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EUROPEAN COMMISSION DG Competition
Case M.8046 - TUI /
TRANSAT FRANCE
Only the English text is available and authentic.
REGULATION (EC) No 139/2004
MERGER PROCEDURE
Article 6(1)(b) NON-OPPOSITION
Date: 20/10/2016
In electronic form on the EUR-Lex website under
document number 32016M8046
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË Tel: +32 229-91111. Fax: +32 229-64301. E-mail: [email protected].
EUROPEAN COMMISSION
Brussels, 20.10.2016
C(2016) 6848 final
To the notifying party
Dear Sir/Madam,
Subject: Case M.8046 - TUI / TRANSAT FRANCE
Commission decision pursuant to Article 6(1)(b) of Council Regulation
No 139/20041 and Article 57 of the Agreement on the European Economic
Area2
1 OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation'). With effect from 1 December 2009, the Treaty on
the Functioning of the European Union ('TFEU') has introduced certain changes, such as the
replacement of 'Community' by 'Union' and 'common market' by 'internal market'. The terminology of
the TFEU will be used throughout this decision.
2 OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement').
PUBLIC VERSION
MERGER PROCEDURE
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omitted has been replaced by ranges of figures or a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.
2
Table of content
1. THE PARTIES AND THE OPERATION .................................................................. 3
2. EU DIMENSION ........................................................................................................ 3
3. MARKET DEFINITION ............................................................................................ 3
3.1. Introduction ....................................................................................................... 3
3.2. Supply of travel services by tour operators ....................................................... 4
3.2.1. Product market definition .................................................................... 4
3.2.2. Geographic market ............................................................................ 17
3.3. Wholesale supply of airline seats .................................................................... 18
3.3.1. Product market definition .................................................................. 18
3.3.2. Geographic market definition ............................................................ 21
3.4. Supply of destination management services .................................................... 21
3.4.1. Product market definition .................................................................. 21
3.4.2. Geographic market definition ............................................................ 21
3.5. Provision of travel agency services ................................................................. 22
3.5.1. Product market definition .................................................................. 22
3.5.2. Geographic market definition ............................................................ 23
4. COMPETITION ASSESSMENT ............................................................................. 24
4.1. Horizontal overlap: market for the provision of leisure travel services and
sub-segments thereof ....................................................................................... 24
4.1.1. Sectorial overview and elements common to the assessment of
the markets for the provision of leisure travel services ..................... 24
4.1.2. Market-specific analysis .................................................................... 31
4.2. Assessment of vertical relationships ............................................................... 60
4.2.1. Legal framework ............................................................................... 60
4.2.2. Overview of the vertically affected markets ..................................... 60
4.2.3. Supply of airline seats and supply of package holidays .................... 64
4.2.4. Supply of package holidays and provision of travel agency
services .............................................................................................. 68
4.2.5. Conclusion ......................................................................................... 71
5. CONCLUSION ......................................................................................................... 71
3
(1) On 16 September 2016, the European Commission received a notification of a
proposed concentration pursuant to Article 4 of Council Regulation (EC) No
139/20043 by which TUI AG ("TUI", Germany) acquires within the meaning of
Article 3(1)(b) of the Merger Regulation control of the whole of Transat France
S.A. ("Transat", France) by way of purchase of shares ("the Transaction"). TUI
and Transat are collectively referred to as "Parties".4
1. THE PARTIES AND THE OPERATION
(2) TUI, a stock corporation according to German law, is the ultimate parent company
of the TUI Group, an integrated leisure tourism group operating in approximately
180 countries through its various subsidiaries. Its portfolio includes hotels, cruise
ships, airlines, aircraft, travel agencies, tour operators and online portals.
(3) Transat is a tour operator and the French subsidiary of Transat A.T. Inc., a
Montreal-based integrated tour operator. It is principally active in the supply of
long and short/medium haul package holidays in France combining
accommodation and other services in a given destination with return travel to and
from it, marginally offering as well a flight-only option to its customers. It also acts
as a destination management company in Greece through its subsidiary TourGreece
S.A. ("TourGreece").
(4) Through the Transaction, TUI will purchase 99.99% of the share capital and voting
rights of Transat France. Therefore, the Transaction will result in the acquisition by
TUI of sole control over Transat.
(5) The Operation therefore constitutes a concentration within the meaning of
Article 3(l)(b) of the Merger Regulation.
2. EU DIMENSION
(6) The undertakings concerned have a combined aggregate world-wide turnover of
more than EUR 5 000 million (TUI: EUR 20 044 million; Transat: EUR 449
million).5 Each of them has an EU-wide turnover in excess of EUR 250 million
(TUI: [Business Secret]; Transat: [Business Secret]), but the two undertakings do
not achieve more than two-thirds of their aggregate EU-wide turnover within one
and the same Member State.
(7) The notified operation has therefore an EU dimension according to Article 1(2) of
the Merger Regulation.
3. MARKET DEFINITION
3.1. Introduction
(8) The Parties are both active in the French travel industry, the value chain of which
typically consists in three main levels:
3 OJ L 24, 29.1.2004, p. 1 (the "Merger Regulation").
4 Publication in the Official Journal of the European Union No C 348, 23.09.2016, p. 19.
5 Turnover calculated in accordance with Article 5 of the Merger Regulation.
4
(a) travel suppliers, which own or operate a travel service. Travel suppliers
include airlines and rail companies, hotel operators, car rental companies,
etc.;
(b) tour operators, which manufacture tourism products by purchasing individual
travel components from travel suppliers and combine them into package
holidays;
(c) travel agencies, which distribute travel services to the end-customer (the
traveller).
(9) Two or more levels of intermediaries, i.e. tour operators (wholesalers) and travel
agencies (retailers), may sit between the travel suppliers and the customers.
Nevertheless, travel suppliers may choose a disintermediated business model and
sell directly their services to end-customers. Conversely, tour operators may follow
an integrated business model and operate upstream services through e.g. their own
airlines or hotels, or downstream services through their own travel agencies.
(10) TUI and Transat are both integrated groups. The relevant markets therefore do not
only comprise the market for the supply of travel services by tour operators in
France; they also comprise the upstream market for the wholesale supply of airline
seats in France, in which TUI is active through its in-house airlines Jetairfly, Tuifly
and Corsair International ("Corsair"), and the upstream market for the supply of
destination management services,6 in which Transat is active through TourGreece,7
and the downstream market for the provision of travel agency services in France, in
which TUI and Transat are both active, notably through outlets.8
3.2. Supply of travel services by tour operators
3.2.1. Product market definition
3.2.1.1. Distinction between leisure and business travel
(11) The Commission has identified in its prior decision practice a distinct market for
the supply of travel services by tour operators, further distinguishing between
leisure travel, and business travel.9
(12) The Transaction relates mainly to the supply of leisure travel services by tour
operators in France. TUI France does not provide any, and TUI at group level only
6 Should the market for the supply of destination management services be defined as a separate product
market.
7 Neither TUI nor Transat own or operate any other travel services that would be supplied to other tour
operators, travel agencies or directly to travellers. In particular, they do not supply hotel
accommodation in France to tour operators (Form CO, paragraph 764).
8 There are 233 outlets operating under the TUI brands (Marmara and Nouvelles Frontières) in France,
among which 69 are owned by TUI France and 164 are franchised to third parties, and 61 outlets
operating under the Transat brand (Look Voyages), among which 42 are owned by Transat and 19 are
franchised to third parties.
9 See among others M.6704 – Rewe Touristik GmbH / Ferid Nasr / Exim Holding SA, recital 16;
M.5867 – Thomas Cook / Öger Tours, recital 10.
5
does so marginally; the Parties' activities do not overlap in business travel
services.10
3.2.1.2. Distinction between package holidays and independent holidays
3.2.1.2.1. Introduction
(13) Within leisure travel, the Commission has distinguished between on one hand
package holidays,11 whereby the customer purchases a ready-made package
combining accommodation and possibly other services in a given destination with
return travel to and from it; and on the other hand independent holidays, whereby
the customer purchases the various elements of the holiday individually.12
(14) In its more recent decisions, the Commission noted that certain changes had
occurred in the market, such as the significant growth in internet usage, which
meant that independent holidays could exercise a certain competitive constraint on
package holidays. However, the Commission did not consider these elements to be
sufficient to conclude that package holidays and independent holidays were part of
the same market.13
3.2.1.2.2. TUI's views
(15) TUI submits that the French travel sector has undergone significant changes in
recent years, notably through the development of online distribution and of low-
cost airlines that has led to the creation of a "dynamic market" for leisure travel.
This "dynamic market" consists in the services provided by all suppliers of the
travel industry's value chain, i.e. the suppliers of travel products, such as hotel
operators, airlines and other transport providers, the tour operators and the high
street and online travel agents ("OTAs").
(16) According to TUI, customers can easily switch from traditional package holidays
to either self-packaged holidays, whereby they source independently flights,
accommodation and various other travel components through separate transactions;
or to dynamic packages, whereby customers purchase all elements of the travel
using a single website. TUI notably stresses the role of OTAs, price aggregators,
low cost carriers and others in this regard, as they enable customers to compare
package and independent holidays pricing and select accordingly. OTAs, such as
Booking.com, Expedia, Last minute and others allow customers to assess the
products, schedules and prices across many suppliers. Price aggregators and
metasearch engines, such as TripAdvisor, Trivago, Google+ enable the comparison
of prices, as they provide thorough information on the prices of flights, hotels, car
10 Form CO, paragraphs 24 and 42.
11 The term "package holidays" for the purposes of this Decision is distinct from the notion of "package
travel" under Directive (EU) 2015/2302 of the European Parliament and of the Council of 25
November 2015 on package travel and linked travel arrangements, amending Regulation (EC) No
2006/2004 and Directive 2011/83/EU of the European Parliament and of the Council and repealing
Council Directive 90/314/EEC ("the new Package Travel Directive") and without prejudice to the
autonomous interpretation of "package travel" contained therein.
12 See among others M.4601 - KarstadtQuelle/ MyTravel, recital 12; M.1524 - Airtours/First Choice,
paragraph 28.
13 See M.5867 – Thomas Cook/ Öger Tours, footnote 5; M.4601 - KarstadtQuelle/ MyTravel, recital 21
and following.
6
rental agencies and other types of travel offers. Last, hotel operators, airlines and
other transport suppliers offer customers the ability to purchase other travel
products through their websites and to thus create their own holiday. In addition,
low cost carriers have contributed to the convergence of prices between charter and
scheduled flights, thus further encouraging customers to directly book low cost
flights and design their holidays accordingly.14
(17) Moreover, the development of IT platforms specialised to the travel sector provide
travel professionals with real-time access to the content of numerous integrated
sources, which enable them to produce and distribute their own complete leisure
travel offers.15 As a result, travel agents, hotel operators and airlines can put
together package holidays independently of any tour operator and sell them to end
customers.
3.2.1.2.3. Commission's assessment
(18) The Commission notably considered in its prior practice that there was a separate
market for packaged holidays, because demand for independent holidays was
unrelated to the pricing of package holidays and because certain types of
customers, such as senior citizens, families with children and customers booking
through traditional high street travel agencies, would not consider independent
holidays as an alternative to package holidays. Moreover, the fact that package
holidays often offer customers the possibility to pay in instalments and include
protection against insolvency, was considered a further differentiating factor from
independent travel.16
(19) Some of the evidence gathered during the market investigation pointed indeed
towards significant evolution of the market in recent years, which would render
some of the above considerations less relevant. However, other elements appeared
to indicate that a number of differences between package and independent holidays
still remain.
(20) First, the majority of respondents to the market investigation submitted that the
prices of a package holiday and an independent holiday consisting of the same
elements are different; the more frequent response being that package holidays are
cheaper than independent holidays, notably due to tour operators' access to capacity
during high season. Yet, the majority of respondents also submitted that the
fluctuation of prices during the year is similar between package and independent
holidays.17
14 Form CO, paragraph 152 and following.
15 TUI submits that Orchestra, the more widely used IT platform specialised in the French travel sector,
provides its users with access to 125 integrated sources. Orchestra users correspond to a material
number of the French tour operators and of the French travel agents, as well as airlines,
accommodation providers and providers of other transport services. Some Orchestra's revenues
correspond to the sales of packaged holidays created by travel agents through Orchestra and this is a
fast growing segment; Form CO, paragraphs 137 and following, Minutes of a call with Orchestra of
26 July 2016, paragraph 7
16 M.4601 – KarstadtQuelle/ MyTravel, recitals 22-23.
17 See replies to Q1 – Questionnaire to tour operators, question 4; Q2 – Questionnaire to travel agents,
question 5. A third questionnaire, Q3, was sent to consumer associations; no reply however was
7
(21) Second, from a demand-side, TUI submits the results of recent surveys showing
that the majority of all French customers prefer independent holidays to package
holidays, irrespective of the customer group to which they belong, and that they
gradually make greater use of the internet.18 However, other market studies on the
French tourism sector conclude that the majority of the French customers travelling
abroad ask professionals to organise their travel.19
(22) Several market participants responding to the market investigation explained that
the degree of substitutability between package and independent holidays usually
depends on the type of holiday. More concretely, respondents stated that domestic
or short/medium haul holidays are easier to book independently than long haul
holidays, that complex tours are more difficult to book than simple holidays
consisting of merely flights and stays and that club holidays are usually not
possible to book independently, because tour operators tend to enter into
exclusivity agreements with the club owners, preventing the latter from providing
their services directly to French customers.20
(23) Third, from the supply side, TUI submits that several OTAs have started offering
their users the possibility to pay for their independent holidays in instalments21 and
that, in light of the new Package Travel Directive, insolvency protection will soon
be provided also to dynamic packaging holiday products, i.e. package holidays put
together by travel agents or through OTAs' websites.22 However, the Package
Travel Directive's transposition period ends on 1 January 2018, therefore such
increased protection is not yet available to French customers. Moreover, tour
operators offer additional services in their package holidays, such as early check-in,
received; therefore, the results of the market investigation consist in the feedback received from tour
operators and travel agents only.
18 Form CO, paragraphs 163 and following; Annex 6.4 to the Form CO, "Les Français et les vacances",
Institut CSA on behalf of Oney, April 2015, according to which 86% of customers falling within the
families with children category and 77% of senior citizens would prefer independent holidays; Annex
6.9.1 to the Form CO, "GfK consumer survey, July 2016", according to which 63% of French
consumers create independent holidays.
19 "Le tourisme reste un marché porteur", Le Figaro of 20 September 2016, reporting that according to
the marketing researcher Raffour Interactif, 35% of the French travelled abroad for the holidays last
year and 70% thereof referred to professionals for the organisation of their travels ("Selon le cabinet
d’études Raffour Interactif, 35% des Français sont partis en vacances à l’étranger l’an dernier et
70% d’entre eux ont fait appel à des professionnels pour organiser leurs séjours.").
20 See among others, Minutes of a call with a travel agent of 4 July 2016, paragraphs 17-18; Minutes of
a call with a customer of 9 June 2016, paragraph 9; Minutes of a call with a competitor of 22 June
2016, paragraph 5.
21 Annexes 6.15 to 6.19 to the Form CO, containing relevant extracts from the websites of Opodo,
Voyage Privé, Carrefour, Promovancances and Auchan; replies of OTAs among replies to Q2 –
Questionnaire to travel agents, question 1.
22 Directive (EU) 2015/2302 of the European Parliament and of the Council of 25 November 2015 on
package travel and linked travel arrangements, amending Regulation (EC) No 2006/2004 and
Directive 2011/83/EU of the European Parliament and of the Council and repealing Council Directive
90/314/EEC, Article 17; Form CO, paragraphs 181 and following.
8
access to airline lounges, 24-hour assistance, tour guides, etc., which cannot be
easily replicated by customers organising their own independent holiday.23
(24) Tour operators have in recent years also expanded their service offer, in order to
provide customers with the possibility of booking online and of composing their
own holidays.24 Also, high street travel agents submit that their online sales have
been increasing rapidly in recent years.25
(25) This is also reflected in the way the Parties monitor competition, as further to the
supply of package holidays, they also monitor the offer of tour operators giving
their customers the possibility to construe their own dynamic packages, the offer of
travel agents that also set up package holiday products and, to some degree, also
the offer of travel services beyond flights of low cost carriers, OTAs websites and
other hotel booking websites.26
(26) Finally, even though the majority of respondents to the market investigation
considered that dynamic packages compete with package holidays supplied by tour
operators,27 they also estimated that most customers would continue to purchase
package holidays, even if their prices were to increase by 5-10%.28 Last, the
majority of respondents submitted that package holidays should be distinguished
from independent holidays for the purpose of assessing the impact of the
Transaction.29
3.2.1.2.4. Conclusion
(27) In light of the above considerations, the Commission concludes that whether
package holidays constitute a distinct market from independent holidays could be
left open for the purpose of assessing the Transaction, since serious doubts do not
arise under any of these plausible product market definitions.
3.2.1.3. Distinction of package holidays by holiday type
3.2.1.3.1. Introduction
(28) A further segmentation of the market for package holidays by holiday type could
be considered.
23 See Minutes of a call with a customer of 9 June 2016, paragraph 10; Minutes of a call with a
competitor of 30 June 2016, paragraph 11.
24 See Minutes of a call with the Syndicat des Entreprises du Tour Operating of 4 July 2016.
25 See Minutes of a call with a competitor of 4 July 2016, paragraph 9.
26 Form CO, paragraphs 649 and following; Annexes 6.9.16, 6.9.18, 6.9.19, 6.9.21 and 6.9.36 to the
Form CO.
27 See replies to Q1 – Questionnaire to tour operators, question 36; Q2 – Questionnaire to travel agents,
question 33.
28 See replies to Q1 – Questionnaire to tour operators, question 3; Q2 – Questionnaire to travel agents,
question 4.
29 See replies to Q1 – Questionnaire to tour operators, question 6; Q2 – Questionnaire to travel agents,
question 7.
