coupon issued by it,  the  Parties  may
      endorse its coupon only up to the value of the fare charged by the New Air Service Provider. A New Air Service  Provider  shall  enjoy  the
      same protection in cases where the Parties’ fare is lower than the value of the coupon issued by it.

4 All interline agreements entered into pursuant to this Section 4 for a particular Identified City Pair shall lapse automatically in  the  event
      that the New Air Service Provider ceases to operate that Airport Pair.

5 The conclusion of the Interlining Agreement with Prospective Entrant is subject to the approval the Commission,  once  the  Monitoring  Trustee
      has released its advice. The Commission will in particular assess whether  the  financial  conditions  of  the  Interlining  Agreement  are
      reasonable.

Frequent Flyer Programmes

1 At the request of a New Air Services Provider that does not have a comparable FFP of its own and does not participate in any  of  the  Parties’
      FFPs, the Parties shall allow it to be hosted in their FFPs for the Airport Pair on which the New Air Services Provider  has  commenced  or
      increased service. The FFP Agreement with the New Air Services Provider shall be on terms such that the New  Air  Services  Provider  shall
      have equal treatment vis-à-vis the accrual and redemption of Miles on the Airport Pair as compared with the Parties.

2 Any agreement entered into pursuant to this Clause 5 shall:

      (a)   lapse automatically in the event that the New Air Services Provider ceases to operate non-stop service on the Airport Pair; and

      (b)   have an effective duration of up to five (5) years at the choice of the New Air Services Provider.  Thereafter, or  if  the  New  Air
          Services Provider elects to have a shorter initial duration than that to which it is entitled pursuant to this Clause 5.2  ,  it  shall
          have a right to renew the agreement on an evergreen basis for further periods of one (1) year (i.e. rolled over on the same  terms)  as
          long as these Commitments are in force, provided it exercises its right of extension by informing the Parties in writing no later  than
          two (2) weeks after the slot conference preceding the requested extension. The New Air Services Provider also has a right to  terminate
          the agreement, at any time during the initial term or the extensions, upon thirty (30) days' written notice.

3 Subject to Clause 5.4,  any term included in the frequent flyer agreement entered into pursuant to this Clause 5 can never be  less  favourable
      than the corresponding term in any FFP Agreement which the relevant Party and the New Air  Services  Provider  have  in  place  as  at  the
      Effective Date.

4 The conclusion of the FFP Agreement shall be subject to the approval of the Commission, once the Monitoring Trustee has  released  its  advice.
      The Commission will in particular assess whether the financial conditions of the FFP Agreement are reasonable.

Monitoring Trustee

1 Appointment of Monitoring Trustee

1 A Monitoring Trustee shall be appointed by the Parties on the terms and in accordance with the procedure described below and, once approved  by
the Commission, shall perform the functions of monitoring the Parties’ fulfillment of  the  Commitments  and  further  obligations  that  may  be
      contained in the Commitment Decision.

2 The Monitoring Trustee shall be independent of the Parties, must be familiar with the airline industry and the  slot  allocation  and  exchange
      procedures, and have the experience and competence necessary for this appointment (e.g. investment bank, consultant specialised in the  air
      transport sector, or auditor). In addition, it shall not be exposed to any conflict of interest and  shall  not  have  had  any  direct  or
      indirect work, consulting or other relationship with the Parties in the last three (3) years and shall not have a similar relationship with
the Parties for three (3) years after completing its mandate. For the avoidance of doubt, the performance of the role of  monitoring  trustee  in
      other Commission proceedings shall not be an obstacle to the appointment as Monitoring Trustee.

3 The Parties shall ensure that the Monitoring Trustee’s remuneration shall be sufficient to guarantee the effective and  independent  compliance
      of its mandate.

4 Within one (1) week of the Effective Date, the Parties shall submit to the Commission for approval a list of  one  or  more  persons  whom  the
      Parties consider adequate to fulfill the duties of the Monitoring Trustee. The  proposal  shall  contain  sufficient  information  for  the
      Commission to verify that the proposed Monitoring Trustee fulfills the requirements set out above and shall include:

      (a) the full terms of the proposed mandate, which shall include all provisions necessary to enable the Monitoring Trustee  to  fulfill  its
      duties under these Commitments; and

      (b) the outline of a work plan which describes how the Monitoring Trustee intends to carry out the tasks assigned to it.

7 The Commission shall have the discretion to approve or reject the proposed Monitoring Trustee and to approve the proposed  mandate  subject  to
      any modifications it deems necessary for the Monitoring Trustee to fulfill its obligations. If only one name is approved, the Parties shall
appoint the individual or institution concerned as Monitoring Trustee. If more than one name is approved by the Commission, the Parties shall  be
      free to choose the Trustee to be appointed from among the names approved. The Monitoring Trustee should be appointed within one (1) week of
      the Commission’s approval, in accordance with the mandate approved by the Commission.

8 If all the proposed Monitoring Trustees are rejected by the Commission, the Parties shall submit the names of at least two more individuals  or
institutions within one (1) week of being formally informed of the rejection by the Commission.

9 If all further proposed Monitoring Trustees are rejected by the Commission, the Commission shall nominate a Monitoring Trustee, whom the
      Parties shall appoint in accordance with the mandate approved by the Commission.

      2 Monitoring Trustee's Mandate

1 The Monitoring Trustee's mandate shall include, in particular, the following obligations and responsibilities:

      (a)   to monitor the satisfactory discharge by the Parties of the obligations entered into in the Commitments in so far as they fall within
          the scope of the Commitments;

      (b)   to propose to the Parties such measures as the Monitoring Trustee considers necessary to ensure  the  Parties'  compliance  with  the
          conditions and obligations attached to the Decision;

      (c)   to advise and make a written recommendation to the Commission as to the suitability of any Slot  Release  Agreement  and  Prospective
          Entrant, Fare Combinability Agreement, Special  Prorate  Agreement,  Codeshare  Agreements,  Interline  Agreement,  and  FFP  Agreement
          submitted for approval to the Commission under Clauses 1 to 5;

      (d)   to provide written reports to the Commission on the Parties' compliance with the Commitments and the progress of the discharge of its
          mandate, identifying any respects in which the Parties have failed to comply with the Commitments or the Monitoring  Trustee  has  been
          unable to discharge its mandate;

      (e)   to mediate in any disagreements relating to any Slot Release Agreement, if mediation is agreed to by the other party  or  parties  to
          the agreement in question, and submit a report upon the outcome of the mediation to the Commission; and

      (f)   at any time, to provide to the Commission, at their request, a written or oral report on matters falling within the  scope  of  these
          Commitments.

2 For the avoidance of doubt, subject to Clause 6.2.1, there is no requirement for the Monitoring  Trustee  to  be  involved  in  the  commercial
      negotiations between one or more of the Parties and a third party carrier entering into any of the agreements under  the  Commitments.  Any
      such agreements however remain subject to the Commission's approval.

3 Any request made by a third party carrier for the  Monitoring  Trustee  to  verify  the  Parties'  compliance  with  the  Commitments  must  be
      reasonable. In particular, the Monitoring Trustee may refuse to conduct such a verification where the third party carrier fails to  produce
      any evidence of a suspected breach of the Commitments and/or appears to be making a vexatious request.

4 The Parties shall receive simultaneously a non-confidential version of any recommendation made by the Monitoring Trustee to the Commission  (as
provided for in Clause  6.2.1(c).

5 The reports provided for in Clauses 6.2.1(c) to 6.2.1(f) shall be prepared in English. The reports provided for in  Clause  6.2.1(d)  shall  be
      sent by the Monitoring Trustee to the Commission within ten (10) working days from the end of every IATA Season  following  the  Monitoring
      Trustee's appointment or at such other time(s) as the Commission may specify and shall cover developments in the immediately preceding IATA
Season. The Parties shall receive simultaneously a non-confidential copy of each Monitoring Trustee report.

6 The Parties shall provide the Monitoring Trustee with such assistance and information, including copies  of  all  relevant  documents,  as  the
      Monitoring Trustee may reasonably require in carrying out its mandate. The Parties shall pay reasonable remuneration for  the  services  of
      the Monitoring Trustee as agreed in the mandate.

7 The Monitoring Trustee shall have full and complete access to any of the Parties' books, records,  documents,  management  or  other  personnel
      facilities, sites and technical information necessary to fulfil its duties under these Commitments.

8 The Parties shall indemnify the Monitoring Trustee (and, where appropriate, its employees, agents and advisors)  (each  an  Indemnified  Party)
      and hold each Indemnified Party harmless, and hereby agrees that an Indemnified Party shall have  no  liability  to  the  Parties  for  any
      liabilities arising out of the performance of the Monitoring Trustee's duties under  the  Commitments,  except  to  the  extent  that  such
      liabilities result from the wilful default, recklessness, gross negligence or bad faith of the Monitoring Trustee (or,  where  appropriate,
      its employees, agents and advisors).

9 At the expense of the Parties, the Monitoring Trustee may appoint advisors, subject to the  Commission's  prior  approval,  if  the  Monitoring
      Trustee reasonably considers the appointment of such advisors necessary for the performance of its duties under the mandate, provided  that
      any fees incurred are reasonable and upon which the Parties have been consulted.

3 Termination of Mandate

1 If the Monitoring Trustee ceases to perform its functions under the Commitments or for any other good cause,  including  the  exposure  of  the
      Monitoring Trustee to a conflict of interest:

       (a)  the Commission may, after hearing the Monitoring Trustee, require the Parties to replace the Monitoring Trustee; or

      (b)   with the prior approval of the Commission, the Parties may replace the Monitoring Trustee.

2 If the Monitoring Trustee is removed, it may be required to continue its functions until a new Monitoring Trustee  is  in  place  to  whom  the
      Monitoring Trustee has effected a full hand-over of all relevant information. The new Monitoring Trustee shall be appointed  in  accordance
      with the procedure referred to in Clause 6.1.

3 Aside from being removed in accordance with Clause 6.3.1, the Monitoring Trustee shall cease to  act  as  Monitoring  Trustee  only  after  the
      Commission has discharged it from its duties. However, the Commission may at any time require the reappointment of the  Monitoring  Trustee
      if it subsequently appears that the Commitments have not been fully and properly implemented.

Fast-track Dispute Resolution Procedure

1 The agreements concluded to implement the Commitments in accordance with Clauses 1 to 6  shall  provide  for  a  fast-rack  dispute  resolution
      procedure (Fast-Track Dispute Resolution Procedure) described in this Clause 7. In the event that a  Prospective  Entrant,  Requesting  Air
      Services Provider, or New Air Services Provider, as relevant, has reason to  believe  thatthe  Parties  are  failing  to  comply  with  the
      requirements of the Commitments vis-à-vis that party, this Fast-Track Dispute Resolution Procedure will apply.

