CELEX: 31996M0785
Language: en
Date: 1996-08-07 00:00:00
Title: Commission Decision of 07/08/1996 declaring a concentration to be compatible with the common market (Case No IV/M.785 - Thomas Cook / Sunworld) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)

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31996M0785

Commission Decision of 07/08/1996 declaring a concentration to be compatible with the common market (Case No IV/M.785 - Thomas Cook / Sunworld) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)  

Official Journal C 279 , 25/09/1996 P. 0004

 COMMISSION DECISION of 07/08/1996 declaring a concentration to be  compatible with the common market (Case No IV/M.785 - Thomas Cook /  Sunworld) according to Council Regulation (EEC) No 4064/89  (Only the English text is authentic). The paper version of the decision is available through the sales offices  of the Office of Official Publications of the European Communities. PUBLIC VERSION MERGER PROCEDURE ARTICLE 6(1)(b) DECISION Registered letter with advice of delivery To the notifying parties Dear Sirs, Subject:  Case No. IV/M. 785  THOMAS COOK / SUNWORLD Notification of 05.07.1996 pursuant to Article 4 of Council Regulation No.  4064/89 1.<ind> On 05.07.1996, the Commission received a notification of a  proposed concentration pursuant to Article 4 of a Council Regulation (EC)  No. 4064/89 by which the undertaking Thomas Cook Group Limited (Thomas  Cook), controlled by Westdeutsche Landesbank Girozentrale (WestLB),  acquires, within the meaning of Article 3(1)b of the Council Regulation,  control of the whole of the undertaking Sunworld Limited (Sunworld), by  way of purchase of shares. 2.<ind> After examination of the notification, the Commission has  concluded that the notified operation falls within the scope of Council  Regulation No. 4064/89 and does not raise serious doubts as to its  compatibility with the common market and with the functioning of the EEA  Agreement. I.<ind> THE PARTIES' ACTIVITIES AND THE OPERATION 3.<ind> Thomas Cook is a leading UKbased travel agent which is also active  in the tour operating business and the provision of principally  travelrelated financial services (i.e. foreign exchange and issue of  travellers' cheques). It is a wholly owned subsidiary of WestLB, a German  stateowned bank which also has interests in some German travel companies. 4.<ind> Sunworld is a UKbased tour operator exclusively controlled by  Ibertouring Holding BV (Ibertouring), which is a Dutch holding company  belonging to the Spanish tour operating group Viajes Iberia SA (GVI).  Sunworld controls several companies active in the travel industry (most of  which are UK subsidiaries) and owns the charter airline company Airworld  Aviation Limited. 5.<ind> The proposed operation consists in the acquisition by Thomas Cook  of the entire issued share capital of Sunworld. The sale and purchase  agreement also provides that Thomas Cook shall have a right of first  refusal if Ibertouring decides to sell its 51% interest in Sunflight  Holidays Inc., a company incorporated in Canada in 1995 for the purpose of  operating charter based tours from Canada to North America and the  Caribbean. II.<ind> COMMUNITY DIMENSION 6.<ind> The undertakings concerned have a combined aggregate worldwide  turnover in excess of 5,000 million ECU. Each of them has a Communitywide  turnover in excess of 250 million ECU, but they do not achieve more than  twothirds of their aggregate Communitywide turnover within one and the  same Member State (WestLB and Sunworldachieve more than twothirds of their  aggregate Communitywide turnover within Germany and the U.K.  respectively). The notified operation therefore has a Community dimension,  but does not constitute a cooperation case under the EEA Agreement. III.  COMPATIBILITY WITH THE COMMON MARKET <ind> A. Relevant product markets 7.<ind> The businesses being acquired include the supply of leisure travel  services, consisting largely of "packages" of accomodation and return  travel supplied by tour operators, which is a business in which both  Thomas Cook and Sunworld participate. The parties to the concentration  state that within the tour operating business two distinct relevant  product markets can be identified: (i) the longhaul market, including  holiday packages with destinations outside Europe (characterized i.a. by  higher prices, scheduled flights, higher grade accomodation facilities and  greater flexibility in terms of time of departure and length of stay), and  (ii) the shorthaul market, including holiday packages with destinations  within Europe as recognised by IATA's European flight route licences  (characterized by lower prices, charter flights, cheaper accomodation and  less consumer choice as to the length and timing of the holiday).  Nonetheless, it is not necessary to further delineate the relevant product  markets because, in all alternative markets considered, effective  competition would not be significantly impeded in the EEA area or any  substantial part of that area. <ind> B. Relevant geographic markets 8.