9
(29) The Commission has considered in some of its prior decisions in the sector, the
possibility of distinct markets for holiday types, such as "sun and sea" holidays,
"city breaks", etc. However, in previous decisions the Commission did not consider
it necessary to conclude on such further distinction.30; 31
(30) The Syndicat des entreprises du Tour Operating ("SETO"), the trade union of the
French tour operators, also distinguishes between holiday types and organises
accordingly its reporting.32
(31) More specifically, SETO distinguishes between the following five different types
of package holidays.33
(a) Package holidays à la carte, which correspond, according to SETO, to the sales
of tailor-made packages of holiday products labelled as "à la carte" or "sur
mesure" by the tour operator, irrespective of the specific type and scope of the
services sold;
(b) Tour package holidays ("circuits"), which refer to itinerant journeys, which
typically include travel, accommodation and guided tours to multiple
destinations;
(c) Package holidays in clubs, which SETO defines as any package holidays labelled
as "clubs" by tour operators. Club holidays imply the provision of dedicated
services in addition to accommodation, such as animation, activities, sports,
baby-sitting, etc. by the tour operator;
(d) Package holiday stays ("séjours"), which conversely are defined as consisting in
the provision of travel and accommodation services in a single destination. Stays
may also sometimes include additional services or activities; these, however, are
not offered directly by the tour operator, but rather by the operator of the hotel.
(e) Last, SETO identifies a separate segment for group package holidays
("groupes"), which it defines as any package holidays sold in the framework of a
collective agreement. Group package holidays notably include holiday services
to works councils. However, SETO considers that group package holidays are a
predominantly commercial categorisation of package holidays rather than a
generic category. SETO explains that group package holidays are constructed
along the lines of the other four generic product types, merely targeted to certain
types of customers.34 Moreover, no respondent to the market investigation
30 See M.4601 - KarstadtQuelle/ MyTravel, recital 25; M.4600 - TUI/ First Choice, recital 30.
31 The French Competition Authority has also taken into account a further distinction of the market for
package holidays by type of holiday in its most recent decision on the sector. See Autorité de la
concurrence, Décision no 16-DCC-35 du 16 mars 2016 relative à la prise de contrôle exclusif d'actifs
du groupe FRAM par la société LBO France Gestion, paragraph 28.
32 SETO estimates that its members represent approximately 60% of the French market of foreign
package holidays supplied by tour operators or travel agents; Form CO, paragraph 198; Minutes of a
call with SETO of 4 July 2016, paragraphs 3 and 6.
33 See Minutes of a call with SETO of 1 September 2016.
34 See Minutes of a call with SETO of 1 September 2016, paragraph 5.
10
indicated that group package holidays should be treated as a separate type of
package holidays or a distinct product market.35
3.2.1.3.2. TUI's views
(32) TUI submits that a segmentation of the market for package holidays by product
type is not appropriate. First, TUI considers that there is a broader market
encompassing all travel products, whether these form part of package holidays,
dynamic packages or independent holidays. Second, from the demand-side,
customers often combine elements of the various types of package holidays.
Moreover, some types of package holidays, as notably package holidays in clubs
and package holiday stays, are interchangeable and in competition with each other.
Third, from a supply-side, most tour operators offer all four types of products and it
is in any event easy for tour operators to reposition their products and extend their
portfolio.36
3.2.1.3.3. Commission's assessment
(33) With regard to the demand side, the majority of respondents to the market
investigation indicated that if the price of club package holidays increased by 5-
10%, the majority of customers would continue to purchase that type of holidays.
The majority of respondents reached the same conclusion also in relation to the
other types of package holidays, namely stays, tours and à la carte package
holidays. Moreover, a number of respondents pointed out that among customers
willing to switch in case of a price increase, those interested in purchasing club
package holidays are more likely to buy package holiday stays and vice versa,
whereas customers interested in purchasing tour package holidays are more likely
to switch to à la carte package holidays and vice versa.37
(34) Furthermore, Orchestra submitted that it classifies the products it displays
according to the type of holiday, as this is the first selection criterion of final
customers. With regard to classifications of package holidays by theme, such as
"nature", "well-being", etc., Orchestra submitted that these are merely marketing
tools, are rarely used by customers and should not serve as a basis for segmenting
the market.38 Other market participants indicated that the different types of package
holidays are not substitutable, as each product entails a different way for customers
to enjoy their holidays. Illustratively, whereas young seniors would choose tour
package holidays, club package holidays are usually more appealing to families
with children that would want to stay in "villages" and benefit from the accessory
products offered therein.39 Some travel agents, however, appear to display their
35 See replies to Q1 – Questionnaire to tour operators, question 13; Q2 – Questionnaire to travel agents,
question 14.
36 Form CO, paragraphs 416-435.
37 See replies to Q1 – Questionnaire to tour operators, questions 7 to 10; Q2 – Questionnaire to travel
agents, questions 8 to 11.
38 See Minutes of a meeting with Orchestra of 26 July 2016, paragraph 9.
39 See Minutes of a call with a competitor of 10 June 2016, paragraph 12; Minutes of a call with a
customer of 4 July 2016, paragraph 14; Minutes of a call with a customer of 9 June 2016, paragraph
13.
11
offer of club package holidays and of package holiday stays in animated hotels
without differentiating between these two types of products.40
(35) TUI also submitted a customer survey indicating that French customers view the
various product types as largely interchangeable.41 Beside the fact that the
Commission's market investigation reached a different result, the questions on the
basis of which this conclusion is drawn, cast some doubt as to its validity. First,
customers were asked to compare between clubs and hotels offering the same
services as clubs. Their response to this question, however, does not suffice to
conclude that club package holidays would also be seen as interchangeable with
package holiday stays in hotels that do not provide such additional services and that
the two types are in general not distinct. Similarly, questions on whether the
customers would switch from certain type of package holiday to another following
a price increase of 10% were asked in the survey in a hypothetical manner,
unrelated to any concrete choice made by the respondent and did not provide all
alternative options available to customers as possible answers. Therefore,
conclusions drawn from that survey on this basis are unreliable for the purpose of
the assessing the Transaction.
(36) From the supply side, respondents to the market investigation were split as to
whether tour operators already offering a type of package holiday could easily start
offering a different type of package holidays for commercial reasons. Respondents
considering that such expansion of the service offer would not be easy, pointed out
that specific know-how and some degree of specialisation would be required to
effectively compete in the supply of a new type of package holidays and that, in
many instances, significant investments would also be required.42 This would
particularly be the case regarding club package holidays, as tour operators pursue a
strategy of differentiation in this particular area of their activity, developing
proprietary products by entering into contracts with the club operators for a number
of years, purchasing capacity in advance, branding clubs as forming part of their
club concept and ensuring exclusivity for the French market.
(37) Moreover, the Parties monitor competition for each of their products,
benchmarking tour package holidays against other similar tour package holiday
products, and not against, for example, à la carte packages. Regarding club
package holidays and package holiday stays, the Parties submit that they look into
both categories interchangeably for benchmarking purposes.43 In addition, the
majority of tour operators responding to the market investigation submitted that
they regularly monitor the prices of their competitors' products by type of package
holidays.44
(38) Last, respondents to the market investigation were split as to whether the different
types of package holidays should be analysed separately or together for assessing
40 Form CO, paragraph 671, Annexes 6.9.47, 6.9.48 and 6.9.49 to the Form CO.
41 Form CO, paragraph 424; Annex 6.9.1 to the Form CO "GfK consumer survey, July 2016", slide 24.
42 See replies to Q1 – Questionnaire to tour operators, question 14; Q2 – Questionnaire to travel agents,
question 15.
43 Form CO, paragraphs 645 and following; Annexes 6.9.15, 6.9.16 and 6.9.17 to the Form CO.
44 See replies to Q1 – Questionnaire to tour operators, question 32.1.
12
the Transaction. Within these four types of package holidays, however, the
majority submitted that no further distinction should be considered, confirming that
there are no sub-segments within a market for club package holidays, package
holiday stays, tour package holidays or package holidays à la carte. Finally, the
majority of respondents stated that, other than these four types, no other types of
package holidays, as for example "sun & sea", "city trips", "well-being", etc.
should be distinguished.45
3.2.1.3.4. Conclusion
(39) In light of the above considerations, the Commission concludes that for the purpose
of assessing the Transaction, it can be left open whether the market for package
holidays should be further segmented by type, in club package holidays, package
holidays stays, tour package holidays and package holidays à la carte, since serious
doubts do not arise under any of these plausible product market definitions.
3.2.1.4. Distinction of package holidays by destination
3.2.1.4.1. Introduction
(40) The Commission has in its prior decision practice made a further distinction of the
market for package holidays between domestic and foreign holidays and, within
foreign package holidays, between short/medium haul and long haul destinations,
defined as package holidays involving flights that substantially exceed three
hours.46 Although the Commission has not defined in its previous decisions
separate markets based on the country of destination, it has considered the
possibility of such segmentation.47
(41) However, as to the distinction of foreign package holidays between short/medium
haul and long haul destinations, SETO distinguishes between, on one hand,
short/medium haul destinations and, on the other hand, long haul destinations.
SETO considers short/medium haul destinations as comprising destinations in
Europe, Northern Africa and the Middle East, whereas long-haul destinations
comprise the Caribbean, Africa, Asia, the Americas and the Pacific Ocean.48
3.2.1.4.2. TUI's views
(42) TUI reiterates that in its view there is a single broader market for all travel products
and that therefore, further distinctions of the market for package holidays by
destination would not be appropriate.
45 See replies to Q1 – Questionnaire to tour operators, questions 11 to 13; Q2 – Questionnaire to travel
agents, questions 12 to 14.
46 M.1524 – Airtours/First Choice, para. 43; M.4601 – KarstadtQuelle/MyTravel, paras. 28 et seq. See
also Case T-342/99 – Airtours v. Commission, 6 June 2002, paras. 21–44.
47 See M.4601 - KarstadtQuelle/MyTravel, recital 25; M.5867 – Thomas Cook/ Öger Tours, recitals 10-
13. Moreover, the French Competition Authority in its recent decision practice has considered
narrower markets for the provision of package holidays to specific destination countries. See Autorité
de la concurrence, Décision no 16-DCC-35 du 16 mars 2016 relative à la prise de contrôle exclusif
d'actifs du groupe FRAM par la société LBO France Gestion, paragraph 28.
48 See Minutes of a call with SETO of 4 July 2016, paragraph 10; Annex 6.22 of the Form CO, slides 16
and 21.
13
(43) TUI further argues that on an international level, large numbers of destinations
compete heavily with each other trying to attract more tourists and that there is
significant interchangeability of destinations for customers. Moreover, in light of
the dynamic character of the market, tour operators can swiftly modify their service
offer to meet demand. This is demonstrated by the rapidly decreasing offer of
package holidays in destinations in Northern Africa, following the political turmoil
e.g. in Tunisia and Egypt in recent years, or the entering of low cost airlines in
Morocco that have led to a significant decrease in demand and a parallel increase in
the offer of package holidays in destinations in Southern Europe.49
(44) Last, TUI submits that as a single destination is often interchangeable with one or
more destinations; in view of similarities in price, culture, language and climate,
certain countries of destinations are grouped together into destination regions in the
Parties' normal business conduct. In this context, TUI identifies the following main
regions of destination:50
i. Northern Europe, comprising Germany, Austria, Belgium, the Netherlands,
Luxembourg, Denmark, Finland, Ireland, Iceland, Norway, the UK, Sweden and
Switzerland;
ii. Southern Europe, comprising Croatia, Cyprus, Greece, Italy, Malta, Portugal and
Spain;
iii. Northern Africa, comprising Egypt, Morocco, Tunisia and Algeria;
iv. Africa and the Middle East, comprising Egypt, Morocco, Tunisia, Algeria, South
Africa, Cameroun, Ivory Coast, Cape Verde, Kenya, Madagascar, Mali,
Mauritania, Namibia, Senegal, Tanzania, UAE, Iran, Israel, Jordan, Lebanon,
Uzbekistan, Oman and Syria;
v. North America, comprising USA and Canada,
vi. Caribbean, comprising Antigua, Bahamas, Barbados, Costa Rica, Cuba, Jamaica,
Saint Lucia, Dominican Republic, Guadeloupe, Martinique, Saint Martin and
Saint Barthélemy;
vii. South America and the Caribbean, comprising Antigua, Bahamas, Barbados,
Costa Rica, Cuba, Jamaica, Saint Lucia, Dominican Republic, Guadeloupe,
Martinique, Saint Martin, Saint Barthélemy, Argentina, Brazil, Chile, Ecuador,
Guatemala, Peru and Venezuela.
3.2.1.4.3. Commission's assessment
(45) The majority of respondents to the market investigation considered that domestic
and foreign package holidays should be distinguished and that within foreign
package holidays, a distinction should also be drawn between short/medium haul
and long haul.51 Respondents to the market investigation indicated that there are
49 Form CO, paragraphs 256 and following.
50 Form CO, paragraphs 272 and following; Annexes 6.36 to the Form CO; Annexes 6.9.23(a) and
6.9.23(b) to the form CO. The Parties also proposed groups of destination countries for South-East
Asia, Asia & the Indian Ocean, UK & Ireland and Tanzania, South Africa & Kenya. As however
considering these groups of destination countries as distinct markets would not impact the assessment
of the Transaction, these groups of destination countries will not be further analysed in this Decision.
51 See replies to Q1 – Questionnaire to tour operators, questions 15 and 16; Q2 – Questionnaire to travel
agents, questions 16 and 17.
14
differences between short/medium haul and long haul destinations in terms of
customer base, operations such as the type of flights used, seasonality and brands,
which often have a focus on one or the other type of package holidays.52 Also,
Orchestra submitted that package holidays are usually searched for on a country
basis in its platform.53
(46) Moreover, from a demand-side, the majority of respondents to the market
investigation estimated that for most customers the country of destination is a very
important criterion in their choice of package holiday. With regard to each type of
package holiday individually, the majority of respondents indicated that the country
of destination is a very important criterion for most customers purchasing tour
package holidays and package holidays à la carte. Conversely, responses are rather
split regarding club package holidays and package holiday stays. Several
respondents to the market investigation submitted that the discovery of a specific
country is frequently the main purpose of tour package holidays, whereas in the
case of package holidays stays or in clubs, the services offered may be more
important and destinations, to a large degree interchangeable. A number of
respondents specified that end-customers view the significance of the destination
country differently, as some would consider alternative destinations when selecting
their package holidays, whereas others have a clear idea as to where they want to
go.54
(47) From a supply-side, the majority of the respondents stated that tour operators
offering foreign package holidays to certain countries would be able to easily start
offering package holidays to other destination countries, namely swiftly and
without incurring significant additional costs or undertaking important additional
risks. A minority of tour operators responding to the market investigation,
however, indicated that such expansion of services would not be easy, in particular
because some investment would be required, in order to identify the right
destination country, do market research, promote the new destination, etc.55
(48) This is further demonstrated by the fact that the Parties monitor competition at the
general country level and, as relevant, also at local level within each destination
country.56 The majority of tour operators responding to the market investigation
also submitted that they regularly monitor the prices of their competitors' product
by destination country. Responses were rather split as to whether they also monitor
the prices of package holidays distinguishing between short/medium haul and long
haul.57
52 See Minutes of a call with a competitor of 10 June 2016, paragraph 18.
53 See Minutes of a meeting with Orchestra of 26 July 2016, paragraph 11.
54 See replies to Q1 – Questionnaire to tour operators, questions 17; Q2 – Questionnaire to travel agents,
questions 18; Minutes of a call with a competitor of 30 June 2016, paragraph 12; Minutes of a call
with a customer of 4 July 2016, paragraph 21; Minutes of a call with a customer of 9 June 2016,
paragraph 14.
55 See replies to Q1 – Questionnaire to tour operators, question 18; Q2 – Questionnaire to travel agents,
question 19.
56 Form CO, paragraph 646; Annexes 1.a, 6.9.15, 6.9.16, 6.9.17 and 6.9.53 to the Form CO.
57 See replies to Q1 – Questionnaire to tour operators, question 32.1.
15
(49) As to the relevance of package holidays to certain regions of destination as a
distinct product market, TUI submitted that the survey conducted among French
customers shows that the majority views the countries comprising the groups of
destination countries proposed by TUI as interchangeable with each other and that
for most of the proposed groups, the majority would switch in case of a price
increase of 10% to another country within these groups.58 However, as already
analysed in Section 3.2.1.3.3 above, a number of shortcomings in the methodology
followed in this survey, cast doubt as to the reliability of its conclusions.
(50) Moreover, the results of the market investigation were rather inconclusive on this
point. On one hand, the majority of respondents considered that in case of a 5-10%
price increase of package holidays to specific countries of destination, customers
would continue to purchase package holidays to those countries rather than select a
different destination within the regions proposed by TUI.59 The only exceptions to
this were Turkey and Tunisia, for which respondents considered that most
customers would not continue purchasing more expensive package holidays,
specifying, however, that demand for these destinations generally decreased in
recent years following the geopolitical developments in the area.60
(51) Moreover, asked about the alternative destinations that customers would revert to,
if they decided to switch after an increase in price, respondents to the market
investigation did not consistently indicate countries belonging to the relevant group
of destination countries proposed by TUI. Instead, in many instances, they
considered that a selection of countries beyond the proposed group of destination
countries would be a likely alternative, or that, even if some countries within the
region would be an option, others would not.61
(52) On the other hand, when asked specifically whether package holidays to certain
region of destination should be analysed together or separately, respondents were
split as to whether a region of destination would be meaningful in the case of
Southern Europe, Northern Europe, Northern Africa, North America and the
Caribbean. The majority, however, considered that a region of destination
comprising Africa & the Middle East, as well as a region comprising South
America & the Caribbean would not be meaningful for the assessment.
(53) Overall, tour operators responding to the market investigation were split as to
whether they monitor the prices of their competitors' products on the basis of a
58 Form CO, paragraph 162; "GfK consumer survey, July 2016", Annex 6.9.1 to the Form CO.
59 Specific questions were included in the market investigation in relation to Spain, Greece, Italy,
Tunisia, Turkey, Cuba and Iceland. These are countries, which according to TUI form part of a
broader region of destination, and where the Parties' activities give rise to non-immaterial overlaps.