2 Any Prospective Entrant, Requesting Air Services Provider, or New Air Services Provider, as relevant which wishes to avail itself of the  Fast-
      Track Dispute Resolution Procedure ("Requesting Party") shall send a written request to the relevant Party (with a copy to  the  Monitoring
      Trustee) setting out in detail the reasons leading the Requesting Party to believe that the relevant Party is failing to  comply  with  the
      requirements of the Commitments ("Request"). The Requesting Party and the relevant Party  will  use  their  best  efforts  to  resolve  all
      differences of opinion and settle all disputes that may arise through cooperation and consultation within a reasonable period of  time  not
      to exceed fifteen (15) working days after receipt of the Request.

3 The Monitoring Trustee shall present its own proposal ("Trustee Proposal") for resolving the dispute within eight (8) working days,  specifying
in writing the action, if any, to be taken by the relevant Party in order to ensure compliance with  the  Commitments  vis-à-vis  the  Requesting
      Party, and be prepared, if requested, to facilitate the settlement of the dispute.

4 Should the Requesting Party and the relevant Party fail to resolve their  differences  of  opinion  through  cooperation  and  consultation  as
      provided for in Clause 7.2, the Requesting Party shall serve a notice (the Notice), in the sense of a request for arbitration, to  the  ICC
      ("Arbitral Institution"), with a copy of such Notice and request for arbitration to the relevant Party.

5 The Notice shall set out in detail the dispute, difference or claim ("Dispute") and shall contain, inter alia, all  issues  of  both  fact  and
      law, including any suggestions as to the procedure, and all documents relied upon shall be attached,  e.g.  documents,  agreements,  expert
      reports, and witness statements. The Notice shall also contain a detailed description of the action to be undertaken  by  the  counterparty
      (including, if appropriate, a draft contract comprising all relevant terms and conditions) and the Trustee Proposal, including a comment as
to its appropriateness.

6 The relevant Party shall, within ten (10) working days from receipt of the Notice, submit its answer ("Answer"), which shall  provide  detailed
      reasons for its conduct and set out, inter alia, all issues of both fact and law, including any suggestions as to the  procedure,  and  all
      documents relied upon (e.g. documents, agreements, expert reports, and witness statements). The Answer shall,  if  appropriate,  contain  a
      detailed description of the action which the counterparty proposes to undertake vis-à-vis the Requesting Party (including, if  appropriate,
      a draft contract comprising all relevant terms and conditions) and the Trustee Proposal (if not already submitted), including a comment  as
      to its appropriateness.

Appointment of the Arbitrators

7 The Arbitral Tribunal shall consist of three (3) persons. The Requesting Party shall nominate its arbitrator in the Notice; the relevant  Party
shall nominate its arbitrator in the Answer.

8 The arbitrators nominated by the Requesting Party and the relevant Party shall, within five (5) working days of the nomination of  the  latter,
      nominate the chairman, making such nomination known to the  parties  and  the  Arbitral  Institution  which  shall  forthwith  confirm  the
      appointment of all three arbitrators. Should the Requesting Party wish to have the Dispute decided by a sole arbitrator, it shall  indicate
      this in the Notice. In this case, the Requesting Party and the relevant Party shall agree on the nomination of  a  sole  arbitrator  within
      five (5) working days from the communication of the Answer, communicating this to the Arbitral Institution. Should the Requesting Party and
counterparty fail to nominate an arbitrator, or if the two arbitrators fail to agree on the chairman, or should  the  Requesting  Party  and  the
      relevant Party fail to agree on a sole arbitrator, the default appointment(s) shall be made by the Arbitral Institution.  The  three-person
      arbitral tribunal or, as the case may be, the sole arbitrator, are herein referred to as the "Arbitral Tribunal".

Arbitration Procedure

9 The Dispute shall be finally resolved by arbitration under the ICC rules,  with  such  modifications  or  adaptations  as  foreseen  herein  or
      necessary under the circumstances (the "Rules").  The arbitration shall be conducted in London, England in the English language.

10 The procedure shall be a fast-track procedure. For this purpose, the Arbitral Tribunal shall shorten  all  applicable  procedural  time-limits
      under the Rules as far as admissible and appropriate in the circumstances.  The Requesting Party and counterparty shall consent to the  use
      of e-mail for the exchange of documents.

11 The Arbitral Tribunal shall, as soon as practical after the confirmation of the  Arbitral  Tribunal,  hold  an  organisational  conference  to
      discuss any procedural issues with the parties to the Arbitration. Terms of Reference shall be drawn up and signed by the  parties  to  the
      Arbitration and the Arbitration Tribunal at the organisational meeting or thereafter and a procedural time-table shall  be  established  by
      the Arbitral Tribunal. An oral hearing shall, as a rule, be established within two (2) months of the confirmation of the Arbitral Tribunal.

12 In order to enable the Arbitral Tribunal to reach a decision, it shall be entitled to request any relevant information  from  the  parties  to
      the Arbitration, to appoint experts and to examine them at the hearing, and to establish the facts by all appropriate means.  The  Arbitral
      Tribunal is also entitled to ask for assistance by the Trustee in all stages of the procedure if the parties to the Arbitration agree.

13 The Arbitral Tribunal shall not disclose confidential information and apply the standards attributable to confidential information  under  the
      Merger Regulation. The Arbitral Tribunal may take  the  measures  necessary  for  protecting  confidential  information  in  particular  by
      restricting access to confidential information to the Arbitral Tribunal, the Trustee, the Commission and outside counsel and experts of the
opposing party.

14 The burden of proof in any dispute under these Rules shall be borne as follows: (i) the Requesting Party must  produce  evidence  of  a  prima
      facie case and (ii) if the Requesting Party produces evidence of a prima facie case, the Arbitral Tribunal  must  find  in  favour  of  the
      Requesting Party unless the relevant Party can produce evidence to the contrary.

Involvement of the Commission

15 The Commission shall be allowed and enabled to participate in all stages of the procedure by:

      (a)   receiving all written submissions (including documents and reports, etc.) made by the parties to the Arbitration;

      (b)   receiving all orders, interim and final awards and other documents exchanged by  the  Arbitral  Tribunal  with  the  parties  to  the
          Arbitration (including Terms of Reference and procedural time-table);

      (c)   giving the Commission the opportunity to file amicus curiae briefs; and

      (d)   being present at the hearing(s) and being allowed to ask questions to parties, witnesses and experts.

      The Arbitral Tribunal shall forward, or shall order the parties to the Arbitration to forward, the documents mentioned  to  the  Commission
      without delay. In the event of disagreement between the parties to the Arbitration regarding the interpretation  of  the  Commitments,  the
      Arbitral Tribunal may seek the Commission’s interpretation of the Commitments before finding in favour of any party to the Arbitration  and
      shall be bound by the interpretation.

Decisions of the Arbitral Tribunal

17 The Arbitral Tribunal shall decide the dispute on the basis of the Commitments and the Decision. Issues not covered by the Commitments and
      the Decision shall be decided (in the order as stated) by reference to the Merger Regulation, EU law and general principles of law common
      to the legal orders of the Member States without a requirement to apply a particular national system. The Arbitral Tribunal shall take all
      decisions by majority vote.

      19 Upon request of the Requesting Party, the Arbitral Tribunal may make a preliminary ruling on the Dispute. The preliminary ruling shall
      be rendered within one (1) month of the confirmation of the Arbitral Tribunal. The preliminary ruling shall be applicable immediately and,
      as a rule, remain in force until the final decision is issued.

      21 The final award shall, as a rule, be rendered by the arbitrators within six (6) months after the confirmation of the Arbitral Tribunal.
      The time-frame shall, in any case, be extended by the time the Commission takes to submit an interpretation of the Commitment if asked by
      the Arbitral Tribunal.

      23 The Arbitral Tribunal shall, in their preliminary ruling as well as the final award, specify the action, if any, to be taken by the
      relevant Party in order to comply with the Commitments vis-à-vis the Requesting Party (e.g. specify a contract including all relevant terms
and conditions). The final award shall be final and binding on the parties to the Arbitration and shall resolve the Dispute and determine any
      and all claims, motions or requests submitted to the Arbitral Tribunal.

      25 The arbitral award shall also determine the reimbursement of the costs of the successful party and the allocation of the arbitration
      costs. In case of granting a preliminary ruling or if otherwise appropriate, the Arbitral Tribunal shall specify that terms and conditions
      determined in the final award apply retroactively.

      27 The parties to the Arbitration shall prepare a non-confidential version of the final award, without business secrets. The Commission may
publish the non-confidential version of the award.

      29 Nothing in the arbitration procedure shall affect the powers of the Commission to take decisions  in  relation  to  the  Commitments  in
      accordance with its powers under the Merger Regulation and the TFEU.

Review Clause

1 The Commission may, where appropriate, in response to a request of the Parties showing  good  cause  and  accompanied  by  a  report  from  the
      Monitoring Trustee:

      (a)   grant an extension of the time periods foreseen in the Commitments, or

      (b)   waive, modify or substitute, in exceptional circumstances, one or more of the undertakings in the Commitments.

2 Where the Parties seek an extension of a time period, they shall submit a request to the Commission no later than  one  (1)  month  before  the
      expiry of that period, showing good cause. Only in exceptional circumstances shall the Parties be entitled to request an  extension  within
      the last month of any period.

           November 2014

      (Signed)

      duly authorised for and on behalf of Alitalia

      (Signed)

      duly authorised for and on behalf of Etihad

-----------------------
[1]   OJ L 24, 29.1.2004, p. 1 (the "Merger Regulation"). With effect from 1 December 2009, the Treaty on the Functioning of the  European  Union
("TFEU") has introduced certain changes, such as the replacement of 'Community'  by  'Union'  and  'common  market'  by  'internal  market'.  The
terminology of the TFEU will be used throughout this decision.

[2]   OJ C 352, 7.10.2014, p. 16.

[3]   Poste Italiane became a shareholder of Alitalia in 2013 when it subscribed Alitalia's EUR 300 million capital increase (the  "2013  Capital
Increase"). The Commission has been assessing whether Poste Italiane's participation in the 2013 Capital Increase  would  constitute  State  aid.
However, the State aid investigation in case SA.37491 (2013/CP) – Italy – Alleged Aid To Alitalia only concerns "Old Alitalia",  a  company  that
through the Transaction will become a holding company for certain of the shareholders of  New  Alitalia.  Therefore,  any  decision  regarding  a
possible State aid would have no direct effects on New Alitalia or on the assessment of the Transaction under the Merger Regulation.

