Critically analyse the decision of the European Court of First Instance in Airtours plc v EC Commission

  Content  

  Introduction  1

I.  Airtours plc v EC Commission -the Relevant Facts  1

II.  Key Issues in the Airtours Case  2

  A. Definition of the Relevant Market  2

  B. Establishing Post-Merger Collective Dominance  4

1.  Preconditions of Collective Dominance within the ECMR  4

2.  Application of the Collective Dominance Doctrine in the Airtours Case  5

i.  Tacit Co-ordination and Market Transparency  5

ii.  Adequate Punishment Mechanism  6

iii.  Marginalisation of Smaller Competitors and Consumer Reactions  6

III.  Implications of the Airtours Judgement  7

IV.  Prospect Revision of the ECMR  8

V.  Assessment of the Reform Proposals  9

  Conclusion  10

II

Bibliography

Articles

Böge, U. and Müller, E., “From the Market Dominance Test to the SLC Test: Are there any Reasons for a Change?” [2002] E.C.L.R., 23 (10), 495.

Haupt, H. “Collective Dominance Under Article 82 EC And EC Merger Control In The Light Of The Airtours Judgement” [2002] E.C.L.R. 23 (9), 434.

Nazerali, J.,“A Merger of Minds or Split Opinion - Does the European Commission address current E.U. Merger Concerns” [2002] I.C.C.L.R. 13 (12), 480

Overd, A., “After the Airtours Appeal” [2002] E.C.L.R. 23 (8) 375.

Stroux, S., “Collective Dominance Under The Merger Regulation: A Serious Evidentiary Re p-rimand For The Commission” [2002] E.L.R. 27 (6), 736.

Official Press Releases of the European Commission Directorate-General for Competition European Commission Press Release, 11 April 2002, Document IP/02/552, “Commission launches detailed i nvestigation into the takeover of P&O Princess by Carnival Corporation”, >http://europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=IP/02/552|0|RAPID& lg=EN<.

European Commission Press Release, 6 June 2002, Document IP/02/829, “Statement by Competition Commissioner Mario Monti on Court judgement on Airtours”, >http://europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=IP/02/829|0|AGED&l g=EN&display=<.

European Commission Press Release, 7 November 2002, Document SPEECH/02/545, “Prof. Mario Monti European Commissioner for Competition Policy, Merger control in the European Union: a radical reform, European Commission/IBA Conference on EU Merger Control Brussels, 7 November 2002”,

>http://europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=SPEECH/02/545|0|R APID&lg=EN&display=<.

III

Other Official Documents of the European Commission Directorate-General for Competition Commission of the European Communities, 11 December 2002, Document COM(2002) 711 final, “Proposal for a Council Regulation on the Control of Concentrations Between Undertakings“, >http://europa.eu.int/comm/competition/mergers/review/com_2002_0711_en.pdf<.

Commission of the European Communities, 11 December 2001, Document COM(2001) 745/6 final, “Green Paper on the Review of Council Regulation (EEC) No 4064/89”, >http://europa.eu.int/comm/competition/mergers/review/green_paper/en.pdf<

EC Commission, 11 December 2002, Document COM (2002) COMP/2002/1926/01, “Commission Notice on the appraisal of horizontal mergers under the Council Regulation on the control of concentrations between undertakings“,

>http://europa.eu.int/comm/competition/mergers/review/final_draft_en.pdf<.

EC Legislation

Notices

E.C. Commission Market Definition Notice 1997 [1998] 4 C.M.L.R. 177.

Table of Cases

Decisions of the European Court of Justice France v. EC Commission [1998] 4 CMLR 829.

Decisions of the European Court of First Instance

Airtours v. EC Commission [2002] All ER (EC) 783. Gencor v. EC Commission [1999] 3 C.M.L.R. 971. Tetra Laval v. EC Commission OJ 2003 C19, p. 34.

Schneider Electric v. EC Commission OJ 2002 C56, p.15 and OJ 2002 C118, p.29.

Decisions of the E.C. Competition Commission

Commission Decision Case No. IV/M.1524 -Airtours/First Choice, [2000] 5 C.M.L.R. 494.

Commission Decision Case No. COMP/M.2706 -Carnival Corporation/P&O Princess, >http://europa.eu.int/comm/competition/mergers/cases/decisions/m2706_en.pdf<.

Commission Decision Case No. IV/M.190 - Nestlé/Perrier, [1993] 4 C.M.L.R. 17.

IV

Introduction

The aim of this paper is to present and to clarify the current approach of EC Competition Law to merger cases, in particular with regard to the problem of collective dominance. I will outline the problems arising from collective dominance in the context with the significant case Airtours plc v. EC Commission, recently dealt with by the European Court of First Instance.

Firstly, I will give briefly the relevant facts of the Airtours case (I.). Secondly I will analyse the case with regard to the criticism made by legal experts (II.) and then give an ove rview on which measures are proposed in the future to eliminate the errors made (III., IV.). Lastly, I will interpret these measures and give an answer to the question whether or not these measures are sufficient to solve the present problems in context with the current EC Merger Regulation (V.).

I. Airtours plc v EC Commission 1 -the Relevant Facts

On June 6, 2002, the European Court of First Instance (hereinafter CFI) released its judgement in Airtours v. European Commission. The CFI overruled the European Commission’s decision of September 22, 1999 ² which declared the take-over of First Choice by its competi-tor Airtours plc to be incompatible with the common market according to Article 8 (3) of Regulation 4064/89 (hereinafter ECMR). Airtours plc (now called My Travel) and First Choice are both U.K.-based operators for packaged tours. In the U.K., the both companies sell foreign package holidays to so-called short-haul and long-haul destinations. The acquisition envisaged by Airtours plc would have combined the second and fourth largest firms in the market for short-haul packaged tours creating the largest firm with a market share of 32%.

Main competitors at the time of the proposed merger in the short-haul holidays market were Thomson and Thomas Cook with respective market shares of 27% and 20%. The Co mmission found that the three tour operators Airtours/First Choice, Thomson and Thomas Cook would post-merger create a collective dominant position in the market for short-haul pac kaged holidays in the U.K., as they would increase their market share in this particular market from 68% before to 79% after. The Commission outright blocked the merger by applying the collective dominance doctrine, stating that the acquisition would give incentive for the three remaining operators to avoid or reduce competition between them.

¹ Case T-342/99, [2002] All ER (EC) 783.

² Case No. IV/M.1524 -Airtours/First Choice, [2000] 5 C.M.L.R. 494.

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