60 See replies to Q1 – Questionnaire to tour operators, questions 19 to 25; Q2 – Questionnaire to travel
agents, questions 20 to 26.
61 Illustratively, only Norway was considered an alternative to Iceland, unlike all the other countries in
the Northern Europe region. Furthermore, the majority of respondents considered that Portugal, Italy
and Greece, as well as countries beyond the Southern Europe region would be an alternative to Spain;
whereas Croatia, Cyprus and Malta would not, even though the Parties placed them in the Southern
Europe region. Similarly, instead of Turkey and Tunisia, the majority of respondents considered that
customers would revert either to Morocco or to countries beyond Northern Africa; see replies to Q1 –
Questionnaire to tour operators, questions 19 to 25; Q2 – Questionnaire to travel agents, questions 20
to 26.
16
group of destination countries.62 Regarding the specific regions proposed by TUI,
the majority submit that they monitor the prices of their competitors' package
holidays offer across the group of destination countries comprised in Southern
Europe. Respondents were split regarding the destination countries corresponding
to Northern Africa and the group of destination countries and islands comprised in
the Caribbean. Conversely, the majority of responding tour operators indicated that
they do not monitor the prices of package holidays to the Northern Europe
destination countries in a collective way.63
(54) Last, respondents to the market investigation did not always delineate the various
groups of destination countries in the same way, some considering e.g. that
Northern Europe would only include the UK, Ireland and the Nordic countries,
whereas others also including countries in Central and Eastern Europe. Similarly,
unlike TUI, a number of respondents included Turkey and Balkan countries in
Southern Europe or Mexico in North America. Conversely, some respondents
limited the Northern Africa group of destination countries to Tunisia and Morocco,
excluding Egypt and Algeria, or a smaller group of destination countries and
islands in determining the Caribbean.64
3.2.1.4.4. Conclusion
(55) In light of the above considerations, a distinction between domestic and foreign
package holidays, as well as a distinction between short/medium haul and long haul
foreign package holidays could be considered; as however no serious doubts arise
as to the compatibility of the Transaction with the internal market on any of these
plausible markets, their exact delineation can be left open.
(56) Similarly, as no serious doubts arise under any plausible distinction of the product
market by destination, it can be left open whether narrower markets for package
holidays by destination country, as well as whether by groups of destination
countries in Southern Europe, Northern Europe, North Africa, North America and
the Caribbean could be considered.
3.2.1.5. Conclusion on product market definition
(57) In light of the above considerations, the impact of the Transaction will be assessed
on a market for leisure travel in general, as well as on the narrower market for
package holidays.
(58) The impact of the Transaction on narrower segments of the market for package
holidays by holiday type will also be assessed, namely on markets for club package
holidays, package holiday stays, tour package holidays and package holidays à la
carte.
(59) In addition, the impact of the Transaction on narrower segments of the market for
all package holidays based on destination will be assessed, namely on markets for
domestic and foreign package holidays, for short/medium haul and long haul
62 See replies to Q1 – Questionnaire to tour operators, question 32.1.
63 See replies to Q1 – Questionnaire to tour operators, question 26.
64 See replies to Q1 – Questionnaire to tour operators, question 27.2; Q2 – Questionnaire to travel
agents, question 27.2.
17
foreign holidays, as well as for package holidays to the countries, to which both
Parties offer package holidays. The impact of the Transaction on markets for
package holidays to groups of countries of destination in Southern Europe,
Northern Europe, North Africa, North America and the Caribbean will also be
assessed.
(60) Last, the impact of the transaction on markets for package holidays segmented by
type of product and by destination will be evaluated, as, for example, on markets
for tour package holidays to Italy or for package holiday stays to the Caribbean.
3.2.2. Geographic market
(61) In its prior decision practice, the Commission has considered that the markets for
the supply of package holidays in general, as well as its possible segments for
foreign package holidays, for short/medium haul or long haul packages or for
package holidays to specific destinations are national.65; 66
(62) TUI also submits that the markets for the supply of package holidays are national
in scope. In particular, TUI submits that tour operators produce and market
package holidays nationally, without substantially differentiating them for
customers on a regional basis. Indeed, customers wishing to travel to a certain
destination are usually offered the choice of travelling from different French
airports.67
(63) The majority of respondents to the market investigation also submitted that the
geographic scope of the market for package holidays is national. A minority of
respondents appeared to consider that the geographic market could be broader than
national, notably as customers may purchase online package holidays offered in
other neighbouring countries.68
(64) Moreover, the Parties' benchmark their products against those of other tour
operators that are active in France and offer package holidays departing from
France.69 This seems to be the case for the industry more generally, as SETO
monitors and provides market data on the "French tour operating market",
including tour operators active in France.70 In addition, TUI explains that usually
the Parties include exclusivity clauses in their contracts with hotel or club operators
in the countries of destination. These clauses, however, are limited to the French
65 See among others, M.6704 – REWE Touristik GmbH / Ferid NASR / EXIM Holding SA, recital 28;
M.5867 – Thomas Cook / Öger Tours, recital 11; Case No IV/M.1524 – Airtours/First Choice, para.
43.
66 Specifically regarding France, national markets have also been identified by the French Autorité de la
concurrence; see Autorité de la concurrence, Décision no 16-DCC-35 du 16 mars 2016 relative à la
prise de contrôle exclusif d'actifs du groupe FRAM par la société LBO France Gestion, paragraph 22.
67 Form CO, paragraphs 621 and 901-903.
68 See replies to Q1 – Questionnaire to tour operators, question 33; Q2 – Questionnaire to travel agents,
question 32.
69 Annexes 6.9.15, 6.9.16 and 6.9.17 to the Form CO.
70 See Minutes of a call with SETO of 4 July 2016.
18
market, namely the hotel or club operator undertakes to not provide any services in
the French market directly or through suppliers others that the Parties.71
(65) In light of the above considerations and for the purposes of assessing the
Transaction, the Commission concludes that the markets for leisure travel and for
package holidays are national in scope. Therefore, the Commission will assess the
impact of the Transaction on the various plausible product markets for leisure
travel and package holidays from France, as set out in Section 3.2.1.5 above.
3.3. Wholesale supply of airline seats
3.3.1. Product market definition
(66) In its prior decision practice, the Commission has defined a separate wholesale
market for airline seats, in which supply is represented by airlines and demand by
tour operators that purchase individual seats, block seats or entire flights and
integrate them in their package holidays. As a consequence, when considering
activities of suppliers (airlines), the Commission has defined a separate market for
the wholesale supply of airline seats.72 When considering activities of customers
(tour operators), the Commission has defined a separate market for the purchase of
airline seats.73; 74
(67) The Commission has also considered two distinctions within the market for the
wholesale supply of airline seats, based on (i) the type of flights (charter flights vs.
all flights, including scheduled flights),75 and (ii) for foreign destinations, the flight
time or distance to destination (short/medium haul vs. long haul).76
(68) In addition, in line with the approach adopted for the supply of package holidays,77
the Commission assessed, for the purpose of assessing the Transaction, whether the
market for the wholesale supply of airline seats should be further segmented by
country of destination.
(69) Finally, considering the dense network of more than 160 airports in France and the
significance of airports outside of the Paris area,78 the Commission, for the specific
71 Form CO, paragraphs 419 and 649.
72 See, among others, M.4600 – TUI / First Choice, recital 57; M.4601 – KarstadtQuelle/ MyTravel,
recital 43; M.5867 – Thomas Cook / Öger Tours, recital 16.
73 See, among others, M.6704 – REWE Touristik GmbH / Ferid NASR / EXIM Holding SA, recital 21.
74 This approach is similar to the practice of the French Autorité de la concurrence, which distinguishes,
within the purchase of air transport capacities, between the purchase of airline seats and aircraft
leasing. See Letter C2008-110 of 12 November 2008 to Karavel; Décision no 16-DCC-35 du 16 mars
2016 relative à la prise de contrôle exclusif d'actifs du groupe FRAM par la société LBO France
Gestion, paragraph 9.
75 See, among others, M.6704 – REWE Touristik GmbH / Ferid NASR / EXIM Holding SA, recital 20;
76 See, among others, M.6704 – REWE Touristik GmbH / Ferid NASR / EXIM Holding SA, recital 19.
77 See Section 3.2.1.4 above.
78 According to the press kit accompanying the press conference on the 2015 activity results of French
airports (Dossier de presse – Conférence du mercredi 17 février 2016 - Résultats d’activité des
aéroports français 2015) by the Union of French Airports (Union des aéroports français), in 2015,
Paris airports accounted for 56% of the total number of passengers and airports in regions (aéroports
19
purpose of assessing the Transaction, examined a possible segmentation of the
market for the wholesale supply of airline seats by airport of departure.
3.3.1.1. Distinction by type of flights (charter flights vs. all flights)
(70) In its prior decision practice, the Commission has considered whether there is a
separate market for the supply of block seats or entire flights by charter airlines to
tour operators, excluding seats provided by scheduled airlines.79
(71) TUI submits that the relevant market should not be segmented between charter and
scheduled airline seats, since the entry of low-cost carriers and the offering of
charter seats by scheduled airlines have blurred the boundaries between the two
segments.80
(72) The majority of respondents to the market investigation indicated that the
procurement of seats on charter and scheduled flights should be assessed
separately, in line with the Commission's practice.81
(73) There are therefore indications that the distinction between charter and scheduled
flights is still relevant for the market of wholesale supply of airline seats.
Nevertheless, for the purpose of this Decision, the Commission considers that the
question of the segmentation of the market for the wholesale supply of airline seats
by type of flights can be left open, since the Transaction does not raise serious
doubts under any plausible product market definition.
3.3.1.2. Distinction between short/medium haul and long haul flights
(74) In its prior decision practice, the Commission has further subdivided the wholesale
market for airline seats between short/medium haul82 and long haul flights,83 along
the same criteria than those used in the context of the supply of travel services.
(75) TUI does not express a firm view as to this possible distinction.
(76) Respondents to the market investigation do not put forward elements that would
question the Commission's practice.
de Province) accounted for 44%
(http://www.aeroport fr/uploads/documents/dossier%20de%20presse%20Conf%202015.pdf).
79 Such a distinction has also been established by the French Autorité de la concurrence in its practice.
See Letter C2006-147 of 16 January 2007 to XL Airways France; Letter C2008-110 of 12 November
2008 to Karavel.
80 Form CO, paragraphs 838-848 and 883.
81 See replies to Q1 – Questionnaire to tour operators, question 34.
82 The "short/medium haul" sector has alternatively been defined as involving a flight time of less than
three hours or less than six hours. For the purpose of this Decision, "short/medium haul" flights will
be considered as referring to flights lasting less than six hours.
83 The "long haul" sector has been alternatively defined as involving a flight time of more than three
hours or more than six hours. For the purpose of this Decision, "long haul" flights will be considered
as referring to flights lasting more than six hours.
20
(77) Nevertheless, for the purpose of this Decision, the Commission considers that the
question of the segmentation of the market for the wholesale supply of airline seats
between short/medium haul and long haul flights can be left open, since the
Transaction does not raise serious doubts under any plausible product market
definition.
3.3.1.3. Distinction by country of destination
(78) Similarly to the potential delineation between short/medium haul and long haul
destinations, the potential delineation of the market for the supply of package
holiday by country of destination may apply to the wholesale market for airline
seats.84
(79) TUI does not provide its view on the plausibility of a product market definition
based on the country of destination.
(80) Some respondents to the market investigation suggest that a distinction by country
or group of countries of destination could be appropriate, notably to differentiate
between destinations served by low cost carriers and those served by other
scheduled and charter airlines.85
(81) Nevertheless, for the purpose of this Decision, the Commission considers that the
question of the segmentation of the market for the wholesale supply of airline seats
by country of destination can be left open, since the Transaction does not raise
serious doubts under any plausible product market definition.
3.3.1.4. Distinction by airport of departure
(82) In view of the specificities of the traffic of air passengers from France, which is
spread over an extensive network of airports across the territory, the Commission
considered whether the market for the wholesale supply of airline seats should be
segmented by airport of departure.86
(83) TUI does not provide a clear view on the plausibility of a product market definition
based on the airport of departure.
(84) The market investigation yielded mixed results as to whether the different airports
of departure in France should be assessed separately.87 There are indications that
customers may not regard the different airports of departure as substitutable.88 For
84 Such a distinction has also been considered by the French Autorité de la concurrence in its practice.
See Letter C2006-147 of 16 January 2007 to XL Airways France; Letter C2008-110 of 12 November
2008 to Karavel; Décision no 16-DCC-35 du 16 mars 2016 relative à la prise de contrôle exclusif
d'actifs du groupe FRAM par la société LBO France Gestion, paragraph 9.
85 See replies to Q1 – Questionnaire to tour operators, question 35.2; Q2 – Questionnaire to travel
agents, question 17.1.
86 The French Autorité de la concurrence has also considered in a specific case such a potential
segmentation. See Letter C2006-147 of 16 January 2007 to XL Airways France.
87 See replies to Q1 – Questionnaire to tour operators, question 35.
88 See replies to Q1 – Questionnaire to tour operators, question 27; Q2 – Questionnaire to travel agents,
question 28.
21
the purpose of this Decision, the Commission considers that the question of the
segmentation of the market for the wholesale supply of airline seats by airport of
departure can be left open, since the Transaction does not raise serious doubts
under any plausible product market definition.
3.3.2. Geographic market definition
(85) In its prior decision practice, the Commission has considered that the market for
the wholesale supply of airline seats is national in scope, under all plausible
product market definitions.89; 90
(86) TUI concurs with this geographic market definition.
(87) Responses to the market investigation do not contain substantiated elements that
would question the Commission's practice.
(88) Therefore, for the purpose of this Decision, the Commission considers that the
scope of the market for the wholesale supply of airline seats and of any plausible
product segments is national (France).
3.4. Supply of destination management services
3.4.1. Product market definition
(89) The Commission has not considered the supply of destination management services
in its prior decision practice.
(90) TUI does not express a firm view as to whether specialised receptive services
offered by destination management companies, such as welcoming customers at
airports or bus stations and transporting them to their hotels, form a distinct market.
TUI nevertheless refers to destination management companies offering services to
tour operators as a specific type of suppliers active in a country of destination.
(91) For the purpose of this Decision, the Commission considers that the questions of
whether the supply of destination management services constitutes a separate
market and of its exact delineation can be left open, since the Transaction does not
raise serious doubts under any plausible product market definition.
3.4.2. Geographic market definition
(92) The Commission has not considered the geographic scope of the supply of
destination management services in its prior decision practice.
(93) TUI does not discuss that issue in detail.
89 See, among others, M.4600 – TUI / First Choice, recital 59; M.4601 – KarstadtQuelle/ MyTravel,
recital 44; M.6704 – REWE Touristik GmbH / Ferid NASR / EXIM Holding SA, recital 28.
90 The French Autorité de la concurrence has reached the same conclusion. See Letter C2006-147 of 16
January 2007 to XL Airways France; Letter C2008-110 of 12 November 2008 to Karavel; Decision
No 16-DCC-35 of 16 March 2016 concerning the acquisition of sole control of assets of the FRAM
group by LBO France Gestion, recital 11.
22
(94) For the purpose of this Decision, the Commission considers that the question of the
geographic scope of the supply of destination management services can be left
open, since the Transaction does not raise serious doubts under any plausible […]*
market definition.
3.5. Provision of travel agency services
3.5.1. Product market definition
(95) In its prior decision practice, the Commission has defined a separate market for the
provision of travel agency services. It has divided this market by type of customers,
distinguishing between the provision of business travel services91 and leisure travel
services.92 In addition, the Commission has left open whether the market for the
provision of leisure travel services should be further segmented by distribution
channel (via outlets or via the Internet)93 or by type of products (package holidays
or independent holidays).94; 95
3.5.1.1. Distinction by distribution channel
(96) In its prior decision practice, the Commission has considered whether the markets
for the provision of leisure travel services by brick-and-mortar travel agencies and
online travel agencies were distinct markets.
(97) TUI does not express a firm view as to leisure travel agency services96 and relies on
the Commission's prior decision practice to identify as relevant markets: (i) the
overall market for the distribution of leisure travel services, (ii) the market for the
distribution of leisure travel services through outlets, and (iii) the market for the
online distribution of leisure travel services.97
* Should read: geographic
91 None of the Parties is active in the business travel sector in France. Therefore, the Commission will
not further consider business travel services in this Decision.
92 See, among others, M.2794 – Amadeus / GGL / JV, recital 10; M.4234 – Carlson / One Equity
Partners / Carlson Wagon-lit, recital 13; M.6163 – AXA / Permira / Opodo / GO Voyages / eDreams,
recital 18.
93 See, among others, M.2794 – Amadeus / GGL / JV, recital 10; M.4601 – KarstadtQuelle/ MyTravel,
recital 31; M.5996 - Thomas Cook / Travel business of Co-operative Group / Travel business of
Midlands Co-operative Society, recital 18; M.6163 – AXA / Permira / Opodo / GO Voyages /
eDreams, recital 28.
94 See, among others, M.5996 – Thomas Cook / Travel business of Co-operative Group / Travel
business of Midlands Co-operative Society, recital 20; M.6163 – AXA / Permira / Opodo / GO
Voyages / eDreams, recital 28.
95 The French Autorité de la concurrence has also considered those distinctions, while exploring
possible sub-segmentations within the market for the provision of package holidays. See Decision No
16-DCC-35 of 16 March 2016 concerning the acquisition of sole control of assets of the FRAM group
by LBO France Gestion, recital 17.
96 Other than its position with regard to the global supply of holiday products ("dynamic approach") as
recalled in Section 3.2.1.2.2.
97 Form CO, paragraph 795.
23
(98) The market investigation did not bring conclusive elements on the distinction by
distribution channel.
(99) For the purpose of this Decision, the Commission considers that the question of the
segmentation of the market for the provision of leisure travel services by
distribution channel can be left open, since the Transaction does not raise serious
doubts under any plausible product market definition.