[4]   Using a common metric in the air transport sector, Etihad had Revenue  Passenger  Kilometres  (representing  passenger  journeys)  of  55.5
billion in 2013 and 47.7 billion in 2012.

[5]   The Notifying Parties' reply to RFI 18 of 21 October 2014, question 1.

[6]   http://www.airserbia.com/en/company-profile (Retrieved on 6 November 2014).

[7]   Form CO, paragraph 2.2.28; Presentation from the Parties to the case team "Case M.7333 – Project Alba", 11 July 2014.

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

[9]   Form CO, Annex 5.1(c), New Alitalia agreed by-laws, paragraph 11.2.

[10]  Form CO, Annex 5.1(c), New Alitalia agreed by-laws, paragraph 16.1.

[11]  Form CO, Annex 5.1(c), New Alitalia agreed by-laws, paragraph 12.1.

[12]  […].

[13]  […].

[14]  Commission Consolidated Jurisdictional Notice (the "Jurisdictional Notice"), paragraph 65, OJ C95, 16.04.2008, page 1.

[15]  Jurisdictional Notice, paragraph 76.

[16]  Jurisdictional Notice, paragraph 79.

[17]  Form CO, Annex 5.1(b), Shareholders Agreement, paragraph 3.1.

[18]  Form CO, Annex 5.1(b), Shareholders Agreement, paragraph 3.3.

[19]  Form CO, Annex 5.1(b), Shareholders Agreement, paragraph 3.4.

[20]  Form CO, Annex 5.1(b), Shareholders Agreement, paragraph 5.1.

[21]  Form CO, Annex 5.1(b), Shareholders Agreement, schedule 2, point C; Form CO, Annex 5.1(c), New Alitalia agreed by-laws, section 13.

[22]        Form CO, Annex 5.1(c), New Alitalia agreed by-laws, section 13.

[23]  Aer Lingus, airberlin, Air Serbia, Air Seychelles, Jet Airways, Virgin Australia, and Darwin Airline (Etihad Regional).  A  description  of
Etihad's main partners is provided in Section 5 of this decision.

[24]  […].

[25]  Form CO, Annex 5.4(b).13, Proposed Alitalia Investment Board Paper No 36.

[26]  Jurisdictional Notice, paragraph 42.

[27]  Form CO, Annex 5.1(a), Transaction Implementation Agreement, paragraph 5.1.4; Form CO, Annex 5.1(a)(i), Alitalia Loyalty Sale and  Purchase
Agreement, paragraph 4.2.

[28]  Alitalia is the only party that achieved more than two-thirds of its EU-wide turnover in Italy. The Parties' turnover meets the  thresholds
set in Article 1(2) of the Merger Regulation under each of the "point of sale", "point of origin", and "50/50 split" methods.

[29]  In addition to the acquisition of 49% of Air Serbia.

[30]  Etihad holds also 70% of airberlin's loyalty programme, Topbonus.

[31]  Form CO, paragraph 2.2.36.

[32]  Etihad holds also 50.1% in Jet Airways' loyalty program, Jet Privilege.

[33]  Form CO, paragraph 6.3.204; airberlin annual report 2013, page 27.

[34]  airberlin's email of 11 November 2014.

[35]  Darwin Airline operates ATR 72-500 (68 seats) with a range of ca. 1,450km and Saab 2000 (50 seats) with a range of approximately ca.  2 200
km.

[36]  The Notifying Parties' reply to RFI 2 of 27 August 2014, question 11.

[37]  Form CO, Annex 2.2(a) EEP 10 Darwin Investment Summary.

[38]  [FOCA's preliminary view on the current financial arrangements between Etihad and Darwin Airline].

[39]  The Notifying Parties' reply to RFI 2 of 27 August 2014, question 8.

[40]  [Term of the licence agreement between Etihad and Darwin Airline].

[41]  Form CO, Annex 2.2(a), EEP 10 Darwin Investment summary, page 4.

[42]  Form CO, Annex 2.2(a), EEP 10 Darwin Investment summary, page 6.

[43]  See treatment of Air Nostrum in M.5364 – Iberia / Vueling / Clickair and Aer Arann M.6663 – Ryanair/ Aer Lingus III.

[44]  Form CO, paragraph 2.2.33.

[45]  Form CO, paragraph 2.2.35.

[46]  The Notifying Parties' reply to RFI 25 of 6 November 2014, question 1.

[47]  The Notifying Parties' reply to RFI 12 of 13 October 2014, question 2(a).

[48]  Form CO, Annex 2.2.5(a) Air Service Agreement between the UAE and Italy.

[49]  Form CO, paragraph 2.2.8.

[50]  Form CO, paragraph 2.2.27.

[51]  […].

[52]  Form CO, paragraph 6.3.103 and following [description of the main terms of the agreement with Air France/KLM].

[53]  The Notifying Parties' reply to RFI 18 of 21 October 2014, question 14. Air Cargo Srl is an  Italian  company  founded  in  1986  based  in
Fiumicino–Rome  and other two branches are in the North of Italy: at Malpensa airport and at Linate airport. Air  Cargo  Srl  is  a  supplier  of
General Sales and Services Agency (GSSA) services, being  itself  an  authorised  handler  and  an  air  charter  brokerage  and  offering  cargo
consultancy and ad-hoc consignment. Air Cargo provides a comprehensive coverage of the Italian commercial area and it serves a number of  airline
clients in addition to Alitalia. As regards Alitalia, Air Cargo set up dedicated office in FCO and in  others  main  Italian  airports  (LIN  and
MXP), and offers services such as post holder, ramp handling, warehouse handling and control on claims.

[54]  Even considering the narrowest plausible market definition (that is to say the markets for air  transport  of  cargo  from  Europe  to  the
United Arab Emirates and vice versa), as confirmed by the market investigation the Parties combined market share would be below 20%. See  Replies
to Q4 – Questionnaire to cargo competitors, questions 10-11; Replies to Q5 – Questionnaire to cargo customers, questions 9-10.

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

[56]  Form CO, paragraph 6.3.3.

[57]  Form CO, paragraph 6.3.3 and following.

[58]  Replies to Q1 – Questionnaire to competitors, question 4; Replies to Q2 – Corporate customers, question 5; Replies to  Q3  –  Questionnaire
to travel agents, question; Replies to Q7 – Questionnaire to airport managers, question 6; Replies  to  Q8  –  Questionnaire  to  Civil  aviation
authorities, question 5; Replies to Q10 – Questionnaire to corporate customers II, question 5; Replies to Q11 – Questionnaire  to  travel  agents
II, question 5.

[59]  Replies to Q1 – Questionnaire to competitors, question 5; Replies to Q2 – Corporate customers, question 6; Replies to  Q3  –  Questionnaire
to travel agents, question 6; Replies to Q7 – Questionnaire to airport managers, question 7; Replies to Q8  –  Questionnaire  to  Civil  aviation
authorities, question 6; Replies to Q10 – Questionnaire to corporate customers II, question 6 ; Replies to Q11 – Questionnaire to  travel  agents
II, question 6.

[60]  M.6607 – US Airways/American Airlines, recital 10; M.6447 – IAG/bmi, recital 31.

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

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

[63]  For example Air  France's,  Austrian  Airlines',  Delta  Airlines',  Lufthansa's,  GermanWings'  and  United  Airlines'  replies  to  Q1  –
Questionnaire to competitors, question 4.

[64]  M.6663 – Ryanair/Aer Lingus III, recital 382; M.6607 – US Airways/American Airlines, recital 8; M.6447 – IAG/bmi, recital 36; M.6607  –  US
Airways/American Airlines, recital 8.

[65]  Form CO, Section 6.3.6.

[66]  Replies Q1 – Questionnaire to competitors, question 6; Replies to Q2 - Questionnaire to corporate customers, question 7; Replies  to  Q3  –
Questionnaire to travel agents, question 7; Replies to Q7 – Questionnaire to airport managers, question 7;  Replies  to  Q8  –  Questionnaire  to
civil aviation authorities, question 7; Replies to Q10 – Questionnaire to corporate customers II, question 7; Replies to Q11 –  Questionnaire  to
travel agents II, question 7.

[67]  For example Aer Lingus',  airberlin's,  Air  France's,  Brussels  Airlines,  Jet  Airways'  (India),  IAG's,  Scandinavian  Airlines',  TUI
Deutschland GmbH's, United Airlines' replies to Q1 – Questionnaire to competitors, question 6.1; Replies  to  Q2  –  Questionnaire  to  corporate
customers, question 10.1; Replies to Q3 – Questionnaire to travel agents, question 8.1; Replies  to  Q7  –  Questionnaire  to  airport  managers,
question 8.1 ; Replies to Q8 – Questionnaire to Civil aviation authorities, question 7.1; Replies to Q10 – Questionnaire to  corporate  customers
II, question 10.1; Replies to Q11 – Questionnaire to travel agents II, question 8.1.

[68]  Air France's reply to Q1 – Questionnaire to competitors, question 6.1.

[69]  Air France's, Jet Airways' (India), IAG's, TUI Deutschland GmbH's, United Airlines' replies to Q1 – Questionnaire to competitors,  question
6.1; ABB ASEA Brown Boveri Ltd's reply to Q2 - Questionnaire to corporate customers, question 10.1; Carlson  Wagonlit  Travel's  reply  to  Q3  -
Questionnaire to travel agents, question 8.1.

[70]  "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.

[71]  M.6663 – Ryanair/Aer Lingus III, recital 373.

[72]  M.6663 – Ryanair/Aer Lingus III, recital 374; M.6447 – IAG/bmi, recital 68.

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

[74]  M.6607 – US Airways/American Airlines, recital 19; M.5440 – Lufthansa/Austrian Airlines, recital 27.

[75]  Form CO, Section 6.3.8.

[76]  Replies to Q1 – Questionnaire to competitors, questions 7 and 8; Replies to Q2 – Questionnaire to corporate  customers,  questions  11  and
12; Replies to Q3 – Questionnaire to travel agents, questions 9 and 10; Replies to Q7 – Questionnaire to airport managers, questions  9  and  10;
Replies to Q8 – Questionnaire to civil aviation authorities, questions 8 and 9; Replies  to  Q10  –  Questionnaire  to  corporate  customers  II,
questions 11 and 12; Replies to Q11 – Questionnaire to travel agents II, questions 9 and 10.