<ind> Within Europe the relevant geographic markets appear to be  national, since tour operators in a particular Member State typically  offer airinclusive packages with points of departure in that Member State  and market them to customers resident in that Member State. Furthermore,  from the consumer's point of view the booking of a holiday package with a  foreign tour operator would be subject to a number of practical  difficulties, including lack of information about available programmes,  linguistic barriers, legal complications and additional travelling costs  to reach the point of departure in another Member State. However, it is  not necessary to further delineate the relevant geographic markets  because, in all alternative geographic markets considered, effective  competition would not be significantly impeded  in the EEA area or any  substantial part of that area. <ind> C. Assessment  9.<ind> Thomas Cook has no tour operating activities outside the U.K.,  where also more than 90% of Sunworld's tour operating turnover is  achieved. According to the information provided by the parties, their  combined market share in the U.K. would be below 5% even if the longhaul  and the shorthaul businesses were to be considered as two distinct  relevant product markets. Furthermore, some large competitors with  significantly higher market shares (like Thomsons, Airtours PLC and First  Choice Holidays PLC) are active in the same market and operate in both the  longhaul and the shorthaul businesses. 10.<ind> A vertical relationship exists between Thomas Cook and Sunworld,  in that the former's main activities are in the downstream retail travel  agency market. Besides that, Sunworld, like most of the leading tour  operators in the UK, provides its holiday programmes using its own charter  airline company (Airworld Aviation Limited). Thomas Cook's share of the  U.K. retail travel agency market is about 13%, but Sunworld is not  currently participating in this market, whereas the two largest U.K. tour  operators (Thomsons and Airtours) are fully integrated vertically with the  two major U.K. retail travel agents (Lunn Poly and Going Places,  respectively). There are also a large number of other competitors in this  market, which seems to be extremely competitive as pointed out in a 1994  study of the U.K. travel industry by the Office of Fair Trading. 11.<ind> In view of the market position of Thomas Cook and Sunworld and  the presence of several other important suppliers, it appears that the  notified operation will have a minimal impact on competition both in the  UK and the European Union and, consequently, effective competition would  not be significantly impeded in the EEA area or any substantial part of  that area. IV.<ind> ANCILLARY RESTRAINTS 12.<ind> The parties have asked for some provisions of the sale and  purchase agreement to be declared ancillary to the concentration. They are  basically noncompetion clauses which prevent the sellerfrom: (i) carrying  on a business competing with Sunworld (or any of its subsidiaries) within  the U.K. and Ireland for a period of five years from the date of the  agreement; (ii) soliciting staff from Thomas Cook, Sunworld or its  subsidiaries within the U.K. and Ireland for a period of five years from  the date of the agreement; (iii) using in the U.K. and Ireland some  specified trade names used by Sunworld in connection with its business,  for a period of ten years from the date of the agreement. All of these  provisions are directly related and necessary to the implementation of the  concentration, since they are aimed at guaranteing the transfer to the  acquirer of the full value of the assets transferred, and they can  therefore be declared ancillary to the transaction. 13.<ind> As part of the transaction, GVI and Thomas Cook have also entered  into an agreement according to which, for a minimum [confidential   business secret] ten years period from the date of the agreement, GVI will  keep providing, and Thomas Cook will take, the groundhandling services for  incoming tourists (defined in the agreement as "Existing Groundhandling  Arrangements") which GVI previously provided on an informal intragroup  basis to Sunworld for its tour operating destinations. These obligations  can be declared ancillary to the transaction in that their legitimate aim  is to preserve, for a transitional period, the previous procurement and  supply links between the vendor and the acquired company, in order for the  transaction to be implemented under reasonable conditions. As to their  duration, however, the [confidential  business secret] period agreed upon  by the parties is not objectively justified and contrasts with the  transitional nature necessarily required in order for such a purchase and  supply agreement to be considered as ancillary to the proposed  concentration. Therefore the present decision will only cover the  aforementioned obligations for a maximum period of [confidential  business  secret]. V.<ind> CONCLUSION 14.<ind> For the above reasons, the Commission has decided not to oppose  the notified operation and to declare it compatible with the common market  and with the functioning of the EEA Agreement. This decision is adopted in  application of Article 6(1)(b) of Council Regulation No 4064/89. <tab> <tab> <tab> <tab> For the Commission