3.5.1.2. Distinction by type of products
(100) In its prior decision practice, the Commission has considered a further distinction
between the (offline or online) distribution of package holidays and the (offline or
online) distribution of independent holidays, in particular of flights.
(101) As for the possible distinction by distribution channel, TUI does not express a firm
view as to whether the market for the (offline or online) distribution of leisure
travel services should be further segmented by type of products.98 TUI nevertheless
identifies different relevant markets based on the type of products distributed,
namely (i) package holidays, (ii) hotel accommodation, and (iii) flights. TUI even
considers two further sub-segmentations of each type of products between (iv)
domestic and foreign leisure travel services, (vi) within foreign leisure travel
services, between short/medium haul and long haul travel services.99
(102) The market investigation did not bring conclusive elements on the distinction by
type of products.
(103) For the purpose of this Decision, the Commission considers that the question of the
segmentation of the market for the provision of leisure travel services by type of
products can be left open, since the Transaction does not raise serious doubts under
any plausible product market definition.
3.5.2. Geographic market definition
(104) In its prior decision practice, the Commission has generally considered that the
market for the provision of travel agency services is national in scope because of
linguistic and cultural borders, without excluding the possibility to find regional or
local markets.100; 101
(105) TUI submits that the geographic scope of the market for the distribution of leisure
travel services and of any of its possible segments is national, i.e. France.102 In
98 Other than its position with regard to the global supply of holiday products ("dynamic approach") as
recalled in Section 3.2.1.2.2.
99 Form CO, paragraph 679 for the distribution of package holidays; paragraph 727 for the distribution
of flight tickets; and paragraph 766 for distribution of hotel accommodation.
100 See, among others, M.4600 – TUI / First Choice, recital 51; M.4601 – KarstadtQuelle/ MyTravel,
recital 38; M.5996 – Thomas Cook/ Travel business of Co-operative Group / Travel business of
Midlands Co-operative Society, recital 35.
101 The French Autorité de la concurrence has found a national market. See Letter C2008-110 of 12
November 2008 to Karavel; Décision no 16-DCC-35 du 16 mars 2016 relative à la prise de contrôle
exclusif d'actifs du groupe FRAM par la société LBO France Gestion, paragraph 22.
102 Form CO, paragraphs 904-908.
24
particular, TUI claims that the market for the distribution of travel services through
outlets should not be viewed as local, due to the significance of the online
distribution channel in France and the competitive constraint it exerts on prices,
which results in the creation of homogeneous market conditions throughout the
French territory.103
(106) For the purpose of this Decision, the Commission considers that the question of
whether the market for the provision of leisure travel services (or any possible
segment of it) is local, regional or national can be left open, since the Transaction
does not raise serious doubts under any plausible geographic market definition.
4. COMPETITION ASSESSMENT
(107) Under Article 2(2) and (3) of the Merger Regulation, the Commission must assess
whether a proposed concentration would significantly impede effective competition
in the internal market or in a substantial part of it, in particular as a result of the
creation or strengthening of a dominant position.
(108) The assessment of the compatibility of the Transaction with the internal market
will essentially focus on non-coordinated horizontal effects in the leisure travel
services markets, including the package holidays markets where the Parties'
activities overlap.
(109) As the Parties' activities in the provision of travel agency services, in the wholesale
supply of airline seats and in the supply of destination management services do not
give rise to horizontally affected markets under any plausible market definition,104
only the vertical relationships arising from these activities will be further assessed
in this Decision.
(110) Therefore, first, the Commission will assess the horizontal effects of the
Transaction through a sectorial overview of the market for the provision of leisure
travel services and an analysis of elements common to the assessment of the
Transaction that cut across the different product markets (Section 4.1.1), before
undertaking a more detailed analysis on a product-by-product basis (Section 4.1.2).
Second, the Commission will assess the vertical relationships that the Transaction
would bring about (Section 4.2).
4.1. Horizontal overlap: market for the provision of leisure travel services and
sub-segments thereof
4.1.1. Sectorial overview and elements common to the assessment of the markets for the
provision of leisure travel services
4.1.1.1. Market structure and market evolution
(111) The French leisure travel market is highly fragmented with some 150 national and
international tour operators offering the French customer package holidays to a
large number of short/medium and long haul destinations.
103 Form CO, paragraph 689.
104 Form CO, paragraphs 678 and following.
25
(112) According to Euromonitor, the leisure travel sector, comprising the activities of
traditional and online tour operators, traditional and online travel agencies, other
online travel intermediaries, direct-selling airlines and direct accommodation
providers, should generate in 2015 a turnover of approximately EUR 14 billion in
France, achieved through the sale of accommodation (EUR 2 billion) cruises (EUR
0.5 billion), flights (EUR 4.5 billion) and package holidays (EUR 7 billion).105
(113) It should further be noted that the markets for the provision of package holidays are
very volatile and subject to trends. Notably, the markets for certain destination
countries, such as Tunisia or Turkey, where the Parties' market shares are quite
significant, shrunk in the period 2013-2015 by 60% and 44% respectively.
(114) Overall, after the Transaction, the merged entity would be the leading tour operator
in France. The Commission has considered several elements, which are relevant for
the assessment of the effects of the Transaction across the various narrower product
markets for package holidays. These elements include closeness of competition
between the Parties (Section 4.1.1.2.), the barriers to entry or expansion (Section
4.1.1.3.), the negotiation with travel agents (Section 4.1.1.4.), as well as an
assessment of the methodology for estimating market shares (Section 4.1.1.5.)
4.1.1.2. Closeness of competition
(115) The Parties claim that TUI and Transat are not closer competitors to each other
than to other generalist tour operators, such as Thomas Cook or Karavel/Fram,
offering foreign package holidays (clubs and tours) from France. Even if a degree
of rivalry exists between the Parties, as does with other tour operators, given that
their product offering is often commoditised and appealing to a broad range of
customers, tour operators in France would face vigorous competition also from
their own distributors, i.e. travel agencies putting together own packages, and
suppliers, i.e. airlines and hotel operators having established direct access to the
end customers, notably through internet platforms.106
(116) The Commission assessed in its market investigation the closeness of competition
between the offerings of TUI and Transat, as well as the degree of competitive
pressure exerted on them by travel agents.
(117) As regards the closeness of competition between the offerings of TUI and Transat,
from the results of the market investigation107 it appears that for the supply of
package holidays and for most of the additional distinctions by type of holidays
(tours, stays, and à la carte), Transat's products are not the most often mentioned
alternative to TUI's (and vice-versa). For these products, companies such as
Thomas Cook, Karavel/Fram, FTI, Kuoni, Voyamar, or Voyageurs du Monde are
alternatively (depending on the product) mentioned as being closer alternatives to
TUI than Transat (and closer alternatives to Transat than TUI respectively). The
same pattern holds true if markets are further sub-segmented by both product type
and country of destination for most affected markets.
105 Form CO, paragraph 186.
106 Form CO, paragraph 1003 and following.
107 Replies to Q1 – Questionnaire to tour operators, question 37; Q2 – Questionnaire to travel agents,
question 34.
26
(118) Only when assessing the following products did the market investigation not reveal
any clear alternative as respondents mentioned many brands:
(a) for the supply of leisure travel in general, TUI was considered to be Transat's
closest competitor, but the reverse was not true,
(b) for TUI's club offering, Transat's LOOK products were deemed closer to
TUI's in terms of price, service, or brand image than products of third parties,
but when assessing Transat's offering, TUI's products were considered less
close than those of third parties.
(119) The abovementioned patterns between the Parties and their competitors are also
reflected to a meaningful extent in the Parties' internal documents, in particular
monitoring data that the Parties develop as market intelligence and which provide
insight into the Parties' own perception of the closeness of their various
competitors. These documents are relevant as they determine pricing decisions
made by the Parties.108
(120) Indeed, the Parties monitor competition for each of their products, distinguishing
by holiday type and destination (e.g. package holiday clubs benchmarked against
clubs of competitors in a given destination). In particular, the Parties monitor the
prices offered by their competitors on an almost daily basis either via a third-party
software called "Vigimilia" or manually for products not present in the Vigimilia
data base.109 Depending on the evolutions of prices, the Parties take actions,
including through yield management software, and can modify their prices of a
given product. In order to select the products of their competitors against which
they benchmark their own products, the Parties, at the beginning of each season
visit their competitors’ websites as well as important distributors’ websites.
(121) The Commission conducted a detailed assessment of the internal documents
showing the Parties' benchmarking of their competitors. From these documents it
appears that a vast number of competitors are monitored by each Party. However,
in TUI's documents, while Transat is present with respect to each destination
assessed by the Commission, for each destination it is always mentioned less often
than at least two other players. Similarly, in Transat's documents, TUI is present
with respect to almost all destinations, but so is a number of other competitors with
TUI mentioned less often than Karavel/Fram and Thomas Cook, and in no
destination is TUI referred to alone.
(122) The same conclusions apply across product types when considering benchmarking
for a given product type, with "Vigimilia" especially used for benchmarking of
stays and clubs. Furthermore, these conclusions are also similar when evaluating
the results of manual benchmarks for tours, although the Commission notes that the
108 Form CO, Annexes 6.9.15, 6.9.16 and 6.9.17.
109 In addition to monitoring tour operators and travel agencies, TUI and Transat both monitor the
websites of hotel booking websites. It also appears from internal documents of the Parties that they
also monitor competitors’ offers that are not available on Vigimilia in the clubs and hotels segments.
Finally, as concerns tour package holidays, there is no comparable tool to Vigimilia to monitor
competition. Therefore, the Parties benchmark their competitors manually by e.g., visiting
distributors' websites and looking for equivalent products. Form CO, paragraph 656.
27
monitoring practices of the Parties for this type of package holidays are less
systematic.110
(123) Having regard to the markets affected by the Transaction, the Commission
therefore considers that a considerable number of strong competitors, such as Club
Med, Karavel/Fram, Thomas Cook and others, are active and would constrain the
merged entity's pricing decisions post-Transaction.
(124) As regards the degree of competitive pressure exerted on the Parties by travel
agents, in addition to the competition exerted by tour operators, in the
Commission's market investigation, a majority of respondents also indicated that
package holidays produced and distributed by travel agents by sourcing their own
flights, accommodation and various other travel components from various suppliers
also compete directly with package holidays produced by tour operators.111
(125) However, a majority of respondents also considered that in case a tour operator
increased its prices, travel agents would generally not be able to credibly and easily
(i.e. swiftly and without incurring important additional costs or risks) develop their
own offering of package holidays produced in-house to compete.112 In particular,
some respondents indicated that for specific types of package holidays such as
stays, travel agents would not have the same negotiating or purchasing capacity as
tour operators when securing holiday accommodation from hotel operators or
airline seats from airlines.113
(126) Therefore, the Commission considers that while it may not be excluded that certain
travel agents may compete with the Parties when considering the overall market for
the supply of leisure travel (including dynamic packages), this would not change
the competitive assessment for narrower product markets when distinguishing by
holiday type, such as package holiday clubs or stays.
Conclusion
(127) Overall, taking into account all the evidence available to it, including the results of
the market investigation, the Commission considers that TUI and Transat's
products are not closer substitutes to each other, than with the products of their
competitors. Furthermore, the Commission considers that any degree of
competitive pressure exerted on the Parties' activities by travel agents would not
change the competitive assessment.
110 For tours, specifically, TUI submits that price modifications do not occur as often and generally only
once during the season (e.g., in October for the summer season). The Parties only benchmark the most
basic products of their portfolio. Such tours include the most basic excursions and visits in a given
country. TUI submits that it is more difficult for the Parties to monitor competition for higher-scale
and à la carte products which by definition are created at the request of the customer. See Form CO,
paragraph 668 and Annexes 6.9.33, 6.9.34, 6.9.35 and 6.9.37.
111 Replies to Q1 – Questionnaire to tour operators, question 36; Q2 – Questionnaire to travel agents,
question 33.
112 Replies to Q1 – Questionnaire to tour operators, question 41.2; Q2 – Questionnaire to travel agents,
question 38.2.
113 Replies to Q1 – Questionnaire to tour operators, question 36; Q2 – Questionnaire to travel agents,
question 33.
28
4.1.1.3. Barriers to entry or expansion
(128) The Parties put forward that barriers to entry and expansion are low in the highly
competitive French tour operator industry characterised by little brand loyalty. A
tour operator could be run with generally low levels of capital outlay requirements,
asset specificity or proprietary knowledge needed, whilst access to suppliers
(airlines, hotels, etc.) can be achieved with ease and at low-cost. The Parties add
that notable entrants would include Marco Vasco and NG Travel which are both
active in the supply of short/medium and long haul package holidays, as well as
non-traditional players (online travel agents, low cost/traditional airlines, direct
selling hotel operators, etc.) which increasingly engage in "dynamic packaging".114
(129) The Commission first considers that the market for the supply of leisure travel is
characterised by frequent product launches, which are a key driver of competition
in the market. Each year there is a very large number of new package holiday
products coming from a wide variety of suppliers. As an example, a shift in travel
destination patterns in light of the geopolitical context in North African markets in
recent years has meant that tour operators in France have worked to redirect
customers towards alternative destinations including Portugal and Spain.115 Long-
haul travel is also on the rise with travellers looking to more exotic destinations in
Asia and beyond.116
(130) The Commission also notes that several new entrants have managed to enter the
market for the supply of foreign package holidays in France in the past five
years.117
(131) A majority of respondents to the market investigation118 indicated that the
Transaction would not have a negative impact on barriers to entry or expansion for
the supply of leisure travel, the supply of package holidays and for most of the
additional distinctions by type of holidays (tours, stays, and à la carte).
(132) As concerns the supply of club package holidays, no conclusion can be drawn from
the market investigation, with responses equally split. However, the Commission
considers that there are examples of tour operators having successfully marketed
clubs without relying on branded clubs (e.g., Promovacances), meaning that
competing tour operators can successfully market holidays which are akin to a
club-stay through independent hotels which offer an animation or entertainment
service.119 The Commission also notes that there has been a significant growth of
new "club" entrants since 2013 with Thalasso No. 1 (ôClub), Top of travel (Top
114 Form CO, paragraph 216 and following.
115 Form CO, Annexes 6.27 to 6.32.
116 Form CO, Annex 6.33.
117 These new entrants include: FTI Group with a market share of approximately [0-5]% on the market
for the supply of foreign package holidays in France; Marco Vasco with approximately [0-5]% and
NG Travel with approximately [0-5]
%. Form CO, paragraph 1006.
118 Replies to Q1 – Questionnaire to tour operators, question 39; Q2 – Questionnaire to travel agents,
question 36.
119 Form CO, paragraph 431.
29
Clubs) and NG Travel (Kappa Club and Coralia). The fact that the Parties see these
players (and others such as Heliades) as competitors appears also from the internal
benchmarking documents previously described in Section 4.1.1.2.
(133) For the supply of package holidays if markets are further sub-segmented by
destination, tour operators indicated that barriers to entry might increase post-
Transaction, while travel agents were split on the issue.120 In particular, some
competitors mentioned that the Transaction may reinforce barriers to entry or
expansion in certain countries in the Caribbean (among which Cuba, the
Dominican Republic, Costa Rica) or Southern Europe (among which Greece and
Spain). However, the Commission notes that especially in Southern Europe several
of the abovementioned new entrants now offer package holidays. As for the
Caribbean, the Commission notes that a number of international hotel chains are
currently developing their infrastructure, therefore providing more accommodation
choices for tour operators to choose from when creating package holidays.121
Conclusion
(134) Considering all evidence available to it, the Commission notes that a number of
tour operators entered the French market over the past years. This indicates that it
is feasible to overcome the potential barriers to entry and expansion. Moreover, the
level of innovation in terms of holiday products and destinations ensures that
markets for the supply of leisure travel and package holidays remain dynamic and
potential entrants and expanding players are likely to exercise a competitive
constraint on the merged entity post-Transaction.
4.1.1.4. Negotiation with travel agents
(135) The Parties argue that tour operators face significant countervailing buyer power at
distribution level. The distribution of the Parties' products can only happen through
third-party travel agency networks and large and powerful retailers; any
hypothetical increase in price of what are in fact commodity packaged products,
would thus result to a credible threat by these retailers to resort, within a short
timeframe, to the products of other tour operators.122
(136) As regards countervailing buyer power,123 the Parties add that travel agents have
the possibility to stop distributing certain travel products, should a tour operator
decide to increase its price. Selectour Afat ceased selling Transat's Look Voyages
and Vacances Transat products in 2003, which led to a loss of 50% of Transat sales
through the Selectour network in the first two years (before that, 15% of Transat’s
120 Replies to Q1 – Questionnaire to tour operators, question 39; Q2 – Questionnaire to travel agents,
question 36.
121 Form CO, paragraph 374.
122 Form CO, paragraphs 234 and following.
123 Countervailing buyer power in this context should be understood as the bargaining strength that the
buyer has vis-à-vis the seller in commercial negotiations due to its size, its commercial significance to
the seller and its ability to switch to alternative suppliers (Horizontal Merger Guidelines, paragraph
64).
30
sales were made through Selectour, this decision thus amounting to a loss of EUR
25 million in revenues for Transat).124
(137) Among respondents to the market investigation however, a majority of both tour
operators and travel agents considered that travel agents do not dispose of
significant negotiating power when buying and distributing leisure travel products
from tour operators.125
(138) Furthermore, while a majority of tour operators consider that travel agents would
have the ability to swiftly and easily (i.e. without incurring important additional
costs or risks) switch between suppliers in case of price increase, conversely, the
majority of travel agents indicate that they do not enjoy this ability.126 In particular,
some travel agents, which distribute their own dynamic products with
proportionally less products from tour operators may be less dependent on their
suppliers in case of price increase, but other travel agents may still be faced with
the need to distribute certain types of products requested by their customers.127
(139) As a result, it has not been demonstrated to a sufficient degree that travel agents
would generally have the ability to exercise significant buyer power to counter
potential price increases.