[77]  Replies to Q1 – Questionnaire to competitors, questions 7 and 8; Replies to Q2 – Questionnaire to corporate  customers,  questions  11  and
12; Replies to Q3 – Questionnaire to travel agents, questions 9 and 10; Replies to Q7 – Questionnaire to airport managers, questions  9  and  10;
Replies to Q8 – Questionnaire to civil aviation authorities, questions 8 and 9; Replies  to  Q10  –  Questionnaire  to  corporate  customers  II,
questions 11 and 12; Replies to Q11 – Questionnaire to travel agents II, questions 9 and 10.

[78]  Replies to Q1 – Questionnaire to competitors, questions 9 and 10; Replies to Q2 – Questionnaire to corporate customers,  questions  13  and
14; Replies to Q3 – Questionnaire to travel agents, questions 11 and 12; Replies to Q7 – Questionnaire to airport managers, questions 11 and  12;
Replies to Q8 – Questionnaire to civil aviation authorities, questions 10 and 11; Replies to Q10  –  Questionnaire  to  corporate  customers  II,
questions 13 and 14; Replies to Q11 – Questionnaire to travel agents II, questions 11 and 12.

[79]  M.6663 – Ryanair/Aer Lingus III, recital 65 and following; M.4439 – Ryanair/Aer Lingus, recital 73 and following.

[80]  M.6663 – Ryanair/Aer Lingus III, recital 56.

[81]  Form CO, Annex 6.3(a), Airport Substitutability Analysis, paragraph 5.23.

[82]  M.6663 – Ryanair/Aer Lingus III, recital 56.

[83]  M.4439 – Ryanair/Aer Lingus, recital 254 and following; M.6663 – Ryanair/Aer Lingus III, recital 280 and following.

[84]  The Italian national competition authority has held that there  was  substitutability  between  FCO  and  CIA  for  international  flights.
Decision No. 23496 of 11 April 2012, C9812B – Monitoraggio post-concentrazione/Compagnia Aerea. Italiana/Alitalia-Linee Aeree  Italiana-Air  One,
recital 120 and following.

[85]  Replies to Q1 – Questionnaire to competitors, question 12.2.

[86]  Replies to Q1 – Questionnaire to competitors, question 12.2; Replies to Q3 – Questionnaire to travel agents, question 14.2; Replies to  Q11
– Questionnaire to travel agents II, question 14.2.

[87]  Form CO, Annex 6.3(a), Airport Substitutability Analysis, paragraph 4.26.

[88]  Form CO, Annex 6.3(a), Airport Substitutability Analysis, paragraph 4.1; M.6663 – Ryanair/Aer Lingus III, recital 242 and following.

[89]  M.6663 – Ryanair/Aer Lingus III, recital 56.

[90]  M.4439 – Ryanair/Aer Lingus, recital 262 and following; M.6663 – Ryanair/Aer Lingus III, recital 242 and following.

[91]  The Italian national competition authority has held that there  was  substitutability  between  LIN  and  MXP  for  international  flights.
Decision No. 23496 of 11 April 2012, C9812B – Monitoraggio post-concentrazione/Compagnia Aerea. Italiana/Alitalia-Linee Aeree  Italiana-Air  One,
paragraph 128.

[92]  Replies to Q1 – Questionnaire to competitors, question 13; Replies to Q2 – Corporate customers, question 17; Replies to Q3 –  Questionnaire
to travel agents, question 15; Replies to Q7 – Questionnaire to airport managers, question 15; Replies to Q8 – Questionnaire  to  Civil  aviation
authorities, question 14; Replies to Q10 – Questionnaire to corporate customers II, question 17; Replies to Q11 – Questionnaire to travel  agents
II, question 15.

[93]  Replies to Q1 – Questionnaire to competitors, question 13; Replies to Q2 – Corporate customers, question 17; Replies to Q3 –  Questionnaire
to travel agents, question 15; Replies to Q7 – Questionnaire to airport managers, question 15; Replies to Q8 – Questionnaire  to  Civil  aviation
authorities, question 14; Replies to Q10 – Questionnaire to corporate customers II, question 17; Replies to Q11 – Questionnaire to travel  agents
II, question 15.

[94]  Form CO, Annex 6.3(a), Airport Substitutability Analysis, paragraph 8.19.

[95]  M.3280 – Air France / KLM, recital 34.

[96]  M.6828 – Delta/Virgin, recital 44 and following.

[97]  Replies to Q1 – Questionnaire to competitors, question 12.1; Replies  to  Q2  –  Corporate  customers,  question  16.1;  Replies  to  Q3  –
Questionnaire to travel agents, question 14.1; Replies to Q7 – Questionnaire to airport managers, question 14.1; Replies to  Q8  –  Questionnaire
to Civil aviation authorities, question 13.1; Replies to Q10  –  Questionnaire  to  corporate  customers  II,  question  16;  Replies  to  Q11  –
Questionnaire to travel agents II, question 14.1.

[98]  Replies to Q1 – Questionnaire to competitors, questions 12.1; Replies to  Q2  –  Corporate  customers,  question  16.1;  Replies  to  Q3  –
Questionnaire to travel agents, question 14.1; Replies to Q7 – Questionnaire to airport managers, question 14.1; Replies to  Q8  –  Questionnaire
to Civil aviation authorities, question 13.1; Replies to Q10  –  Questionnaire  to  corporate  customers  II,  question  16;  Replies  to  Q11  –
Questionnaire to travel agents II, question 14.1.

[99]  There are no flights to and from DWC relevant for the assessment of the Transaction.

[100]       Form CO, Annex 6.3(a), Airport Substitutability Analysis, paragraph 3.1.

[101]       Moreover, AUH forecasts more than 20 million passengers for 2014; AUH's reply to Q7 – Questionnaire to airport managers, question 2.

[102]       [Parties' estimate for passengers travelled through AUH in 2013].

[103]       The Notifying Parties' reply to RFI 16 of 16 October 2014, question 1(a)(ii).

[104]       The Notifying Parties' reply to RFI 18 of 21 October 2014, Annex RFI 18.6, paragraph 1.9.

[105]       The Notifying Parties' reply to RFI 18 of 21 October 2014, Annex RFI 18.6, paragraphs 1.19.

[106]       The Notifying Parties' reply to RFI 18 of 21 October 2014, Annex RFI 18.6, paragraphs 1.10.

[107]       The Notifying Parties' reply to RFI 18 of 21 October 2014, Annex RFI 18.6, paragraphs 1.11.

[108]       The Notifying Parties' reply to RFI 18 of 21 October 2014, Annex RFI 18.6, paragraphs 1.12.

[109]       The Notifying Parties' reply to RFI 18 of 21 October 2014, Annex RFI 18.6, paragraphs  1.6  and  following;  The  Notifying  Parties'
reply to RFI 18 of 21 October 2014, Annex RFI 18.7; The Notifying Parties' reply to RFI 21 of 30 October 2014.

[110]       The Notifying Parties' reply to RFI 21 of 30 October 2014.

[111]       The Notifying Parties' reply to RFI 21of 30 October 2014.

[112]       The Notifying Parties' reply to RFI 18 of 21 October 2014, Annex RFI 18.6, paragraphs 1.5.

[113]       Form CO, Annex 6.3(a), Airport Substitutability Analysis; The Notifying Parties' reply to RFI 18 of 21 October 2014, Annex RFI  18.6,
18.7 and 18.9.

[114]       M.6663 – Ryanair/Aer Lingus III, recital 56.

[115]       The Notifying Parties contend that the overall travel time between Abu Dhabi city centre and DXB amounts to  only  65  minutes  given
the 140 km/h speed limit on the motorway connecting the city and airport.

[116]       See Google Maps.

[117]       http://www.emirates.com/be/english/plan_book/to_and_from_airport/free_shuttle_service_dubai.aspx (retrieved on 21 October 2014).

[118]       http://www.etihad.com/en-be/experience-etihad/etihad-chauffeur/ (retrieved on 23 October 2014).

[119]       [60-70]% of journeys and passengers travelled to Abu Dhabi with the remaining [5-10]%  to  other  UAE  destinations;  Form  CO  Annex
6.3(a), Airport Substitutability Analysis.

[120]       Form CO, Annex 8.4, Etihad business case for Rome flights (2014).

[121]       Replies from competitors operating to AUH or DXB to Q1 – Questionnaire to competitors, questions 13  and  14;  Replies  of  corporate
customers buying tickets on the routes Rome–AUH or Milan –AUH to Q2 – Corporate customers, questions  17  and  18;  Replies  from  travel  agents
purchasing tickets on the routes Rome–AUH and Milan–AUH to Q3 – Questionnaire to travel agents, questions 15 and 16.

[122]       Air France/KLM's reply to Q1 – Questionnaire to competitors, question 13.1.

[123]       Emirates' reply to Q1 – Questionnaire to competitors, question 4.1.

[124]       Minutes of the Conference call with Emirates held on 13 October 2014, paragraphs 2 and following.

[125]       On FCO–AUH, no changes would be made to their current frequencies; and on MXP–AUH, no change would be made  to  Etihad's  frequencies
but Alitalia might start operating daily flights on the route prior to Summer 2015  in  connection  with  Milan  EXPO  2015  […];  the  Notifying
Parties' reply to RFI 22 of 30 October 2014, question 4

[126]       Form CO, Annex 8.4, Etihad business case for Rome flights (2014); The Notifying  Parties'  reply  to  RFI  13  of  17  October  2014,
question 2(d).

[127]       For none of the other routes to Abu Dhabi (Abu Dhabi–Paris and Abu Dhabi–Munich) airport substitutability for AUH  would  affect  the
Commission's conclusion.

[128]       M.6447 – IAG/bmi; M.5889 – United Airlines/ Continental Airlines; M.5747 – Iberia/ British Airways.

[129]       For instance, the Notifying Parties have submitted a comparison of MIDT data and PaxIS Plus data for selected routes. The  comparison
confirms that, for the purpose of the present case, PaxIS Plus data has a coverage which is in general at least as extensive as MIDT data.

[130]       Form CO, paragraphs 6.3.6, 6.3.66 and following.

[131]       The scope of these JVs covers only certain routes between Italy and France - the Netherlands, it is  limited  to  passenger  services
and it does not cover cargo activities. Source: Annex 10.(a) to the Form CO.

[132]       Form CO, Annex 10(a), Joint venture  agreements  between  Alitalia  and  Air  France/KLM  (AFKL)  and  Delta  Airlines  (Delta);  The
Transatlantic JV covers several intercontinental routes, it includes belly-hold cargo and it excludes charters and cargo-only flights.

[133]       M.6607 – US Airways/ American Airlines, recital 28; M.6828 – Delta Airlines/Virgin Group/Virgin Atlantic, recital 84.

[134]       Commission White Paper, Towards more effective EU merger control, COM(2014) 449 final, 9.7.2014, paragraph 29.

[135]       Commission White Paper, Towards more effective EU merger control, COM(2014) 449 final, 9.7.2014, paragraph 30.

[136]       Commission White Paper, Towards more effective EU merger control, COM(2014) 449 final, 9.7.2014, paragraph 35.

[137]       Form CO, paragraph 6.3.65.

[138]       Commission White Paper, Towards more effective EU merger control, COM(2014) 449 final, 9.7.2014, paragraph 29 and 35.

[139]       Commission White Paper, Towards more effective EU merger control, COM(2014) 449 final, 9.7.2014, paragraph 30.

[140]       Replies to Q2 – Questionnaire to corporate customers, questions 34.1 and  36,  Replies  to  Q3  –  Questionnaire  to  travel  agents,
questions 34.1 and 36, Replies to Q10 – Questionnaire to corporate customers II, questions 34.1 and 36 to, Replies  to  Q11  –  Questionnaire  to
travel agents II, questions 34.1 and 36.

[141]       In addition to Etihad and its Equity partners, Alitalia has in place code share agreements  with  several  other  carriers  including
members of SkyTeam (such as, Aeroflot, Aerolíneas Argentinas, Aeromexico, Air Europa, Air France, Alitalia, China Airlines, China Eastern,  China
Southern, CSA Czech Airlines, Delta Air Lines, Garuda Indonesia, Kenya Airways, KLM, Korean  Air,  MEA,  Saudia,  Tarom,  Vietnam  Airlines,  and
Xiamen Air) as well as other partner carriers (such as, Air Baltic, Air Corsica, Air Seychelles, Azal, Bulgaria  Air,  Croatia  Airlines,  Cyprus
Airways, GOL, Kuwait Airlines, Luxair, Montenegro Airlines, SriLankan, Tap, and Tarom).

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

[143]       M.5403, Lufthansa/bmi, recital 43.

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

[145]       Soft block on the Milan–Belgrade route and hard block on the Rome–Belgrade route.

[146]       The Notifying Parties' reply to RFI 18 of 21 October 2014, question 2.

[147]       The Notifying Parties' reply to RFI 18 of 21 October 2014, question 2; The Notifying Parties' reply to RFI 20  of  29  October  2014,
questions 1 and 2.

[148]       The codeshare agreements between Alitalia and airberlin, Air Serbia Darwin, Etihad, and Jet Airways can be terminated with 60  or  90
day notice, depending on the agreement, before the beginning of each IATA season.

[149]       Replies to Q1 – Questionnaire to competitors, question 21; Replies to Q2 –  Questionnaire  to  corporate  customers,  question  27.1;
Replies to Q3 – Questionnaire to travel agents, question 26.1; Replies to Q10 – Questionnaire to corporate customers II, question  27.1;  Replies
to Q11 – Questionnaire to travel agents II, question 26.1.

[150]       Form CO, Annex 5 4(a), Alitalia BoD 03 07 2013, Business Plan Board Presentation.

[151]       M.6828 – Delta/Virgin, footnote 77; M.6607 – US Airways/American Airlines, recital 32;  M.5889  –  United/Continental,  footnote  25;
M.5830 – Aegean/Olympic I, footnote 365; M.5747 – BA/Iberia, recital 117; M.5335 – LH/SN Airholding, footnote 302.

[152]       Summer 2012, winter 2012/13, summer 2013 and winter 2013/14 IATA seasons.

[153]       M.5335 – BA/Iberia, recital 117; M.6828 – Delta/Virgin, footnote 77.

[154]       M.6607 – US Airways/American Airlines, recital 32.

[155]       M.6607 – US Airways/American Airlines, recital 32.

[156]       Abu Dhabi–Paris, Belgrade–Brussels.

[157]       Abu Dhabi–Paris, Belgrade–Brussels.

[158]       Nuremberg–Lamezia Terme, Lamezia Terme–Vienna, Palma de Mallorca–Venice, Frankfurt–Lamezia Terme,    Frankfurt–Palermo.

[159]       Brindisi–Nuremberg.

[160]       Nuremberg–Lamezia Terme, Lamezia Terme–Vienna, Palma de Mallorca–Venice, Frankfurt–Lamezia Terme,    Frankfurt–Palermo.

[161]       Palermo–Vienna.

[162]       Brindisi–Nuremberg and Palermo–Vienna.

[163]       The overlap on this route would have led to an affected market in the winter 2012/13 IATA season,  in  which  the  Parties'  combined
market share amounted to [20-30]% for all types of passengers combined and reached  [20-30]%  if  the  NTS  passengers'  segment  is  considered.
However, the increment brought about by the Transaction was minimal and in any event below [0-5]% irrespective of the distinction between TS  and
NTS passengers. As a result, the Transaction will not lead to material merger specific effects on this route and does not  raise  serious  doubts
as to its compatibility with the internal market.

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

[165]       Replies to Q2 – Questionnaire to corporate customers, question 34.1; Replies to  Q10  –  Questionnaire  to  corporate  customers  II,
question 34.1.

[166]       Email from the Parties entitled RE: M.7333 - Alitalia / Etihad - State of play meeting [BEP-ACTIVE.FID685275] of 17 October 2014.

[167]       See Annex Annex 6.3.c. (ii) to the Form CO.

[168]       Replies to Q1 – Questionnaire to competitors, question 15; Replies to  Q2  –  Questionnaire  to  corporate  customers,  question  20;
Replies to Q3 – Questionnaire to travel agents, question 18; Replies to Q10 – Questionnaire to corporate customers II, question  20;  Replies  to
Q11 – Questionnaire to travel agents II, question 18.

[169]       Form CO, Annex 6.3(c)(ii), O&D by airport pair.

[170]       Form CO, Annex 6.3(c)(ii), O&D by airport pair.

[171]       Form CO, Annex 6.3(c)(ii), O&D by airport pair.

[172]       Form CO, Annex 6.3(c)(ii), O&D by airport pair.

[173]       Form CO, Annex 6.3(c)(i),  O&D by city pair.

[174]       Form CO, Annex 6.3(c)(i),  O&D by city pair.

[175]       Form CO, Annex 6.3(c)(i), O&D by city pair.

[176]       Form CO, Annex 6.3(c)(i), O&D by city pair.

[177]       Replies to Q1 – Questionnaire to competitors, question 15; Replies to  Q2  –  Questionnaire  to  corporate  customers,  question  20;
Replies to Q3 – Questionnaire to travel agents, question 18; Replies to Q10 - Questionnaire to corporate customers II, question  20;  Replies  to
Q11 – Questionnaire to travel agents II, question 18.

[178]       Figures for 2012 would be lower than those pertaining to 2013.

[179]       Considering return tickets ratios of [60-70]% for Etihad, [80-90]% for Alitalia (see the Notifying Parties' reply to  RFI  18  of  21
October 2014), and a conservative [50-60]% for indirect competitors. Even considering that the new direct service of Etihad would  stimulate  the
market by 20%, there would be around [<5 000] TS individuals and the Commission's conclusion would remain the same.

[180]       The Notifying Parties estimate that around [<5 000] TS passengers purchased tickets in the EU in 2013, meaning  that  less  than  [<5
000] individuals would be concerned. See the Notifying Parties' response to RFI15 of 15 October 2014, question 4.

[181]       The Notifying Parties' reply to RFI 8 of 1 October 2014, Annex 2.

[182]       Replies to Q1 – Questionnaire to competitors, question 15; Replies to  Q2  –  Questionnaire  to  corporate  customers,  question  20;
Replies to Q3 – Questionnaire to travel agents, question 18; Replies to Q10 - Questionnaire to corporate customers II, question  20;  Replies  to
Q11 – Questionnaire to travel agents II, question 18.

[183]       In terms of the average percentage of tickets sold by Air Serbia within […]  of the departure date, Air  Serbia  does  not  have  the
      tools for this type of analysis. However it is estimated that around [5-10]% would be sold within the final […]  period.

[184]       The Notifying Parties' reply to RFI 18 of 15 October 2014, question 3(b).

[185]       Replies to Q1 – Questionnaire to competitors, question 21; Replies to Q2 –  Questionnaire  to  corporate  customers,  question  27.1;
Replies to Q3 – Questionnaire to travel agents, question 26.1; Replies to Q10 – Questionnaire to corporate customers II, question  27.1;  Replies
to Q11 – Questionnaire to travel agents II, question 26.1.

[186]       The Notifying Parties' reply to RFI 8 of 1 October 2014, Annex 2.

[187]       Form CO, Annex 6.3(c)(ii), O&D by airport pair.

[188]       Form CO, Annex 6.3(c)(ii), O&D by airport pair.

[189]       Form CO, Annex 6.3(c)(ii), O&D by airport pair; The Notifying Parties' reply to RFI 8 of 1 October 2014, questions 5 and 6;  Indirect
flights do not represent a material competitive constraint to the Parties' direct operation on the route.

[190]       Form CO, Annex 6.3(c)(ii), O&D by airport pair.

[191]       The Notifying Parties provided frequency data, considering 1 way flight as 1 frequency. They refer for instance to 21 and  17  weekly
frequencies in the summer 2014 IATA season. Figures used in the Decision relate to round-trips.

[192]       Form CO, paragraph 8.8.1; Minutes of the conference call with Wizzair held on 6 October 2014.

[193]       Form CO, Annex 6.3(a), Airport Substitutability Analysis, paragraph 5.23.

[194]       The Notifying Parties' reply to RFI 18 of 21 October 2014, question 9.

[195]       Assoclearance Associazione Italiana Gestione Clearance e Slots' reply to Q9 – Questionnaire to Slots Manager, question 5.2.3.

[196]       Assoclearance Associazione Italiana Gestione Clearance e Slots' reply to Q9 – Questionnaire to Slots Manager, question 5.2.3.

[197]       Assoclearance Associazione Italiana Gestione Clearance e Slots' reply to Q9 – Questionnaire to Slots Manager, question 9.1.

[198]       Rome Fiumicino Airport & Ciampino Airport's reply to Q7 – Questionnaire to Airport Managers, questions 19 and 19.1.