(140) Moreover, travel agents are divided when asked whether the Transaction would
increase the negotiating power currently held by Parties vis-à-vis travel agents.128
However, a majority of both tour operators and travel agents confirmed that, if the
Parties decided not to distribute leisure travels through multi-brand travel agencies,
those agencies would still be able to maintain their activities on the leisure travel
retail market.129
Conclusion
(141) Considering all evidence available to it, the Commission estimates that even if TUI
and Transat were to jointly distribute their products to travel agents post-
Transaction, this is not likely to significantly increase the merged entity's
negotiating power in leisure travel markets. Subsequently, any countervailing
buying power of the Parties' customers is not likely to be materially affected by the
Transaction.
124 Form CO, paragraph 236.
125 Replies to Q1 – Questionnaire to tour operators, question 40; Q2 – Questionnaire to travel agents,
question 37.
126 Replies to Q1 – Questionnaire to tour operators, question 41.1; Q2 – Questionnaire to travel agents,
question 38.1.
127 Replies of two travel agents to Q2 – Questionnaire to travel agents, question 38.1.
128 Replies to Q1 – Questionnaire to tour operators, question 42; Q2 – Questionnaire to travel agents,
question 39.
129 Replies to Q1 – Questionnaire to tour operators, question 44; Q2 – Questionnaire to travel agents,
question 40.
31
4.1.1.5. Methodology for estimating market shares
(142) The Parties have used data produced by SETO to calculate their shares on the
market for tour operating services in France and on its possible segmentations.130
Although SETO members only represent 60% of the overall French tour operating
market, based on the information available to it, the Commission considers that
SETO data are sufficiently reliable and detailed to give a fair picture of the market
positions of tour operators in France.131
(143) The Parties have submitted market shares on the basis of both turnover and
passenger numbers for 2015. The Commission has used such data in previous
decisions in the sector.132 In the light of the size of the various markets identified,
which are based on the SETO data and the Parties' best estimates of the markets
using publicly available sources,133 the Commission is of the view that the
assessment of market shares and market characteristics is best served by the
turnover data in the present case, as this dataset provides a homogeneous and
comprehensive approach for the relevant markets.134
(144) Based on the market definitions outlined in Section 3.2, the Transaction would lead
to the following competitive situation.
4.1.2. Market-specific analysis
4.1.2.1. Affected markets
(145) On the markets for the supply of leisure travel in general, the supply of package
holidays and its plausible distinctions between domestic and foreign and
short/medium and long haul package holidays, the Parties' activities would not give
rise to any affected market.135 When considering an additional distinction by type
of holidays, two affected markets would arise: supply of short/medium haul club
130 As indicated in Section 3.2.1.3, SETO identifies a "group" package holidays category, which
however, does not appear to constitute a separate product market. Therefore, the Parties sales of group
package holidays have been allocated to the respective holiday type, to which they actually
corresponded, namely to clubs, tours, stays or à la carte, depending on the type of holiday that each
of these groups had actually purchased. As, on one hand, the Parties' sales by package holiday type
were adjusted to include their group sales, whereas, on the other hand, the estimation of the market
size for each of these products was not adjusted in the same way to include all group sales of that
specific product type, the approach followed for estimating the Parties' market shares is conservative.
131 Due to the 60% coverage of SETO data, the Parties have calculated the sizes of the different possible
markets and the shares of the tour operators active on those markets by multiplying SETO data by
167%. This looks appropriate, considering that non-SETO members would have similar structures of
sales as SETO members.
132 See, among others, M.6704 – REWE Touristik GmbH / Ferid NASR / EXIM Holding SA, recital 36.
133 Form CO, paragraphs 185 and following, and 195 and following.
134 The Commission has nevertheless verified that should market shares be established on passenger
numbers rather than on turnover, the conclusions of the competitive assessment would be similar.
135 For the definition of horizontally or vertically affected markets, see Annex 1 point 6.3 of Commission
Implementing Regulation 802/2004, as last amended by Commission Regulation 1269/2013.
32
package holidays (along with the wider markets of foreign club package holidays,
and all club package holidays) and supply of long-haul package holidays stays.136
(146) If narrower markets for the supply of all package holidays137 from France to
specific countries of destination are considered, the Transaction would give rise to
12 affected markets. If markets are further sub-segmented by both product type and
country of destination, the Transaction would give rise to 30 additional affected
markets.138
(147) If product markets for the supply of package holidays (or the relevant product
types) from France to broader groups of destination countries as proposed by the
Parties are then considered, the Transaction would give rise to affected markets for
the following destinations and types of package holidays: to the Caribbean (tours
and stays), to Northern Africa (all package holidays, clubs and tours), to Northern
Europe (tours), to Southern Europe (clubs), and to North America (Canada and the
USA: all package holidays, tours and stays).
(148) All of the abovementioned affected markets are listed in Table 1 below.
136 When segmenting by holiday type, only one affected market arises when using passenger market
shares, which is not affected when considering turnover: supply of long-haul tour package holidays.
However, the Parties' combined passenger market shares barely reach [20-30]%. This market is
therefore not further assessed in this Decision.
137 If broader markets for the supply of all leisure travel from France to specific destination countries
were considered, the Transaction would only give rise to affected markets for leisure travel to Cuba
and for leisure travel to Panama (see Form CO, Annex 6.35). However, the increment brought upon
by the Transaction is below [0-5]% and [0-5]% respectively in these markets, thus no merger-specific
effects would exist. These markets will therefore not be further assessed in this Decision.
138 Across all segmentations, including holiday types and destinations, only five additional plausible
markets would be affected when using passenger market shares, which are not affected when
considering turnover: Caribbean-all package holidays, Burma-tours, Italy-all package holidays, Italy-
tours, and Japan-tours. However, (i) for each of Caribbean–all packages, Burma–tours, Italy–all
packages and Japan–tours, the Parties' combined passenger market shares barely reach [20-30]%, and
(ii) for Italy-tours Parties' combined passenger share is [40-50]%, but the Parties' combined turnover
share is only [10-20]%. The discrepancy between turnover and passenger market shares can be
explained by the fact that the Parties offer lower end products than specialists active to the destination
do. Furthermore, regarding this market, which is very limited in size with less than 9 000 annual
passengers, respondents to the market investigation did not generally indicate that TUI would be
closer to Transat (or vice versa) in terms of price, service, or brand image than other competitors and
a majority of respondents indicated that they expect sufficiently strong competition to prevent the
merged entity from raising prices for tours in Italy. See Replies to Q1 – Questionnaire to tour
operators, questions 37 and 46; Q2 – Questionnaire to travel agents, questions 34 and 42. All the
aforementioned markets will not be further assessed in this Decision on the basis of passenger market
shares.
33
Table 1: Affected markets in package holidays by type and destination139
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Package holiday types to all destinations
All clubs [10-20]% [5-10]% [20-30]%
All foreign clubs [10-20]% [10-20]% [20-30]%
All short/medium haul clubs [10-20]% [5-10]% [20-30]%
All long haul stays [10-20]% [5-10]% [20-30]%
Canada
All package holidays [0-5]% [20-30]% [30-40]%
Tours [0-5]% [40-50]% [40-50]%
Caribbean
Tours [0-5]% [30-40]% [30-40]%
Stays [10-20]% [5-10]% [20-30]%
Costa Rica
Tours [5-10]% [10-20]% [20-30]%
Cuba
All package holidays [0-5]% [20-30]% [30-40]%
Tours [0-5]% [30-40]% [30-40]%
Stays [5-10]% [20-30]% [30-40]%
Czech Republic
Tours [10-20]% [5-10]% [20-30]%
Dominican Republic
All package holidays [5-10]% [10-20]% [20-30]%
Stays [10-20]% [10-20]% [20-30]%
Greece
All package holidays [10-20]% [5-10]% [20-30]%
Clubs [20-30]% [10-20]% [30-40]%
Tours [20-30]% [5-10]% [20-30]%
Guadeloupe
Stays [20-30]% [0-5]% [30-40]%
Guatemala
Tours [5-10]% [10-20]% [20-30]%
Iceland
Tours [20-30]% [20-30]% [40-50]%
139 For each of the groups of destination countries, the market shares are provided on the basis of the
respective lists of countries/islands proposed by the Parties, as previously described in the market
definition Section. These are respectively: (i) Northern Europe: Germany, Austria, Belgium,
Netherlands, Luxemburg, Denmark, Finland, Ireland, Iceland, Norway, UK, Sweden and Switzerland;
(ii) Northern Africa: Egypt, Morocco, Tunisia and Algeria; (iii) Caribbean: Antigua, Bahamas,
Barbados, Costa Rica, Cuba, Jamaica, Saint Lucia, Dominican Republic, Guadeloupe, Martinique,
Saint Martin and Saint Barthélemy; (iv) Southern Europe: Croatia, Cyprus, Greece, Italy, Malta,
Portugal and Spain; (v) North America: USA and Canada.
34
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Ireland
Tours [0-5]% [30-40]% [30-40]%
Italy
Clubs [20-30]% [5-10]% [20-30]%
Kenya
All package holidays [10-20]% [10-20]% [20-30]%
Tours [10-20]% [10-20]% [30-40]%
Laos
All package holidays [10-20]% [5-10]% [20-30]%
Tours [20-30]% [10-20]% [30-40]%
Martinique
Stays [20-30]% [0-5]% [20-30]%
Mexico
All package holidays [0-5]% [20-30]% [20-30]%
Tours [0-5]% [20-30]% [30-40]%
Stays [0-5]% [20-30]% [20-30]%
Morocco
All package holidays [20-30]% [0-5]% [20-30]%
Clubs [20-30]% [5-10]% [20-30]%
Tours [30-40]% [0-5]% [30-40]%
Northern Africa
All package holidays [10-20]% [0-5]% [20-30]%
Clubs [20-30]% [5-10]% [30-40]%
Tours [20-30]% [0-5]% [20-30]%
Northern Europe
Tours [5-10]% [20-30]% [30-40]%
Norway
Tours [10-20]% [10-20]% [30-40]%
Senegal
All package holidays [0-5]% [20-30]% [20-30]%
Tours [10-20]% [5-10]% [20-30]%
Stays [10-20]% [0-5]% [20-30]%
Southern Europe
Clubs [20-30]% [10-20]% [30-40]%
Spain
All package holidays [10-20]% [5-10]% [20-30]%
Clubs [20-30]% [10-20]% [30-40]%
Tunisia
All package holidays [20-30]% [5-10]% [20-30]%
Clubs [30-40]% [10-20]% [40-50]%
Tours [30-40]% [0-5]% [30-40]%
Turkey
All package holidays [20-30]% [0-5]% [20-30]%
35
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Clubs [20-30]% [5-10]% [30-40]%
Tours [20-30]% [0-5]% [30-40]%
United States
Tours [5-10]% [20-30]% [30-40]%
Stays [0-5]% [30-40]% [30-40]%
North America (USA and Canada)
All package holidays [5-10]% [10-20]% [20-30]%
Tours [5-10]% [30-40]% [30-40]%
Stays [0-5]% [30-40]% [40-50]%
(149) Details on the competitive assessment are provided in each market-specific section
below.
4.1.2.2. Package holidays to all destinations – distinction by holiday type
(150) After the Transaction, TUI would be the leading tour operator in France. When
considering further distinctions in the markets of package holidays by type of
holidays, encompassing all destinations, the following markets are affected:
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
All clubs [10-20]% [5-10]% [20-30]%
All foreign clubs [10-20]% [10-20]% [20-30]%
All short/medium haul clubs [10-20]% [5-10]% [20-30]%
All long haul stays [10-20]% [5-10]% [20-30]%
(151) The market shares of the merged entity would remain limited on the markets for
the supply of long-haul stays, foreign clubs and clubs overall, and no higher than
[20-30]%. In the supply of short/medium haul clubs, the market shares would
remain moderate at [20-30]%.
(152) While the merged entity would be the market leader in the abovementioned
markets, significant competitors such as ClubMed, NG Travel, Thomas Cook,140
140 In the Commission's market investigation, a travel agent considered that the financial situation of
Thomas Cook makes it a weak competitor of the Parties. The Commission has looked at the situation
in more details and notes the following: Thomas Cook's "Continental Europe bookings for the
Summer 2016 were below last year (especially in Belgium)" (Thomas Cook Group, Q3 2016 Results –
28 July 2016), while fiscal year 2016 "underlying operating profit (was) of around GBP 300 million".
Moreover, in fiscal year 2015, Thomas Cook "French business saw its operating loss widen by GBP 6
million to GBP 14 million on the back of a weaker consumer demand generally and lower customer
demand to North African destinations in particular", the revenues were respectively GBP 265 million
and GBP 329 million in 2015 and 2014. (Thomas Cook Group, annual report & accounts 2015).
However, at group level, Thomas Cook was profitable in 2015, showing financially stronger results
than in 2014, in particular thanks to improved EBIT (GBP 211 million in 2015 against GBP 52
36
Karavel/Fram, Top of Travel and Thalasso No. 1 are active on these markets and
specifically in the supply of short/medium haul clubs. As regards the latter market,
in three of the principal destinations in which the Parties are active, namely Turkey,
Morocco and Tunisia, TUI and Transat are reducing their presence in view of the
political situation in these destinations.141
(153) Besides, as described in Sections 4.1.1.2 and 4.1.1.3., during the market
investigation a majority of respondents confirmed that the Parties do not compete
more closely with each other than they do with third parties, and it appears feasible
to overcome the potential barriers to entry and expansion on the markets for the
supply of leisure travel and for the supply of package holidays in France.
(154) Overall, given the moderate market shares of the Parties, the presence of significant
competitors and the fact that no material concern was expressed during the market
investigation,142 the Commission considers that the Transaction is unlikely to lead
to any significant competition concerns on the markets for package holidays from
France to all destinations, when considering the various types of package holidays.
Conclusion
(155) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to all destinations, under any plausible segmentation by
holiday type.
(156) The competitive assessments for markets which are further sub-segmented by both
product type and country of destination are provided in the following sections.
4.1.2.3. North America (United States of America and Canada)
(157) At country level, the following markets are affected:
4.1.2.3.1. United States of America
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Tours [5-10]% [20-30]% [30-40]%
Stays [0-5]% [30-40]% [30-40]%
(158) The market shares of the merged entity would remain moderate and not higher than
[30-40]% on the above markets.
million in 2014). The Commission concludes that, even if some capacity reductions are planned in
France to adapt to this environment, Thomas Cook has sufficient resources to compete, and to
continue to compete, vigorously with the Parties post-Transaction, including in France.
141 Parties' response to RFI 3 of 3 October 2016.
142 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
37
(159) In addition, the increment brought upon by the Transaction in the package holiday
stays market would be limited at [0-5]%, so that there would be no material
Transaction-specific effect in this market.
(160) Significant competitors such as Kuoni, JetSet Voyages, Salaun, Euram, Verdie
Voyages and Voyamar are active in the supply of package holidays tours from
France to the USA.143
(161) Overall, given the moderate market shares of the Parties, the presence of significant
competitors and the fact that no material concern was expressed during the market
investigation,144 the Commission considers that the Transaction is unlikely to lead
to any significant competition concerns markets for package holidays from France
to the USA, under any plausible segmentation.
Conclusion
(162) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to the USA, under any plausible segmentation.
4.1.2.3.2. Canada
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
All package holidays [0-5]% [20-30]% [30-40]%
Tours [0-5]% [40-50]% [40-50]%
(163) The market shares of the merged entity would remain moderate in the market for
all package holidays to Canada, at [30-40]%. In addition, the increment brought
upon by the Transaction in this market would be limited to [0-5]%, so that there
would be no material Transaction-specific effect in this market.
(164) As concerns tours, Transat is a specialist to Canada only because of its parent
company Transat A.T. Inc. and the increment brought upon by the Transaction in
the market for tours would be limited at [0-5]%, so that there would be no material
Transaction-specific effect in this market.
(165) Furthermore, there are numerous competitors active in the supply of package
holidays and tours from France to Canada, such as Euram, Salaun, Voyamar or
Karavel/Fram.145
(166) Overall, given the moderate market shares of the Parties and the limited increment
brought upon by the Transaction, the presence of significant competitors and the
143 Form CO, paragraph 564 and Annex 6.33
144 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
145 Form CO, paragraph 351 and Annex 6.33.
38
fact that no material concern was expressed during the market investigation,146 the
Commission considers that the Transaction is unlikely to lead to any significant
competition concerns in the markets for package holidays from France to Canada,
under any plausible segmentation.
Conclusion
(167) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to Canada, under any plausible segmentation.
4.1.2.3.3. North America
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
All package holidays [5-10]% [10-20]% [20-30]%
Tours [5-10]% [30-40]% [30-40]%
Stays [0-5]% [30-40]% [40-50]%
(168) When considering package holidays to the USA and Canada together, the market
shares of the merged entity would remain limited in the market for overall package
holidays, at [20-30]%.
(169) As concerns tours to the USA and Canada together, as indicated previously,
Transat is a specialist to Canada (and North America as a whole) by virtue of its
parent company Transat A.T. Inc. However, this situation is not merger-specific
and as mentioned, significant competitors with respect to Canada and the USA
remain, such as Salaun and Voyamar. In particular, respondents to the market
investigation did not generally indicate that TUI would be closer to Transat (or vice
versa) in terms of price, service, or brand image than other competitors active on
this market.147 Furthermore, during the market investigation, a majority of
respondents indicated that they expect sufficiently strong competition to prevent
the merged entity from raising prices for North America tours.148
(170) As concerns package holiday stays to the USA and Canada together, the combined
share of the Parties reaches [40-50]%. However, the market for package holiday
stays in Canada is not affected because TUI is not active in that market. Indeed, the
affected market for package holiday stays in North America is only due to (i) the
Parties' activities in the affected market for package holiday stays in the USA
(which does not raise serious doubts as mentioned above) and (ii) Transat's
146 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
147 Replies to Q1 – Questionnaire to tour operators, question 37; Q2 – Questionnaire to travel agents,
question 34.
148 Replies to Q1 – Questionnaire to tour operators, question 46; Q2 – Questionnaire to travel agents,
question 42.