[199]       Assoclearance Associazione Italiana Gestione Clearance e Slots' reply to Q9 – Questionnaire to Slots Managers,  questions  3  and  4.
Alitalia, Etihad, and Etihad's Equity Partners do not operate any flights from Rome Ciampino. Rome Ciampino is also  somewhat  congested  due  to
regulatory and environmental restrictions to the number of movements that can be authorized each day. In the summer  2013  and  winter  2013/2014
IATA seasons no slots have been granted to new entrants at Rome Ciampino.

[200]       Replies to Q1 – Questionnaire to competitors, question 15; Replies to  Q2  –  Questionnaire  to  corporate  customers,  question  20;
Replies to Q3 – Questionnaire to travel agents, question 18; Replies to Q10 – Questionnaire to corporate customers II, question  20;  Replies  to
Q11 – Questionnaire to travel agents II, question 18.

[201]       Alitalia also offered indirect flights on the Belgrade–Brussels route and carried [<1 000] passengers on this  route  in  the  summer
2013 IATA season and [<1 000] passengers in the winter  2013/2014  IATA  season.  However,  even  taking  into  consideration  a  broader  market
definition including indirect services, Alitalia's market share is only [0-5]%. In addition, there are also  other  competitors  present  on  the
Belgrade–Brussels route, such as Lufthansa, LOT and Adria Airlines. Therefore, the Commission's competitive assessment would not change  even  if
considering a direct/indirect overlap on the Belgrade–Brussels route.

[202]       If taking into consideration a direct/indirect overlap at city pair level, the Transaction would not lead to combined  market  shares
above 20% at city pair level under any market segmentation during all four completed IATA seasons.

[203]       If taking into consideration a direct/indirect overlap at airport pair  level  Abu  Dhabi  International  Airport  (AUH)  and  Munich
International (MUC), the Parties combined market share is [80-90]% in summer 2013 IATA season and [90-100]% in winter 2013/2014 IATA  season  for
all types of passengers combined and could be higher if other segments are considered. However, the increment brought about  by  the  Transaction
is small (below [0-5]%) under any market segmentation considered. Therefore, the Commission's competitive assessment would  not  change  even  if
considering a direct/indirect overlap at airport pair level.

[204]       However, Alitalia also offers indirect flights on the Abu Dhabi–Paris route, both  operated  and  via  codeshare.  Even  taking  into
consideration a broader market definition including  indirect  services,  Alitalia's  market  share  remains  below  [0-5]%  and  in  any  event,
considering the overlap at city pair, the Parties' combined market share would be below [20-30]% under any market segmentation.  Nonetheless,  in
relation to the airport pair Abu Dhabi International Airport (AUH) and Paris  Charles  de  Gaulle  (CDG),  the  Parties'  combined  market  share
amounted to [70-80]% in the summer 2013 IATA season and [60-70]% in the winter 2013/2014 IATA season for all types  of  passengers  combined  and
could be higher if other segments were considered. However, the increment brought about by the Transaction would be small (below  [5-10]%)  under
any market segmentation considered and there are a number of other competitors such as Air France-KLM, Qatar, Turkish Airlines as  well  as  Gulf
Air present on the route with a higher or similar market share as compared to  Alitalia's  increment  on  the  respective  market  segmentations.
Therefore, the Commission's competitive assessment would not change even if considering a direct/indirect overlap at airport pair level.

[205]       Replies to Q1 – Questionnaire to competitors, question 17; Replies to Q2 – Questionnaire to corporate customers question 22;  Replies
to Q3 – Questionnaire to travel agents, question 20; Replies to Q10 – Questionnaire to corporate customers II, question  22;  Replies  to  Q11  –
Questionnaire to travel agents II, question 20.

[206]       The Transaction may give rise to direct/indirect overlaps as a result of Alitalia's, including where relevant  its  Transatlantic  JV
partners', and Darwin Airline's operations. However, the  Commission's  competitive  assessment  would  not  change  even  if  considering  these
direct/indirect overlaps.

[207]       The Notifying Parties' reply to RFI 8 of 1 October 2014, Annex RFI-8.2.

[208]       Form CO, Annex 6.3(c)(i) O&D by city pair.

[209]       Form CO, Annex 6.3(c)(i) O&D by city pair.

[210]       Form CO, Annex 6.3(c)(i) O&D by city pair

[211]       Lufthansa Group had [<3 000] passengers on this route in the summer 2013 IATA season and [<3 000] passengers in the winter  2013/2014
IATA season, representing a market share of [10-20]% and [10-20]% respectively on the total market.

[212]       Alitalia's passenger share from Italy towards international and intercontinental destination is estimated at [10-20]%  in  2013.  See
Notifying Parties' reply to RFI 17 of 17 October 2014, question 2.

[213]       The Notifying Parties' reply to RFI 17 of 17 October 2014, Annex RFI-17.2.

[214]       The Commission's competitive assessment would not change even if considering a rather high market share of Alitalia as a result of  a
codeshare with Darwin Airline.

[215]       Replies Q1 – Questionnaire to competitors to question 15; Replies to Q2 – Questionnaire to corporate customers, question 20;  Replies
to Q3 – Questionnaire to travel agents, question 18 of; Replies to Q10 – Questionnaire to corporate customers II, question 20; Replies to  Q11  –
Questionnaire to travel agents II, question 18.

[216] The Notifying Parties' reply to RFI 7 of 30 September 2014; Annex "Code  Sharing  Free-Flow  Agreement  between  Darwin  Airline  S.A.  and
Alitalia effective as from 27 March 2011".

[217]       M.5830 – Olympic / Aegean Airlines, recital 278 and following; in addition, the Parties submit that irrespective of  their  currently
operated PSO routes, no overlap arises in the PSO market in Italy in light of the recent enforcement of the bilateral agreement  between  EU  and
Switzerland, in particular due to the fact that this agreement does not grant the parties' air carriers the right to  provide  cabotage  services
(that is to say internal flights in the territory of a State).

[218]       Alitalia is only indirectly operating and codesharing on the Geneva–Venice route in winter 2013/2014 IATA season.

[219]       Replies to Q1 – Questionnaire to competitors, question 17; Replies to  Q2  –  Questionnaire  to  corporate  customers,  question  22;
Replies to Q3 – Questionnaire to travel agents, question 20; Replies to Q10 – Questionnaire to corporate customers II, question  22;  Replies  to
Q11 – Questionnaire to travel agents II, question 20.

[220]       Etihad itself was also codesharing on this route, however only a minimal number of passengers bought an Etihad ticket (less than  [<1
000]).

[221]       As regards the Brussels–New York route, the combined market share would be [50-60]% in summer 2013  IATA  season  for  all  types  of
passengers combined at the Brussels-New York (JFK) airport pair. However, the increment brought about by the Transaction is  below  [0-5]%  under
any market segmentation considered. In addition, there will be no direct/direct overlap in winter 2013/2014 IATA season at the Brussels-New  York
(JFK) airport pair as Jet Airways directly operates to Newark Liberty International Airport (EWR).

[222]       If taking into consideration a direct/indirect overlap the combined market shares would  remain  well  below  20%  under  any  market
segmentation considered during the summer 2013 IATA season.

[223]       In the winter 2013/2014 IATA season there would be an indirect/indirect overlap  only,  however  the  combined  market  shares  would
remain well below 20% under any market segmentation considered.

[224]       Etihad itself was also codesharing on this route, however only a minimal number of passengers bought an Etihad ticket (less than  [<1
000]).

[225]       The Notifying Parties' reply to RFI 18 of 21 October 2014, Annex RFI-18.2(a).

[226]       Replies to  Q1 – Questionnaire to competitors, questions 22 and 23; Replies to Q2 – Questionnaire to corporate  customers,  questions
28 and 29; Replies to Q3 – Questionnaire to travel agents, questions 27 and 28; Replies  to  Q10  –  Questionnaire  to  corporate  customers  II,
questions 28 and 29; Replies to Q11 – Questionnaire to travel agents II, questions 27 and 28.

[227]       Replies to Q1 – Questionnaire to competitors, question 15; Replies to  Q2  –  Questionnaire  to  corporate  customers,  question  20;
Replies to Q3 – Questionnaire to travel agents, question 18; Replies to Q10 – Questionnaire to corporate customers II, question  20;  Replies  to
Q11 – Questionnaire to travel agents II,  question 18.

[228]       Replies to Q1 – Questionnaire to competitors, question 17; Replies to  Q2  –  Questionnaire  to  corporate  customers,  question  22;
Replies to Q3 – Questionnaire to travel agents, question 20; Replies to Q10 – Questionnaire to corporate customers II, question  22;  Replies  to
Q11 – Questionnaire to travel agents II,  question 20.

[229]        Amsterdam–Mumbai,  Amsterdam–New  Delhi,  Stockholm–New  York,  Athens–New  York,   Barcelona–Los   Angeles,   Barcelona–New   York,
      Brindisi–Munich,  Bari–Munich,  Bari–Riga,  Brussels–Toronto,  Cagliari–Düsseldorf,   Cagliari–Munich,   Cagliari–Zurich,   Chicago–Berlin,
      Copenhagen–Catania,   Copenhagen–New   York,   Copenhagen–Turin,   Catania–Frankfurt,   Catania–London,   Catania–Moscow,   Catania–Munich,
      Catania–Zurich,   Düsseldorf–Los   Angeles,   Düsseldorf–Miami,   Düsseldorf–New   York,   Düsseldorf–Rome,    Düsseldorf–Lamezia    Terme,
      Basel/Mulhouse–Lamezia  Terme,  Hamburg–Rome,  Seoul–Milan,  Krakow–Rome,  Las  Vegas–Munich,  Los  Angeles–Rome,  St.   Petersburg–Venice,
      Lampedusa–Milan,  Miami–Milan,  Miami–Rome,  Miami–Berlin,  Miami–Venice,  Milan–Moscow,   Milan–New   York,   Milan–Palma   de   Mallorca,
      Milan–Pantelleria, Milan–Tokyo, Moscow–Rome, Munich–Palermo,  Munich–Lamezia  Terme,  Naples–Zurich,  Nice–New  York,  Nuremberg–Rome,  New
      York–Prague, New York–Rome, New York–Berlin, New York–Venice, Palermo–Zurich, Pantelleria–Rome, Riga–Venice, Lamezia Terme–Berlin,  Lamezia
      Terme–Zurich.
[230]       The Notifying Parties' reply to RFI 6 of 22 September 2014, question 26. See RFI 6 answer to question 26.

[231]       The Notifying Parties' reply to RFI 8 of 1 October 2014, question 8; The Notifying Parties' reply to RFI  6  of  22  September  2014,
question 27(c).

[232]       airberlin's reply to RFI 3 of 10 October 2014, question 2.

[233]       The Notifying Parties' email of 4 November 2014.

[234]       Summer 2012, winter 2012/2013, summer 2013 and winter 2013/2014 IATA seasons.

[235]       On Milan–Tokyo the yearly average in the last 4 IATA season for  overall  passengers  is  below  2%  and  the  highest  market  share
increment in the narrowest market definition is 3% for NTS passengers in summer 2013 IATA season.

[236]       No substantiated concerns were raised with regards to these routes; Replies to Q1 – Questionnaire to competitors,  questions  16  and
17; Replies to Q2 – Questionnaire to corporate customers, questions 21 and 22; Replies to Q3 – Questionnaire to travel agents, questions  19  and
20; Replies to Q10 – Questionnaire to corporate customers II, questions 21 and 22; Replies to Q11 – Questionnaire to travel agents II,  questions
19 and 20.

[237]       In the winter 2013/2014 IATA season the overlap was indirect/indirect.

[238]       In the winter 2013/2014 IATA season the overlap was indirect/indirect.

[239]       No overlap during summer 2013 IATA season.

[240]       In the winter 2013/2014 IATA season the overlap was indirect/indirect.

[241]       In winter 2013/2014 IATA season the overlap was indirect/indirect.

[242]       No other substantiated concerns were raised with regards to these routes; Replies to Q1 – Questionnaire to competitors, questions  16
and 17; Replies to Q2 – Questionnaire to corporate customers, questions 21 and 22; Replies to Q3 – Questionnaire to travel agents,  questions  19
and 20; Replies to Q10 – Questionnaire to corporate customers II, questions 21 and 22; Replies to  Q11  –  Questionnaire  to  travel  agents  II,
questions 19 and 20.

[243]       In winter 2013/2014 IATA season the overlap was indirect/indirect.

[244]       In winter 2013/2014 IATA season the overlap was indirect/indirect and the increment [<1 000] NTS  passengers;  in  summer  2013  IATA
season the increment was [<1 000] TS passengers.

[245]       The increment in winter 2013/2014 IATA season was [<1 000] NTS passengers.

[246]       Replies to Q1 – Questionnaire to competitors, question 16; Replies to  Q2  –  Questionnaire  to  corporate  customers,  question  21;
Replies to Q3 – Questionnaire to travel agents, question 19; Replies to Q10 – Questionnaire to corporate customers II, question  21;  Replies  to
Q11 – Questionnaire to travel agents II, question 19.

[247]       No other substantiated concerns were raised with regards to these routes; Replies to Q1 – Questionnaire to competitors,  question  16
and 17; Replies to Q2 – Questionnaire to corporate customers, question 21 and 22; Replies to Q3 – Questionnaire to  travel  agents,  question  19
and 20; Replies to Q10 – Questionnaire to corporate customers II, question 21 and 22; Replies  to  Q11  –  Questionnaire  to  travel  agents  II,
question 19 and 20.

[248]       [<3 000] passengers travelled on the route in the winter 2012/2013 IATA season.

[249]       Replies to Q1 – Questionnaire to competitors, question 16 and 17; Replies to Q2 – Questionnaire to corporate customers,  question  21
and 22; Replies to Q3 – Questionnaire to travel agents, question 19 and 20; Replies to Q10 – Questionnaire to corporate  customers  II,  question
21 and 22; Replies to Q11 – Questionnaire to travel agents II, question 19 and 20.

[250]       Replies to Q1 – Questionnaire to competitors, question 16 and 17; Replies to Q2 – Questionnaire to corporate customers,  question  21
and 22; Replies to Q3 – Questionnaire to travel agents, question 19 and 20; Replies to Q10 – Questionnaire to corporate  customers  II,  question
21 and 22; Replies to Q11 – Questionnaire to travel agents II, question 19 and 20.

[251]       In addition, there were only [<3 000] TS passengers on this route in 2013.

[252]       Replies to Q1 – Questionnaire to competitors, question 16 and 17; Replies to Q2 – Questionnaire to corporate customers,  question  21
and 22; Replies to Q3 – Questionnaire to travel agents, question 19 and 20; Replies to Q10 – Questionnaire to corporate  customers  II,  question
21 and 22; Replies to Q11 – Questionnaire to travel agents II, question 19 and 20.

[253]       In winter 2013/2014 IATA season the overlap was indirect/indirect.

[254]       [<5 000] passengers travelled on the route in the winter 2012/2013 IATA season.

[255]       Replies to Q1 – Questionnaire to competitors, question 16 and 17; Replies to Q2 – Questionnaire to corporate customers,  question  21
and 22; Replies to Q3 – Questionnaire to travel agents, question 19 and 20; Replies to Q10 – Questionnaire to corporate  customers  II,  question
21 and 22; Replies to Q11 – Questionnaire to travel agents II, question 19 and 20.

[256]       In addition, there were only [<1 000] TS passengers on this route in summer 2013 IATA season.

[257]       Replies to Q1 – Questionnaire to competitors, question 16 and 17; Replies to Q2 – Questionnaire to corporate customers,  question  21
and 22; Replies to Q3 – Questionnaire to travel agents, question 19 and 20; Replies to Q10 – Questionnaire to corporate  customers  II,  question
21 and 22; Replies to Q11 – Questionnaire to travel agents II, question 19 and 20.

[258]       Replies to Q1 – Questionnaire to competitors, question 16 and 17; Replies to Q2 – Questionnaire to corporate customers,  question  21
and 22; Replies to Q3 – Questionnaire to travel agents, question 19 and 20; Replies to Q10 – Questionnaire to corporate  customers  II,  question
21 and 22; Replies to Q11 – Questionnaire to travel agents II, question 19 and 20.

[259]       Edelweiss Air, a wholly owned subsidiary of Swiss International Airlines, operates on the route, having a base in Zurich.

[260]       Competitor's market share increased significantly between summer 2013 and summer 2014 IATA seasons.

[261]       In winter 2013/2014 IATA season the overlap was indirect/indirect.

[262] [<3 000] passengers travelled on the route in the winter 2012/2013 IATA season.

[263]       The Star Alliance Transatlantic JV offered a direct service which  was  terminated  during  the  winter  2013/2014  IATA  season  and
continues to offer indirect services on the route.

[264]       [5 000 -10 000] passengers travelled on the route in the winter 2012/2013 IATA season.

[265]       Replies to Q1 – Questionnaire to competitors, question 16 and 17; Replies to Q2 – Questionnaire to corporate customers,  question  21
and 22; Replies to Q3 – Questionnaire to travel agents, question 19 and 20; Replies to Q10 – Questionnaire to corporate  customers  II,  question
21 and 22; Replies to Q11 – Questionnaire to travel agents II, question 19 and 20.

[266]       In winter 2013/2014 IATA season the overlap was indirect/indirect.

[267] [<3 000] passengers travelled on the route in the winter 2012/2013 IATA season.

[268]       Replies to Q1 – Questionnaire to competitors, question 16 and 17; Replies to Q2 – Questionnaire to corporate customers,  question  21
and 22; Replies to Q3 – Questionnaire to travel agents, question 19 and 20; Replies to Q10 – Questionnaire to corporate  customers  II,  question
21 and 22; Replies to Q11 – Questionnaire to travel agents II, question 19 and 20.

[269]       No other substantiated concerns were raised with regards to these routes; Replies to Q1 – Questionnaire to competitors,  question  16
and 17; Replies to Q2 – Questionnaire to corporate customers, question 21 and 22; Replies to Q3 – Questionnaire to  travel  agents,  question  19
and 20; Replies to Q10 – Questionnaire to corporate customers II, question 21 and 22; Replies  to  Q11  –  Questionnaire  to  travel  agents  II,
question 19 and 20.

[270]       Replies to Q1 – Questionnaire to competitors, question 16; Replies to  Q2  –  Questionnaire  to  corporate  customers,  question  21;
Replies to Q3 – Questionnaire to travel agents, question 19; Replies to Q10 – Questionnaire to corporate customers II, question  21;  Replies  to
Q11 – Questionnaire to travel agents II, question 19.

[271]        These  are  the  following  47  routes:  Amsterdam–Thessaloniki,  Barcelona–Belgrade,  Barcelona–San   Francisco,   Belgrade–Madrid,
Bari–Moscow, Bucharest–Toronto,  Budapest–New  York,  Budapest–Toronto,  Cagliari–Moscow,  Catania–New  York,  Catania–Vienna,  Copenhagen–Miami,
Copenhagen–Naples,  Florence–Moscow,  Florence–New  York,  Frankfurt–Lamezia   Terme,   Frankfurt–Palermo,   Hamburg–Miami,   Hamburg–New   York,
Ibiza–Moscow, Kuala Lumpur–Milan, Lamezia Terme–Vienna, Los Angeles–Milan, Los Angeles–Venice, Los Angeles–Vienna, London–Naples, Lyon–New  York,
Madrid–Naples, Miami–Munich,  Miami–Vienna,  Milan–Manila,  Milan–San  Francisco,  Milan–Toronto,  Moscow–Naples,  Moscow–Olbia,  Moscow–Palermo,
Moscow–Verona, Marseille–New York, Munich–New York, Naples–New York, New York–Stuttgart, New York–Toulouse,  Nuremberg–Lamezia  Terme,  Palma  de
Mallorca–Venezia, Paris–Thessaloniki, Prague–Toronto, San Francisco–Venice.

[272]       See Section 7.3 of this decision.

[273]       M.5747 – Iberia/British Airways, recital 117.

[274]       These are the following 10 routes: Belgrade–Madrid,  Bari–Moscow,  Cagliari–Moscow,  Catania–New  York,  Ibiza–Moscow,  Moscow–Olbia,
Barcelona–Belgrade, Milan–Toronto, Prague–Toronto, Bucharest–Toronto.

[275]       airberlin's reply to RFI 3 of 10 October 2014, question 2.

[276]       There are no reportable indirect/indirect overlaps with Darwin or Alitalia's Transatlantic JV partners.

[277]       The additional overlap with airberlin is not significant. To avoid double counting the route is excluded from Section 7.6.2.

[278]       No substantiated concerns were raised with regards to these routes; Replies to  Q1  –  Questionnaire  to  competitors,  question  17;
Replies to Q2 – Questionnaire to corporate customers, question 22; Replies to Q3–Questionnaire to travel agents, question 20;  Replies  to  Q7  –
Questionnaire to airport managers, question 26; Replies to Q8 – Questionnaire to civil aviation  authorities,  question  16;  Replies  to  Q10  –
Questionnaire to corporate customers II, question 22; Replies to Q11 – Questionnaire to travel agents II, question 20.