39
activities in package holiday stays in Canada (where there is no merger-specific
effect since TUI is not active).
(171) Furthermore, the increment brought upon by the Transaction in the market for
[…]* in North America is limited at [0-5]%, so that there would be no material
Transaction-specific effect in this market.
(172) Overall, given the market shares of the Parties, the presence of significant
competitors, the fact that a majority of respondents to the market investigation
expects sufficiently strong competition to prevent the merged entity from raising
prices for North America tours and that no material concern was expressed
regarding the other products,149 the Commission considers that the Transaction is
unlikely to lead to any significant competition concerns in the markets for package
holidays from France to North America, under any plausible segmentation.
Conclusion
(173) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays to the USA and Canada, neither separately nor viewed together as a
possible group of countries, under any plausible segmentation.
4.1.2.4. Caribbean
(174) At country/island level, the following markets are affected:
4.1.2.4.1. Costa Rica
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Tours [5-10]% [10-20]% [20-30]%
(175) The market shares of the merged entity on the market for tour package holidays
would remain limited at [20-30]%.
(176) Significant competitors such as Karavel/Fram, Amerigo or Kuoni are active in the
supply of package holidays from France to Costa Rica.150
(177) Although some competitors have mentioned that the Transaction may reinforce
barriers to entry or expansion in Costa Rica,151 no material concern has been raised
beyond the considerations already described in Section 4.1.1.3.
* Should read: stays
149 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
150 Form CO, Annex 6.33.
151 Replies to Q1 – Questionnaire to tour operators, question 39.
40
(178) Overall, given the limited market shares of the Parties, the presence of significant
competitors and the fact that no material concern was expressed during the market
investigation,152 the Commission considers that the Transaction is unlikely to lead
to any significant competition concerns markets for package holidays from France
to Costa Rica, under any plausible segmentation.
Conclusion
(179) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to Costa Rica, under any plausible segmentation.
4.1.2.4.2. Cuba
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
All package holidays [0-5]% [20-30]% [30-40]%
Tours [0-5]% [30-40]% [30-40]%
Stays [5-10]% [20-30]% [30-40]%
(180) The market shares of the merged entity would remain moderate in the market for
all package holidays to Cuba, at [30-40]%.
(181) In addition, the increment brought upon by the Transaction in the all package
holidays market would be limited at [0-5]%, so that there would be no material
Transaction-specific effect in this market. The same would apply to tour package
holidays with an increment of only [0-5]%.
(182) As concerns package holiday stays from France to Cuba, respondents to the market
investigation did not generally indicate that TUI would be closer to Transat (or vice
versa) in terms of price, service, or brand image than other competitors active on
this market.153 Furthermore, during the market investigation, a majority of
respondents indicated that they expect sufficiently strong competition to prevent
the merged entity from raising prices for stays in Cuba.154
(183) There are numerous competitors active in the supply of package holidays and tours
from France to Cuba, such as Empreinte, Kuoni, Karavel/Fram or Havanatour.155
(184) Although some competitors have mentioned that the Transaction may reinforce
barriers to entry or expansion in Cuba156, no material concern has been raised
152 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
153 Replies to Q1 – Questionnaire to tour operators, question 37; Q2 – Questionnaire to travel agents,
question 34.
154 Replies to Q1 – Questionnaire to tour operators, question 46; Q2 – Questionnaire to travel agents,
question 42.
155 Form CO, paragraph 351.
41
beyond the considerations already described in Section 4.1.1.3. The Commission
further notes that large international hotel chains are also currently increasing their
supply of hotel accommodation specifically in Cuba.157
(185) Overall, given the market shares of the Parties, the presence of significant
competitors, and the fact that a majority of respondents to the market investigation
expect sufficiently strong competition to prevent the merged entity from raising
prices for stays in Cuba and given that no material concern was expressed
regarding the other products,158 the Commission considers that the Transaction is
unlikely to lead to any significant competition concerns in the markets for package
holidays from France to Cuba, under any plausible segmentation.
Conclusion
(186) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to Cuba, under any plausible segmentation.
4.1.2.4.3. Dominican Republic
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
All package holidays [5-10]% [10-20]% [20-30]%
Stays [10-20]% [10-20]% [20-30]%
(187) The market shares of the merged entity would remain limited and not higher than
[20-30]% on the above markets.
(188) Significant competitors such as Vacances Héliades, Exotismes or Karavel/Fram are
active in the supply of package holidays from France to the Dominican Republic.159
(189) Although some competitors have mentioned that the Transaction may reinforce
barriers to entry or expansion in the Dominican Republic,160 no material concern
has been raised beyond the considerations already described in Section 4.1.1.3.
(190) Overall, given the limited market shares of the Parties, the presence of significant
competitors and the fact that no material concern was expressed during the market
investigation,161 the Commission considers that the Transaction is unlikely to lead
156 Replies to Q1 – Questionnaire to tour operators, question 39.
157 Form CO, paragraph 374.
158 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
159 Form CO, Annex 6.33.
160 Replies to Q1 – Questionnaire to tour operators, question 39.
161 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
42
to any significant competition concerns markets for package holidays from France
to the Dominican Republic, under any plausible segmentation.
Conclusion
(191) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to the Dominican Republic, under any plausible
segmentation.
4.1.2.4.4. Guadeloupe
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Stays [20-30]% [0-5]% [30-40]%
(192) The market shares of the merged entity would remain moderate at [30-40]% on the
package holiday stays market.
(193) In addition, the increment brought upon by the Transaction in the package holidays
stays market would be limited at [0-5]%, so that there would be no material
Transaction-specific effect in this market.
(194) Significant competitors such as Exotismes, Nouvelles Iles, or Karavel/Fram are
active in the supply of package holidays to Guadeloupe.162
(195) Overall, given the limited market shares of the Parties and the limited increment
brought upon by the Transaction, the presence of significant competitors and the
fact that no material concern was expressed during the market investigation,163 the
Commission considers that the Transaction is unlikely to lead to any significant
competition concerns markets for package holidays to Guadeloupe, under any
plausible segmentation.
Conclusion
(196) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays to Guadeloupe, under any plausible segmentation.
4.1.2.4.5. Martinique
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Stays [20-30]% [0-5]% [20-30]%
162 Form CO, Annex 6.33.
163 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
43
(197) The market shares of the merged entity would remain moderate and not higher than
[20-30]% on the package holiday stays markets.
(198) In addition, the increment brought upon by the Transaction in the package holidays
stays market would be limited to [0-5]%, so that there would be no material
Transaction-specific effect in this market.
(199) Significant competitors such as Exotismes, Nouvelles Iles, or Karavel/Fram are
active in the supply of package holidays to Martinique.164
(200) Overall, given the limited market shares of the Parties and the limited increment
brought upon by the Transaction, the presence of significant competitors and the
fact that no material concern was expressed during the market investigation,165 the
Commission considers that the Transaction is unlikely to lead to any significant
competition concerns markets for package holidays to Martinique, under any
plausible segmentation.
Conclusion
(201) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays to Martinique, under any plausible segmentation.
4.1.2.4.6. Caribbean
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Tours [0-5]% [30-40]% [30-40]%
Stays [10-20]% [5-10]% [20-30]%
(202) When considering package holidays to the Caribbean together, the market shares of
the merged entity would remain moderate and not higher than [30-40]% on the
above markets.
(203) In addition, the increment brought upon by the Transaction in the tours package
holidays market would be limited at less than [0-5]%, so that there would be no
material Transaction-specific effect in this market.
(204) Significant competitors such as Exotismes, Karavel/Fram or Nouvelles Iles are
active in the supply of package holidays from France to the Caribbean.166
(205) Although some competitors mentioned that the Transaction may reinforce barriers
to entry or expansion in Cuba, the Dominican Republic, Costa Rica or the
164 Form CO, Annex 6.33.
165 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
166 Form CO, Annex 6.33.
44
Caribbean,167 no material concern was raised beyond the considerations already
described in Section 4.1.1.3. The Commission further notes that large international
hotel chains are also currently increasing their supply of hotel accommodation in
the Caribbean and specifically in Cuba.168
(206) Overall, given the market shares of the Parties, the presence of significant
competitors and the fact that no material concern was expressed during the market
investigation,169 the Commission considers that the Transaction is unlikely to lead
to any significant competition concerns in the markets for package holidays from
France to the Caribbean, under any plausible segmentation.
Conclusion
(207) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays to Costa Rica, Cuba, the Dominican Republic, Guadeloupe, and
Martinique, neither separately nor viewed together as part of a possible Caribbean
group of islands and countries, under any plausible segmentation.
4.1.2.5. Southern Europe
(208) At country level, the following markets are affected:
4.1.2.5.1. Greece
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
All package holidays [10-20]% [5-10]% [20-30]%
Clubs [20-30]% [10-20]% [30-40]%
Tours [20-30]% [5-10]% [20-30]%
(209) The market shares of the merged entity would remain limited in the market for all
package holidays and moderate in the market for tour package holidays to Greece,
at [20-30]% and [20-30]% respectively.
(210) As concerns club package holidays from France to Greece, where the Parties would
reach a combined share of [30-40]%, respondents to the market investigation did
not generally indicate that TUI would be closer to Transat (or vice versa) in terms
of price, service, or brand image than other competitors active on this market.170
Furthermore, during the market investigation, a majority of respondents indicated
167 Replies to Q1 – Questionnaire to tour operators, question 39.
168 Form CO, paragraph 374.
169 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
170 Replies to Q1 – Questionnaire to tour operators, question 37; Q2 – Questionnaire to travel agents,
question 34.
45
that they expect sufficiently strong competition to prevent the merged entity from
raising prices for clubs in Greece.171
(211) There are numerous competitors active in the supply of package holidays, clubs
and tours from France to Greece, such as notably NG Travel, Club Med, Thomas
Cook, Karavel/Fram, Top of Travel and Thalasso No. 1.172
(212) Although some competitors have mentioned that the Transaction may reinforce
barriers to entry or expansion in Greece,173 no material concern was raised beyond
the considerations already described in Section 4.1.1.3.
(213) Overall, given the market shares of the Parties, the presence of significant
competitors, the fact that a majority of respondents to the market investigation
expect sufficiently strong competition to prevent the merged entity from raising
prices for clubs in Greece and given that no material concern was expressed
regarding the other products,174 the Commission considers that the Transaction is
unlikely to lead to any significant competition concerns in the markets for package
holidays from France to Greece under any plausible segmentation.
Conclusion
(214) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to Greece, under any plausible segmentation.
4.1.2.5.2. Italy
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Clubs [20-30]% [5-10]% [20-30]%
(215) The market shares of the merged entity would remain moderate in the market for
club package holidays to Italy, at [20-30]%.
(216) Respondents to the market investigation did not generally indicate that TUI would
be closer to Transat (or vice versa) in terms of price, service, or brand image than
other competitors active on this market.175 Furthermore, during the market
investigation, a majority of respondents indicated that they expect sufficiently
171 Replies to Q1 – Questionnaire to tour operators, question 46; Q2 – Questionnaire to travel agents,
question 42.
172 Form CO, paragraph 466.
173 Replies to Q1 – Questionnaire to tour operators, question 39.
174 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
175 Replies to Q1 – Questionnaire to tour operators, question 37; Q2 – Questionnaire to travel agents,
question 34.
46
strong competition to prevent the merged entity from raising prices for clubs in
Italy.176
(217) There are numerous competitors active in the supply of package holidays and clubs
from France to Italy, such as NG Travel, Héliades, Thomas Cook, Thalasso No. 1
and Karavel/Fram.177
(218) Overall, given the market shares of the Parties, the presence of significant
competitors, the fact that a majority of respondents to the market investigation
expect sufficiently strong competition to prevent the merged entity from raising
prices for clubs in Italy and given that no material concern was expressed regarding
the other products,178 the Commission considers that the Transaction is unlikely to
lead to any significant competition concerns in the markets for package holidays
from France to Italy, under any plausible segmentation.
Conclusion
(219) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to Italy, under any plausible segmentation.
4.1.2.5.3. Spain
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
All package holidays [10-20]% [5-10]% [20-30]%
Clubs [20-30]% [10-20]% [30-40]%
(220) The market shares of the merged entity would remain limited in the market for all
package holidays to Spain, at [20-30]%.
(221) As concerns club package holidays from France to Spain, respondents to the
market investigation did not generally indicated that TUI would be closer to
Transat (or vice versa) in terms of price, service, or brand image than other
competitors active on this market.179 Furthermore, during the market investigation,
a majority of respondents indicated that they expect sufficiently strong competition
to prevent the merged entity from raising prices for clubs in Spain.180
176 Replies to Q1 – Questionnaire to tour operators, question 46; Q2 – Questionnaire to travel agents,
question 42.
177 Form CO, paragraph 470.
178 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
179 Replies to Q1 – Questionnaire to tour operators, question 37; Q2 – Questionnaire to travel agents,
question 34.
180 Replies to Q1 – Questionnaire to tour operators, question 46; Q2 – Questionnaire to travel agents,
question 42.
47
(222) There are numerous competitors active in the supply of package holidays and clubs
from France to Spain, such as NG Travel, Thomas Cook, Karavel/Fram, Top of
Travel and Thalasso No. 1.181
(223) Although some competitors have mentioned that the Transaction may reinforce
barriers to entry or expansion in Spain,182 no material concern has been raised
beyond the considerations already described in Section 4.1.1.3.
(224) Overall, given the market shares of the Parties, the presence of significant
competitors, the fact that a majority of respondents to the market investigation
expect sufficiently strong competition to prevent the merged entity from raising
prices for clubs in Spain and given that no material concern was expressed
regarding the other products,183 the Commission considers that the Transaction is
unlikely to lead to any significant competition concerns in the markets for package
holidays from France to Spain, under any plausible segmentation.
Conclusion
(225) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to Spain, under any plausible segmentation.
4.1.2.5.4. Southern Europe
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Clubs [20-30]% [10-20]% [30-40]%
(226) When considering package holidays to Southern Europe together, the market shares
of the merged entity would remain moderate and not higher than [30-40]% in club
package holidays.
(227) Significant competitors such as NG Travel, Thomas Cook, Karavel/Fram and
Thalasso No. 1 are active in the supply of club package holidays from France to
Southern Europe.184
(228) Although some competitors have mentioned that the Transaction may reinforce
barriers to entry or expansion in Greece or Spain,185 no material concern has been
raised beyond the considerations already described in Section 4.1.1.3.
181 Form CO, paragraph 462.
182 Replies to Q1 – Questionnaire to tour operators, question 39.
183 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
184 Form CO, Annex 6.33.
185 Replies to Q1 – Questionnaire to tour operators, question 39.
48
(229) Overall, given the moderate market shares of the Parties, the presence of significant
competitors and the fact that no material concern was expressed during the market
investigation regarding the other products,186 the Commission considers that the
Transaction is unlikely to lead to any significant competition concerns in the
markets for package holidays from France to Southern Europe under any plausible
segmentation.
Conclusion
(230) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays to Greece, Italy and Spain, neither separately nor viewed together as part
of a possible Southern European group of countries, under any plausible
segmentation.
4.1.2.6. Northern Europe
(231) At country level, the following markets are affected:
4.1.2.6.1. Iceland
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Tours [20-30]% [20-30]% [40-50]%
(232) On the market for tour package holidays from France to Iceland, where the Parties
would reach a combined share of [40-50]%, respondents to the market
investigation did not generally indicate that TUI would be closer to Transat (or vice
versa) in terms of price, service, or brand image than other competitors active on
this market.187
(233) There are numerous competitors active in the supply of tour package holidays from
France to Iceland, such as notably Kuoni, Voyageurs du Monde, Jet Tours and
Verdié.188 Moreover, as Iceland is a not very distant European destination, French
customers would be able to organise their own holiday to that destination.189 The
independent organisation of holidays exerts therefore significant degree of
competitive pressure on the Parties as regards Iceland as a destination. This is
demonstrated by the fact that the customers purchasing package holidays from
186 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
187 Replies to Q1 – Questionnaire to tour operators, question 37; Q2 – Questionnaire to travel agents,
question 34.
188 Form CO, paragraph 528.
189 Tour operators explain that the demand for package holidays is higher for long-haul destinations; See
Minutes of a call with a tour operator of 4 July 2016, paragraph 17; Minutes of a call with a tour
operator of 22 June 2016, paragraph 5.
49
France to Iceland correspond to less than [10-20]% of the total travellers from
France to Iceland.190
(234) Finally, a majority of respondents to the market investigation indicated that they
expect sufficiently strong competition to prevent the merged entity from raising
prices for tours in Iceland.191
(235) Overall, given the presence of numerous competitors, the fact that a majority of
respondents to the market investigation expect sufficiently strong competition to
prevent the merged entity from raising prices for tours in Iceland, and given that no
material concern was expressed regarding the other products,192 the Commission
considers that the Transaction is unlikely to lead to any significant competition
concerns in the markets for package holidays from France to Iceland under any
plausible segmentation.
Conclusion
(236) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to Iceland, under any plausible segmentation.
4.1.2.6.2. Ireland
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Tours [0-5]% [30-40]% [30-40]%
(237) On the market for tour package holidays from France to Ireland, the increment
brought upon by the Transaction market would be limited at [0-5]%, so that there
would be no material Transaction-specific effect in this market.
(238) There are numerous competitors active in the supply of tour package holidays from
France to Ireland, such as notably Kuoni, Verdié, Time Tours and Syltours.193
(239) Overall, given the market shares of the Parties and the limited increment brought
upon by the Transaction, the presence of significant competitors and the fact that
no material concern was expressed during the market investigation,194 the
Commission considers that the Transaction is unlikely to lead to any significant
190 Annex 6.33 to the Form CO, "Enquête/Palmarès des voyagistes"; L'Echo Touristique of November
2015, according to which out of a total of 58 293 travellers from France to Iceland, a total of 8 346
purchased package holidays.
191 Replies to Q1 – Questionnaire to tour operators, question 46; Q2 – Questionnaire to travel agents,
question 42.
192 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
193 Form CO, Annex 6.33.
194 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
50
competition concerns markets for package holidays to Ireland, under any plausible
segmentation.
Conclusion
(240) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays to Ireland, under any plausible segmentation.
4.1.2.6.3. Norway
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Tours [10-20]% [10-20]% [30-40]%
(241) The market shares of the merged entity would remain moderate at [30-40]% on the
tour package holidays market.
(242) There are numerous competitors active in the supply of tour package holidays from
France to Norway, such as notably Salaun, Kuoni, Verdié, and Time Tours.195
(243) Overall, given the moderate market shares of the Parties, the presence of significant
competitors and the fact that no material concern was expressed during the market
investigation,196 the Commission considers that the Transaction is unlikely to lead
to any significant competition concerns markets for package holidays to Norway,
under any plausible segmentation.
Conclusion
(244) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays to Norway, under any plausible segmentation.
4.1.2.6.4. Northern Europe
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Tours [5-10]% [20-30]% [30-40]%
(245) When considering tour package holidays to Northern Europe together, the market
shares of the merged entity would remain moderate at [30-40]%.
195 Form CO, Annex 6.33.
196 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
51
(246) Significant competitors such as Kuoni, Verdié, Voyageurs du Monde and Time
Tours are active in the supply of tour package holidays from France to Northern
Europe.197
(247) Overall, given the moderate market shares of the Parties, the presence of significant
competitors and the fact that no material concern was expressed during the market
investigation,198 the Commission considers that the Transaction is unlikely to lead
to any significant competition concerns markets for package holidays to Northern
Europe, under any plausible segmentation.
Conclusion
(248) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays to Iceland, Ireland and Norway, neither separately nor viewed together as
part of a possible Northern European group of countries, under any plausible
segmentation.
4.1.2.7. Northern Africa
(249) At country level, the following markets are affected:
4.1.2.7.1. Morocco
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
All package holidays [20-30]% [0-5]% [20-30]%
Clubs [20-30]% [5-10]% [20-30]%
Tours [30-40]% [0-5]% [30-40]%
(250) The market shares of the merged entity would remain limited in the market for all
package holidays and moderate in the market for club package holidays to
Morocco, at [20-30]% and [20-30]% respectively.
(251) In addition, the increment brought upon by the Transaction in the tours, clubs and
all package holiday markets would be limited at [0-5]%, [5-10]% and [0-5]%
respectively, so that there would be no material Transaction-specific effect in these
markets.
(252) There are numerous competitors active in the supply of package holidays, clubs
and tours from France to Morocco, such as notably Karavel/Fram, Voyamar,
Salaun and Thalasso No. 1.199 It can also be noted that the size of the market for
197 Form CO, Annex 6.33.
198 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
199 Form CO, paragraph 340.
52
package holidays has contracted in recent years, and that the Parties are currently in
the process of reducing their presence in Morocco.200
(253) Overall, given the market shares of the Parties and the limited increment brought
upon by the Transaction,, the presence of significant competitors and the fact that
no material concern was expressed during the market investigation,201 the
Commission considers that the Transaction is unlikely to lead to any significant
competition concerns markets for package holidays to Morocco, under any
plausible segmentation.
Conclusion
(254) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to Morocco, under any plausible segmentation.
4.1.2.7.2. Tunisia
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
All package holidays [20-30]% [5-10]% [20-30]%
Clubs [30-40]% [10-20]% [40-50]%
Tours [30-40]% [0-5]% [30-40]%
(255) The market shares of the merged entity would remain moderate in the market for
all package holidays to Tunisia, at [20-30]%.
(256) In addition, the increment brought upon by the Transaction in the tour package
holidays market would be limited at [0-5]%, so that there would be no material
Transaction-specific effect in this market.
(257) As concerns club package holidays from France to Tunisia, where the Parties
would reach a combined share of [40-50]%, respondents to the market
investigation did not generally indicate that TUI would be closer to Transat (or vice
versa) in terms of price, service, or brand image than other competitors active on
this market.202 Furthermore, during the market investigation, a majority of
respondents indicated that they expect sufficiently strong competition to prevent
the merged entity from raising prices for clubs in Tunisia.203
200 Form CO, paragraph 338.
201 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
202 Replies to Q1 – Questionnaire to tour operators, question 37; Q2 – Questionnaire to travel agents,
question 34.
203 Replies to Q1 – Questionnaire to tour operators, question 46; Q2 – Questionnaire to travel agents,
question 42.
53
(258) There are numerous competitors active in the supply of package holidays, clubs
and tours from France to Tunisia, such as notably Karavel/Fram, Voyamar,
Sunshine Vacances and Thalasso No. 1.204 It can also be noted that the size of the
market for package holidays has contracted in recent years, and that the Parties are
currently in the process of reducing their presence in Tunisia.205
(259) Furthermore, the market for tour package holidays in Tunisia is very limited in size
(less than 1 000 travellers). Therefore, this market does not constitute a substantial
part of the internal market.
(260) Overall, given the market shares of the Parties, the presence of significant
competitors, the fact that a majority of respondents to the market investigation
expect sufficiently strong competition to prevent the merged entity from raising
prices for clubs in Tunisia, that tours in Tunisia do not constitute a substantial part
of the internal market, and given that no material concern was expressed regarding
the other products,206 the Commission considers that the Transaction is unlikely to
lead to any significant competition concerns in the markets for package holidays
from France to Tunisia under any plausible segmentation.
Conclusion
(261) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to Tunisia, under any plausible segmentation.
4.1.2.7.3. Northern Africa
Affected market TUI market share (%)
Transat market
share (%)
Combined market
share (%)
All package holidays [10-20]% [0-5]% [20-30]%
Clubs [20-30]% [5-10]% [30-40]%
Tours [20-30]% [0-5]% [20-30]%
(262) When considering package holidays to Northern Africa together, the market shares
of the merged entity would remain moderate and not higher than [30-40]% in all
the above markets.
(263) In addition, the increment brought upon by the Transaction in the overall package
holidays market would be limited at [0-5]%, and in the tour package holidays
market at [0-5]% so that there would be no material Transaction-specific effect in
these markets.
204 Form CO, paragraph 466.
205 Form CO, paragraph 549.
206 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
54
(264) As concerns club package holidays, the market investigation did not allow drawing
a clear conclusion as to whether sufficiently strong competition would prevent the
merged entity from raising prices in Northern Africa post-Transaction, as
respondents were divided on this point.207 However, respondents to the market
investigation did not generally indicate that TUI would be closer to Transat (or vice
versa) in terms of price, service, or brand image than other competitors active on
this market.208
(265) Furthermore, significant competitors such as Karavel/Fram, Voyamar and Thalasso
No. 1 are active in the supply of package holidays, clubs and tours from France to
Northern Africa.209 It can also be noted that the size of the market for package
holidays has contracted in recent years, and that the Parties are currently in the
process of reducing their presence in Northern Africa.210
(266) Overall, given the moderate market shares of the Parties, the presence of significant
competitors and the fact that no material concern was expressed during the market
investigation,211 the Commission considers that the Transaction is unlikely to lead
to any significant competition concerns in the markets for package holidays from
France to Northern Africa under any plausible segmentation.
Conclusion
(267) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays to Morocco and Tunisia, neither separately nor viewed together as part of
a possible Northern African group of countries, under any plausible segmentation.
4.1.2.8. Other countries
(268) The following markets are also affected at country level:
4.1.2.8.1. Czech Republic
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Tours [10-20]% [5-10]% [20-30]%
(269) The market shares of the merged entity would remain moderate at [20-30]% in the
tour package holidays market.
207 Replies to Q1 – Questionnaire to tour operators, question 46; Q2 – Questionnaire to travel agents,
question 42.
208 Replies to Q1 – Questionnaire to tour operators, question 37; Q2 – Questionnaire to travel agents,
question 34.
209 Form CO, Annex 6.33.
210 Form CO, Annexes 6.27 to 6.32.
211 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
55
(270) Significant competitors such as Travel Europe, Salaun, Verdié or Voyamar are
active in the supply of package holidays to the Czech Republic.212
(271) Overall, given the moderate market shares of the Parties, the presence of significant
competitors and the fact that no material concern was expressed during the market
investigation,213 the Commission considers that the Transaction is unlikely to lead
to any significant competition concerns markets for package holidays to the Czech
Republic, under any plausible segmentation.
Conclusion
(272) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays to the Czech Republic, under any plausible segmentation.
4.1.2.8.2. Guatemala
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
Tours [5-10]% [10-20]% [20-30]%
(273) The market shares of the merged entity would remain limited at [20-30]% on the
tour package holidays market.
(274) Significant competitors such as Syltours, Kuoni, Les Maisons du Voyage or Richou
Voyages are active in the supply of package holidays to Guatemala.214
(275) Furthermore, the market for tour package holidays in Guatemala is very limited in
size (less than 3 000 travellers). Therefore, this market does not constitute a
substantial part of the internal market.
(276) Overall, given the limited market shares of the Parties, the presence of significant
competitors, the fact that tours in Guatemala do not constitute a substantial part of
the internal market and that no material concern was expressed during the market
investigation,215 the Commission considers that the Transaction is unlikely to lead
to any significant competition concerns markets for package holidays to
Guatemala, under any plausible segmentation.
212 Form CO, Annex 6.33.
213 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
214 Form CO, Annex 6.33.
215 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
56
Conclusion
(277) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays to Guatemala, under any plausible segmentation.
4.1.2.8.3. Kenya
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
All package holidays [10-20]% [10-20]% [20-30]%
Tours [10-20]% [10-20]% [30-40]%
(278) The market shares of the merged entity would remain moderate and not higher than
[30-40]% on the above markets.
(279) Significant competitors such as Kuoni, La Française des Circuits or Vivatours are
active in the supply of package holidays from France to Kenya.216
(280) Furthermore, the market for tour package holidays in Kenya is very limited in size
(less than 1 500 travellers). Therefore, this market does not constitute a substantial
part of the internal market.
(281) Overall, given the limited market shares of the Parties, the presence of significant
competitors, the fact that tours in Kenya do not constitute a substantial part of the
internal market and that no material concern was expressed during the market
investigation,217 the Commission considers that the Transaction is unlikely to lead
to any significant competition concerns markets for package holidays from France
to Kenya, under any plausible segmentation.
Conclusion
(282) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to Kenya, under any plausible segmentation.
216 Form CO, Annex 6.33.
217 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
57
4.1.2.8.4. Laos
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
All package holidays [10-20]% [5-10]% [20-30]%
Tours [20-30]% [10-20]% [30-40]%
(283) The market shares of the merged entity would remain moderate and not higher than
[30-40]% on the above markets.
(284) On the market for tour package holidays from France to Laos, where the Parties
would reach a combined share of [30-40]%, respondents to the market
investigation did not generally indicate that TUI would be closer to Transat (or vice
versa) in terms of price, service, or brand image than other competitors active on
this market.218 Furthermore, during the market investigation, a majority of
respondents indicated that they expect sufficiently strong competition to prevent
the merged entity from raising prices for tours in Laos.219
(285) Furthermore, the market for tour package holidays in Laos is very limited in size
(less than 2 000 travellers). Therefore, this market does not constitute a substantial
part of the internal market.
(286) Significant competitors such as Asia, Time Tours, Syltours or La Française des
Circuits are active in the supply of package holidays, including tours, from France
to Laos.220
(287) Overall, given the moderate market shares of the Parties, the presence of significant
competitors, the fact that tours in Laos do not constitute a substantial part of the
internal market and that no material concern was expressed during the market
investigation,221 the Commission considers that the Transaction is unlikely to lead
to any significant competition concerns markets for package holidays from France
to Laos, under any plausible segmentation.
Conclusion
(288) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to Laos, under any plausible segmentation.
218 Replies to Q1 – Questionnaire to tour operators, question 37; Q2 – Questionnaire to travel agents,
question 34.
219 Replies to Q1 – Questionnaire to tour operators, question 46; Q2 – Questionnaire to travel agents,
question 42.
220 Form CO, Annex 6.33.
221 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
58
4.1.2.8.5. Mexico
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
All package holidays [0-5]% [20-30]% [20-30]%
Tours [0-5]% [20-30]% [30-40]%
Stays [0-5]% [20-30]% [20-30]%
(289) The market shares of the merged entity would remain moderate and not higher than
[30-40]% on the above markets.
(290) In addition, the increment brought upon by the Transaction in the stays, tours and
all package holiday markets would be limited at [0-5]%, [5-10]% and [0-5]%
respectively, so that there would be no material Transaction-specific effect in these
markets.
(291) Significant competitors such as Kuoni, Empreinte, Amerigo, Syltours or
Karavel/Fram are active in the supply of package holidays from France to
Mexico.222
(292) Overall, given the limited market shares of the Parties and the limited increment
brought upon by the Transaction, the presence of significant competitors and the
fact that no material concern was expressed during the market investigation,223 the
Commission considers that the Transaction is unlikely to lead to any significant
competition concerns markets for package holidays from France to Mexico, under
any plausible segmentation.
Conclusion
(293) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to Mexico, under any plausible segmentation.
4.1.2.8.6. Senegal
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
All package holidays [0-5]% [20-30]% [20-30]%
Tours [10-20]% [5-10]% [20-30]%
Stays [10-20]% [0-5]% [20-30]%
222 Form CO, Annex 6.33.
223 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
59
(294) The market shares of the merged entity would remain limited and not higher than
[20-30]% on the above markets.
(295) In addition, the increment brought upon by the Transaction in the stays and all
package holiday markets would be limited at [0-5]% and [0-5]% respectively, so
that there would be no material Transaction-specific effect in these markets.
(296) Significant competitors such as Karavel/Fram, Voyamar, Verdié or Salaun are
active in the supply of package holidays from France to Senegal.224
(297) Overall, given the limited market shares of the Parties, the presence of significant
competitors and the fact that no material concern was expressed during the market
investigation,225 the Commission considers that the Transaction is unlikely to lead
to any significant competition concerns markets for package holidays from France
to Senegal, under any plausible segmentation.
Conclusion
(298) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to Senegal, under any plausible segmentation.
4.1.2.8.7. Turkey
Affected market TUI
market share (%)
Transat market
share (%)
Combined market
share (%)
All package holidays [20-30]% [0-5]% [20-30]%
Clubs [20-30]% [5-10]% [20-30]%
Tours [20-30]% [0-5]% [30-40]%
(299) The market shares of the merged entity would remain moderate and not higher than
[30-40]% on the above markets.
(300) In addition, the increment brought upon by the Transaction in the tours and all
package holiday markets would be limited at [0-5]% each, so that there would be
no material Transaction-specific effect in these markets.
(301) Significant competitors such as Karavel/Fram, Voyamar, Salaun or Verdié are
active in the supply of package holidays from France to Turkey.226
(302) Overall, given the limited market shares of the Parties, the presence of significant
competitors and the fact that no material concern was expressed during the market
224 Form CO, Annex 6.33.
225 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
226 Form CO, Annex 6.33.
60
investigation,227 the Commission considers that the Transaction is unlikely to lead
to any significant competition concerns markets for package holidays from France
to Turkey, under any plausible segmentation.
Conclusion
(303) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns the markets for package
holidays from France to Turkey, under any plausible segmentation.
4.2. Assessment of vertical relationships
4.2.1. Legal framework
(304) In this Section, the Commission will examine whether the Transaction is likely to
result in foreclosure in any of the markets that are vertically affected by the
Transaction.
(305) According to the Non-Horizontal Merger Guidelines,228 foreclosure occurs when
actual or potential rivals' access to markets is hampered, thereby reducing those
companies' ability and/or incentive to compete.229 Such foreclosure can take two
forms: (i) input foreclosure, when access of downstream rivals to supplies is
hampered;230 and (ii) customer foreclosure, when access of upstream rivals to a
sufficient customer base is hampered.231
(306) For input or customer foreclosure to be a concern, three conditions need to be met
post-Transaction: (i) the merged entity needs to have the ability to foreclose its
rivals; (ii) the merged entity needs to have the incentive to foreclose its rivals; and
(iii) the foreclosure strategy needs to have a significant detrimental effect on
competition on the downstream market (input foreclosure) or on customers
(customer foreclosure).232 In practice, these factors are often examined together
since they are closely intertwined.
4.2.2. Overview of the vertically affected markets
(307) TUI and Transat, as tour operators, are wholesalers of travel services. They thus
interact with upstream suppliers, in particular suppliers of hotel accommodation
and of airline seats, and with downstream retailers, i.e. travel agents.
227 Replies to Q1 – Questionnaire to tour operators, question 48; Q2 – Questionnaire to travel agents,
question 45.
228 Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control
of concentrations between undertakings, OJ C 265, 18.10.2008, p. 7.
229 Non-Horizontal Merger Guidelines, paragraphs 29-30.
230 Non-Horizontal Merger Guidelines, paragraph 31.
231 Non-Horizontal Merger Guidelines, paragraph 58.
232 Non-Horizontal Merger Guidelines, paragraphs 32 and 59.
61
Hotel accommodation
(308) Neither TUI nor Transat supply hotel accommodation to tour operators active in
France.233 Therefore, the Transaction does not involve any vertical integration with
regard to hotel accommodation.
(309) Nevertheless, a travel agency has raised concerns about the risk that independent
holiday providers are foreclosed access to hotel accommodation in key holiday
destinations, due to (i) the combination of TUI and Transat hotel portfolios, and (ii)
the extension of exclusivity arrangements between the Parties and hotel operators.
A tour operator expressed a similar issue of reduced access to hotel
accommodation capacities.234
(310) TUI submits that the merged entity would not have the ability to foreclose other
tour operators from access to hotel accommodation in any destination.
(311) With regard to point (i), the Commission notes that Transat does not own or lease
any accommodation. It resorts to agreements with third-party hotel operators to
produce its package holidays.235 Therefore, the Commission does not expect that
the combination of TUI and Transat will have any impact on the portfolio of hotel
rooms that the merged entity would supply to other tour operators or travel
agencies active in France.