[279]       Barcelona–San Francisco, Budapest–New York, Budapest–Toronto, Copenhagen–Miami,  Copenhagen–Naples,  Florence–Moscow,  Hamburg–Miami,
Hamburg–New York, Los Angeles–Milan, Los Angeles–Venice, Los Angeles–Vienna, London–Naples,  Lyon–New  York,  Marseille–New  York,  Miami–Munich,
Miami–Vienna, Milan–San Francisco, Milan–Toronto, Moscow–Verona, Munich–New York, New York–Toulouse, San Francisco–Venice.

[280]       No substantiated concerns were raised with regards to these routes; Replies to  Q1  –  Questionnaire  to  competitors,  question  17;
Replies to Q2 – Questionnaire to corporate customers, question 22; Replies to Q3–Questionnaire to travel agents, question 20;  Replies  to  Q7  –
Questionnaire to airport managers, question 26; Replies to Q8 – Questionnaire to civil aviation  authorities,  question  16;  Replies  to  Q10  –
Questionnaire to corporate customers II, question 22; Replies to Q11 – Questionnaire to travel agents II, question 20.

[281]       No substantiated concerns were raised with regards to these routes; Replies to  Q1  –  Questionnaire  to  competitors,  question  17;
Replies to Q2 – Questionnaire to corporate customers, question 22; Replies to Q3–Questionnaire to travel agents, question 20;  Replies  to  Q7  –
Questionnaire to airport managers, question 26; Replies to Q8 – Questionnaire to civil aviation  authorities,  question  16;  Replies  to  Q10  –
Questionnaire to corporate customers II, question 22; Replies to Q11 – Questionnaire to travel agents II, question 20.

[282]       No substantiated concerns were raised with regards to these routes; Replies to  Q1  –  Questionnaire  to  competitors,  question  17;
Replies to Q2 – Questionnaire to corporate customers, question 22; Replies to Q3–Questionnaire to travel agents, question 20;  Replies  to  Q7  –
Questionnaire to airport managers, question 26; Replies to Q8 – Questionnaire to civil aviation  authorities,  question  16;  Replies  to  Q10  –
Questionnaire to corporate customers II, question 22; Replies to Q11 – Questionnaire to travel agents II, question 20.

[283]       Amsterdam–Thessaloniki, Barcelona–Belgrade, Barcelona–San Francisco, Belgrade–Madrid,  Bari–Moscow,  Bucharest–Toronto,  Budapest–New
York, Budapest–Toronto, Cagliari–Moscow, Catania–New York, Catania–Vienna,  Copenhagen–Miami,  Copenhagen–Naples,  Florence–Moscow,  Florence–New
York, Frankfurt–Lamezia Terme, Frankfurt–Palermo, Hamburg–Miami, Hamburg–New York, Ibiza–Moscow, Kuala Lumpur–Milan,  Lamezia  Terme–Vienna,  Los
Angeles–Milan, Los Angeles–Venice, Los Angeles–Vienna, London–Naples, Lyon–New York,  Madrid–Naples,  Miami–Munich,  Miami–Vienna,  Milan–Manila,
Milan–San Francisco, Milan–Toronto, Moscow–Naples, Moscow–Olbia, Moscow–Palermo, Moscow–Verona, Marseille–New York, Munich–New  York,  Naples–New
York, New York–Stuttgart, New  York–Toulouse,  Nuremberg–Lamezia  Terme,  Palma  de  Mallorca–Venezia,  Paris–Thessaloniki,  Prague–Toronto,  San
Francisco–Venice.

[284]       As explained above in section 5, the Commission has not included in its assessment Air Seychelles, Virgin Australia, and Aer  Lingus.
For the purpose of this section, Darwin Airlines is treated as an EEP even though Etihad does not hold a minority  shareholding  in  Darwin.  Air
Serbia is jointly controlled by Etihad and is thus included in the analysis of Etihad's competitive position.

[285]       […].

[286]       Form CO, Annex 5.1(d), Commercial Cooperation Agreement, paragraph 2.2.2.

[287]       Form CO, Annex 5.1(d), Commercial Cooperation Agreement, paragraph 2.3.7.

[288]       The Notifying Parties' reply to RFI 9 of 8 October 2014, question 10.

[289]       Form CO, Annex 5 4(a), Alitalia BoD 03 07 2013, Business Plan Board Presentation.

[290]       In Italy, the Lufthansa Group also controls Air Dolomiti. Air Dolomiti mainly operates as a  feeder  carrier  for  Lufthansa  to/from
Munich and Frankfurt from/to Italian and other European destinations. Air Dolomiti targets both network and  point-to-point  passengers.  Working
on the basis of a "hub-inverse model", its main hub is Munich. Air Dolomiti, reply to Q1  –  Questionnaire  to  competitors,  questions  1.1  and
following.

[291]       The Notifying Parties' reply to RFI 16 of 16 October 2014, question 1.

[292]       Replies Q7 – Questionnaire to airport managers, question 19.

[293]       Form CO, Annex 6.3(a), Airport Substitutability Analysis, paragraph 3.11. Dubai World Central ("DWC"), an airport located  in  Dubai,
opened on 27 June 2010 and initially only operated cargo flights. On 24 February 2011 the airport was  certified  to  handle  passenger  aircraft
with up to 60 passengers. DWC officially opened for international passenger flights on 26 October 2013 with flights from Nas Air  and  Wizz  Air.
DWC is expected to have the capacity to handle 160 million passengers once it is completed in 2028. The Parties are of  the  view  that  Emirates
may move its operations from DXB to DWC from 2020 onwards.

[294]         Flightglobal.   Available   at:   http://www.flightglobal.com/news/articles/analysis-middle-east-hubs-drive-airport-growth-in-2013-
398172/.

[295]       Article 2.1(b) of the Merger Regulation.

[296]       The Notifying Parties' reply to RFI 9 of 8 October 2014, question 12.

[297]       Form CO, Annex 5.1(a), Transaction Implementation Agreement, Schedule 5: Conditions Precedent, paragraph 3.

[298]       Replies to Q1 – Questionnaire to competitors, question 33.1.

[299]       See section 6.2.7.2.2 of this decision for an assessment of substitutability between Milan Linate and Milan Malpensa.

[300]       Assoclearance Associazione Italiana Gestione Clearance e Slots' reply to Q9 – Questionnaire to slot  managers,  questions  3  and  4.
Bergamo Orio al Serio and Milan Malpensa are not congested airports and requests for new slots can be accommodated by  the  slot  coordinator  of
the two airports.

[301]       As regards engine maintenance and component maintenance, Alitalia has a 15%  non-controlling  shareholding  in  AMS  Holding  S.p.A.,
      which controls Alitalia Maintenance Systems S.p.a a  provider  of  engine,  Auxiliary  Power  Units  (A.P.U.)  and  Aeronautical  Component
      maintenance. Neither Etihad, nor ADAT carry out any engine or component maintenance in the EEA or in the  United  Arab  Emirates.  None  of
      Etihad's Equity Partners carry out engine or component maintenance.

[302]            Etihad does provide catering services to itself and third parties at Abu Dhabi (AUH)  airport,  through  its  subsidiary  Etihad
Airport Services – Catering.

[303]       Alitalia Loyalty was established as a wholly owned subsidiary in January 2013  by  Alitalia  which  transferred  into  it  the  going
concern relating to its loyalty activities and the management of MilleMiglia, and launched a new  MilleMiglia  programme  from  1  January  2013.
Alitalia and Alitalia Loyalty have a framework agreement which governs all intra-group services and defines all economic fundamental elements  of
the services.

[304]       Which was notified and cleared by the German and Austrian competition authorities.

[305]       All of the above loyalty programmes are managed by and report into the Global Loyalty Company,  a  wholly  owned  subsidiary  of  the
Etihad Group.

[306]       The Notifying Parties submit that the individual or combined market shares of all the parties to the concentration that  are  engaged
in business activities in a product market which is upstream or downstream from a product market in which any other party  to  the  concentration
is engaged are less than 30%. See the Notifying Parties' reply to RFI 22 of 30 October 2014, question 3.

[307]            Replies to Q1 – Questionnaire to competitors, questions 39 and 43.

[308]       When compared with the commitments submitted on 27 October 2014, the Final Commitments provide for the following main amendments  (i)
an increased number of slots, from 9 weekly slots to 2 daily slots, at Rome Fiumicino (FCO) and at Belgrade (BEG) airport; (ii) access  to  slots
under the commitments is no longer limited  to  one  carrier;  (iii)  the  grandfathering  rights  are  no  longer  restricted  to  Europe,  once
grandfathering rights are acquired on the slots, the latter can be used without any geographic restriction; and (iv) the scope of the SPA  is  no
longer limited to traffic with a true origin/destination in Europe.

[309]       Commission notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission regulation (EC) No  802/2004,
OJ C 267, 22.10.2008, p. 1.

[310]       Cf. point 63 of the Commission Notice on Remedies, and Case T-177/04 easyJet v Commission [2006] ECR II-1931, para 197 ff. Point  63,
footnote (4), of the Commission Notice on Remedies state that, in air transport mergers, a mere reduction of barriers to entry  by  a  commitment
of the parties to offer slots on specific airports may not always be sufficient to ensure the entry of new  competitors  on  those  routes  where
competition problems arise and to render the remedy equivalent in its effects to a divestiture.

[311]       Responses to R1 – Market test of commitments – competitors, question 1; responses to R2 – Market test of commitments –  other  market
participants, question 1;

[312]       The Notifying Parties' Reply to RFI 18 of 21 October 2014, annex RFI-18.2(a).

[313]       Responses to R1 – Market test of commitments – competitors, question 6; responses to R2 – Market test of commitments –  other  market
participants, question 6.

[314]       Responses to R1 – Market test of commitments – competitors, question 6.1.

[315]       The Notifying Parties' Reply to RFI 24 of 31 October 2014, Table 4.

[316]       Responses to R1 – Market test of commitments – competitors, question 7; responses to R2 – Market test of commitments –  other  market
participants, question 7.

[317]       Responses to R1 – Market test of commitments – competitors, questions 8, 9, and 10; responses to R2 – Market test  of  commitments  –
other market participants, questions 8, 9, and 10.

[318]       Responses to R1 – Market test of commitments – competitors, question 15; responses to R2 – Market test of commitments – other  market
participants, question 14.

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

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