(312) With regard to point (ii) as well, the Commission finds that the Transaction is not
likely to have any material impact on the access of other tour operators and travel
agencies to hotel accommodation services. First, the development of a club concept
by a tour operator generally implies entering into exclusive agreements with hotel
operators.236 TUI and Transat already enter, pre-Transaction, into such exclusive
agreements with operators of hotels which, once provided with the necessary
additional animation services, are included in their club offering.237 The
Transaction is therefore not expected to entail any conversion of non-exclusive
agreements into exclusive agreements. Second, the buying or negotiating power of
the Parties, even though increased through the Transaction, would remain limited,
since the Parties’ combined market shares on the market for the procurement of
hotel accommodation in each destination where they are active is below [0-5]%,
with the exceptions of Guadeloupe and Martinique where they reach a low [5-
10]%.238
(313) In view of the above, the Commission will not further assess the market for the
supply of hotel accommodation services in this Decision.
233 Form CO, paragraph 764.
234 See Minutes of a call with a tour operator of 22 June 2016, paragraphs 10 to 13.
235 Form CO, paragraph 74.
236 See definition by the SETO of clubs, as opposed to stays: "Les ventes dans des hôtels clubs non
exclusifs sont à considérer comme des ventes de séjour" ("sales of package in non-exclusive club
hotels are to be considered as sales of stays") (Form CO, Annex 6.9.22).
237 Form CO, paragraphs 48 and 75.
238 Form CO, Annex 6.50.
62
Airline seats
(314) TUI acts as a wholesale supplier of airline seats to tour operators in France.239
Transat is not active on the wholesale supply of airline seats, as it does not operate
its own airline in France.240 However, Transat is a customer on that market and
purchases airline seats to be integrated in its package holidays.
(315) The vertically related markets for the wholesale supply of airline seats and the
supply of package holidays are affected if the downstream market is defined as one
of the following:
(a) the supply of short/medium haul package holidays in clubs, since TUI
supplies short/medium haul airline seats on a wholesale basis, Transat is
active on that downstream market and achieves a market share of [30-40]%
(in number of passengers ("PAX"))241 together with TUI;
(b) the supply of package holidays (all types of products included) to Turkey,
Morocco, Tunisia, Canada and Cuba, since TUI supplies airline seats on a
wholesale basis from France to those five countries of destination, Transat is
active on those downstream markets and achieves market shares exceeding
30% (in PAX) together with TUI;242
(c) the supply of packages holidays in clubs, stays or tours to certain destinations
for which TUI supplies airline seats on a wholesale basis, Transat is active on
those downstream markets and achieves market shares exceeding 30% (in
PAX) together with TUI.243
(316) The Commission will therefore further assess in Section 4.2.3 the vertical effects of
the Transaction on the upstream markets for the wholesale supply of airline seats
and the downstream markets for the supply of package holidays.
239 In terms of destinations, Jetairfly and Tuifly supply airlines seats from France to only short/medium
haul destinations; Corsair supplies airlines seats from France to only long haul destinations. In terms
of types of flights, Jetairfly supplies both charter and scheduled airline seats. Tuifly and Corsair
supply only scheduled airline seats (Form CO, Tables 6.1.209 to 6.1.217). In addition, Corsair is not,
according to the Parties, used for package holidays supplied by TUI in France (Form CO, paragraph
924).
240 Transat has no stake in Air Transat, which is the Transat group's in-house airline and is wholly owned
by Transat A.T. Inc. In any case, from France, Air Transat only operates flights to Canada (Form CO,
paragraph 77).
241 For the sake of data availability and consistency between the upstream markets for the wholesale
supply of airline seats and the downstream markets for the supply of package holidays, the
Commission will use market shares calculated in PAX rather than turnover in this Section.
242 Turkey: [30-40]%; Morocco: [30-40]%; Tunisia: [30-40]%; Canada: [30-40]%; and Cuba: [30-40]%.
243 Those destinations would be the five countries already listed (Turkey, Morocco, Tunisia, Canada and
Cuba) as well as Italy ([40-50]% on tours and [30-40]% on clubs); Czech Republic ([30-40]% on
tours); Greece ([30-40]% on tours and [30-40]% on clubs); Iceland ([60-70]% on tours); Ireland ([30-
40]% on tours); Norway ([30-40]% on tours); Spain ([30-40]% on clubs); the Caribbean ([30-40]% on
tours); Northern Africa ([30-40]% on tours and [30-40]% on clubs); Southern Europe ([30-40]% on
clubs); and North America ([30-40]% on tours and [40-50]% on stays). TUI airlines do not offer
flights from France to Kenya, Laos, Mexico and the USA; therefore, the four countries do not give
rise to vertically affected markets.
63
Other upstream services
(317) Transat, via its subsidiary TourGreece, provides destination management services
to third-party tour operators in Greece.244 That market is therefore technically
affected since the Parties' combined market shares on the supply of package
holidays to Greece exceed 30% for clubs and tours.
(318) Nevertheless, as submitted by the Parties, the Transaction does not create concerns
of foreclosure.
(319) First, the Transaction is not likely to lead to input foreclosure, since Transat has a
marginal position in the provision of destination management services in Greece245
and mainly serves tour operators active outside of France.246 In addition, a large
number of other destination management companies are active in Greece (e.g. Siva
Travel Services, Thomas Cook, Deltanet, Conceptours, and Destination One).
(320) The Transaction does not create concerns of customer foreclosure either, as,
already pre-Transaction, the Parties only source destination management services
in Greece in-house, from their own destination management companies.247
(321) In view of the above, the Commission will not further assess the market for the
supply of destination management services in this Decision.
Travel agency services
(322) The Parties are both retailers of package holidays.248 They distribute not only their
own leisure travel services but also those offered by their competitors. In addition,
the Parties supply their package holidays to unrelated travel agencies (i.e. travel
agencies belonging to other tour operators and independent travel agencies).
(323) The vertically linked markets for the supply of package holidays and the provision
of travel agency services are affected if the downstream market is defined as one of
the following:
244 TUI Hellas, TUI's subsidiary providing destination management services in Greece, achieves all of its
revenue with companies belonging to TUI. In line with the Commission's practice regarding self-
supply, TUI is not considered as active on destination management services in Greece.
245 TourGreece's estimated share of the market for destination management services in Greece is below
[0-5]% (see TUI's answer of 10 October 2016 to RFI 5).
246 Form CO, paragraph 934.
247 See TUI's answer of 10 October 2016 to RFI 5.
248 In this regard, the Commission notes that the Transaction would give rise to two horizontally affected
markets (Charleville-Mézières and Dunkerque areas), if (i) those markets were to be defined as the
local markets for the provision of travel agency services through outlets, and (ii) the Parties' combined
market shares were to be calculated on the basis of the number of outlets, which is not the most
relevant indicator (the turnover or the number of PAX would be more appropriate). In addition, the
Parties' combined market shares would only marginally exceed 20% (Charleville-Mézières area: [20-
30]%; Dunkerque area: [20-30]%). As a consequence, the Commission considers that the Transaction
does not raise any competition concerns as to its horizontal effects on the market for the provision of
travel agency services. It will therefore focus its competitive assessment on the vertical effects of the
Transaction on that market.
64
(a) the supply of short/medium haul package holidays in clubs, for which the
Parties' combined market share is [30-40]% (in PAX);
(b) the supply of package holidays (all types of products included) to Turkey,
Morocco, Tunisia, Canada and Cuba, for which the Parties' combined market
shares exceed 30% (in PAX);249
(c) the supply of packages holidays in clubs, stays or tours to certain destinations
for which the Parties' combined market shares exceed 30% (in PAX).250
(324) The Commission will therefore further assess in Section 4.2.4 the vertical effects of
the Transaction on the downstream markets for the provision of travel agency
services and the upstream markets for the supply of package holidays.
4.2.3. Supply of airline seats and supply of package holidays
(325) The Commission has assessed whether the Transaction could lead to input
foreclosure, with TUI's airline seats being the input to unrelated tour operators
active in France, or to customer foreclosure, with the merged entity being the
customer of seats supplied by third-party airlines.
4.2.3.1. Input foreclosure
TUI's views
(326) TUI submits that the Transaction does not lead to vertical concerns on the market
for the wholesale supply of airline seats, since (i) the Transaction does not create
market power in favour of the merged entity on the upstream market; (ii) the share
of the merged entity on the upstream market is modest; and (iii) competing tour
operators would have sufficient sourcing alternatives.251
Commission's assessment
(327) The Commission considers that the Transaction is not likely to raise competitive
concerns as a result of input foreclosure for the following reasons.
(328) First, the ability of the merged entity to engage into input foreclosure would not
increase as a result of the Transaction. The Transaction would change neither the
number of airlines that can provide wholesale access to airline seats nor the overall
air transport capacity offered on the wholesale market.
249 Turkey: [30-40]%; Morocco: [30-40]%; Tunisia: [30-40]%; Canada: [30-40]%; and Cuba: [30-40]%.
250 Those destinations would be the five countries already listed (Turkey, Morocco, Tunisia, Canada and
Cuba) as well as Italy ([40-50]% on tours and [30-40]% on clubs); Czech Republic ([30-40]% on
tours); Greece ([30-40]% on tours and [30-40]% on clubs); Iceland ([60-70]% on tours); Ireland ([30-
40]% on tours); Kenya ([30-40]% on tours), Laos ([30-40]% on tours), Mexico ([30-40]% on tours);
Norway ([30-40]% on tours); Spain ([30-40]% on clubs); the USA ([30-40]% on tours and [30-40]%
on stays); the Caribbean ([30-40]% on tours); Northern Africa ([30-40]% on tours and [30-40]% on
clubs); Southern Europe ([30-40]% on clubs); and North America ([30-40]% on tours and [40-50]%
on stays).
251 Form CO, paragraphs 896-899.
65
(329) Second, TUI's market share on the upstream market for the wholesale supply of
airline seats does not exceed 30% under any plausible market definition, even
taking account of the narrowest segments combining a type of flights (charter or
scheduled), an airport of departure and a country of destination.252 On broader
segments encompassing all airports of departure in France, TUI's market shares
range from 0% to 10%.253 The merged entity therefore lacks the market power in
the upstream market which could result in input foreclosure being a concern.254
(330) Two tour operators mentioned another potential input foreclosure strategy,
following which the merged entity would reduce its co-chartering operations, thus
restricting access to charter seats for tour operators competing with the merged
entity for regional departures.255 Nevertheless, pre-Transaction, the Parties very
marginally resort to co-chartering of aircrafts.256 In addition, Transat could be
replaced by other partners for the purpose of co-chartering aircrafts.257 It is
therefore unlikely that the merged entity would engage in input foreclosure by
limiting or even ceasing co-chartering.
(331) Third, following the Transaction, TUI's incentive to offer wholesale access to its air
transport capacities to competing tour operators may decrease, as a result of the
transfer of Transat's customers from competing airlines to TUI's in-house airlines
and the improved load factors of aircrafts operated by TUI.
(332) Nevertheless, due to the complementarity of the short/medium haul and long haul
destinations served by the Parties, the transfer of Transat's customers may have a
relative impact, so that the merged entity may still have spare air transport capacity
to be sold to competing tour operators,258 in particular on short/medium haul
destinations.259
252 See TUI's answer of 03 October 2016 to RFI 3. In line with the Commission prior decision practice,
TUI has excluded the share of TUI's capacity on the French market used for self-supply ([40-50]%)
(Form CO, paragraph 883).
253 Wholesale supply of airline seats departing from airports in France: [0-5]%; Wholesale supply of
airline seats to short/medium haul destinations departing from airports in France: [0-5]%; Wholesale
supply of airline seats to long haul destinations departing from airports in France: [0-5]%; Wholesale
supply charter airline seats departing from airports in France: [5-10]%; Wholesale supply of
scheduled airline seats departing from airports in France: [0-5]%; Wholesale supply of charter airline
seats to short/medium haul destinations departing from airports in France: [5-10]%; Wholesale supply
of charter airline seats to long haul destinations departing from airports in France: [0-5]%; Wholesale
supply of scheduled airline seats to short/medium haul destinations departing from airports in France:
[0-5]%; Wholesale supply of scheduled airline seats to long haul destinations departing from airports
in France: [0-5]% (Form CO, Tables 6.1.209 to 6.1.217).
254 Non-Horizontal Merger Guidelines, paragraph 35.
255 See Minutes of two calls with tour operators of 10 June 2016, paragraph 25, and of 22 June 2016,
paragraph 14.
256 Less than [0-5]% of TUI's annual flight plan and less than [0-5]% of Transat's annual flight plan over
the last two or three years (Form CO, paragraphs 1029 and 1030).
257 See Minutes of a call with a travel agent of 10 June 2016, paragraphs 27 and 28.
258 Even when co-chartering aircrafts, TUI's average load factor over the period November 2013-October
2015 was [90-100]% for the Paris, Nantes, Lille and Lyon airports (Form CO, Annex 8.11.2).
259 For which TUI, through Jetaifly, operates charter flights.
66
(333) In addition, the extension of the customer base served by TUI's in-house would
have positive effects, in particular: (i) TUI's increased incentive to deploy or
charter additional aircrafts and offer flights from new airports of departure and/or
to new destinations;260 and (ii) TUI's increased flight reliability (fewer
cancellations or flight schedule changes).261
(334) Fourth, even if the merged entity had the ability to engage in an input foreclosure
strategy, its effects would likely be limited. Post-Transaction, competing tour
operators would be offered the same amount of charter or scheduled airline seats
from one airport of departure to one destination as pre-Transaction. Indeed, the
redirection of Transat's customers from unrelated charter or scheduled airlines to
TUI's in-house airlines will free up air transport capacity on those airlines, which in
turn would have an incentive to compete actively for wholesale customers (tour
operators) post-Transaction.
(335) Fifth, although few tour operators expressed a view during the market investigation
as to whether they would find solutions to maintain their access to air transport
capacities if the merged entity stopped co-chartering aircrafts or reselling block
seats (e.g. purchase of block seats from other companies, 100% chartering, co-
chartering with other tour operators), no respondent raised substantiated
concerns.262 Conversely, the market investigation gave indications that out-of-
market competition by low cost carriers or by neighbouring airports (including
outside France) could alleviate the effects of any input foreclosure strategy
implemented by the merged entity on the wholesale market for charter airline
seats263 or from a specific airport of departure.264
Conclusion
(336) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns wholesale access to airline
seats (input) by tour operators.
260 Such a pro-competitive effect was notably mentioned by a travel agent (see minutes of a call with a
travel agent of 4 July 2016, paragraph 26).
261 TUI in particular notes that Transat's high level of sales to groups would reduce the average number
of late bookings for flights operated by TUI, thus contributing to reducing the risk of flight schedule
changes (Form CO, paragraph 124).
262 See replies to Q1 – Questionnaire to tour operators, question 43.4.
263 See replies to Q2 – Questionnaire to travel agents, question 17.1: "l'aérien est souvent stratégique
dans la commercialisation d'une destination. Souvent les TO affrètent des avions et se retrouvent
"maîtres" de l'offre aérienne. Les compagnies low cost viennent modifier profondément la donne, et
concurrencent les charters des TO sur bien des axes touristiques. Les low cost interviennent
seulement en court et moyen courrier." ("air transport is often key to the offering of a destination.
TOs often charter aircrafts and decide on supply of airline seats. Low cost carriers are game
changers and compete with TO charters on many holiday routes. Low cost carriers only operate short
and mid-haul flights.")
264 See replies to Q1 – Questionnaire to tour operators, question 33.1 and to Q2 – Questionnaire to travel
agents, questions 4.1.1, 30.2 and 32.1.
67
4.2.3.2. Customer foreclosure
TUI's views
(337) TUI submits that the Transaction is unlikely to give rise to customer foreclosure.265
Commission's assessment
(338) The Parties' market shares on segments of the downstream market for the supply of
package holidays exceed 30%. However, the Parties together procure less than 30%
of the airline seats offered third-party airlines, including if those capacities are
segmented by type of flights and/or distance. Furthermore, the increment brought
about by Transat is lower than [5-10]%.266
(339) When considering procurement of (charter and/or scheduled) airline seats from
France to specific destinations, the Parties together account for less than [5-10]%
for all destinations, except Cape Verde ([10-20]%). When considering (charter
and/or scheduled) airline seats from a specific airport of departure (Bordeaux,
Paris, Lyon, Toulouse, Lille, Nantes, Marseille), the Parties do not procure from
third-party airlines more than 30% of the charter and/or scheduled seats to all
destinations or to a specific destination.267
(340) In view of the above, the merged entity would not be an important customer with a
significant degree of market power towards third-party airlines. Customer
foreclosure is consequently not likely to be a concern.268
(341) In addition, no external airline appears to be dependent upon sales to TUI.269
(342) Finally, even if the merged entity were able to engage successfully in a customer
foreclosure strategy and force the most fragile charter airlines out of the upstream
market, quod non, competing tour operators would likely find alternative solutions
to source air transport capacity.270
265 Form CO, paragraph 899.
266 Excluding intra-group sales (i.e. seats of TUI's in-house airlines sold to TUI), the Parties procure (in
PAX): [0-5]% of airline seats ([0-5]% to short/medium haul destinations; [0-5]% to long haul
destinations); [10-20]% of charter airline seats ([10-20]% to short/medium haul destinations; [5-10]%
to long haul destinations); and less than [0-5]% of scheduled airline seats ([0-5]% to short/medium
haul destinations; [0-5]% to long haul destinations) (Form CO, amended Table 6.1.205). The
Commission notes that the tour operator having mentioned a potential risk of customer foreclosure
had overestimated the Parties' share in the operation of charter flights in France (see minutes of a call
with a tour operator of 10 June 2016, paragraph 23).
267 Form CO, Annex 6.9.51.
268 Non-Horizontal Merger Guidelines, paragraph 61.
269 Form CO, Table 6.1.206. As Transat's share of procurement of airline seats is lower than TUI's, it is
not expected to entail any dependence of an airline to Transat's purchases.
270 See Section 4.2.3.1.
68
Conclusion
(343) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns access to tour operators
(customers) by wholesale suppliers of airline seats.
4.2.4. Supply of package holidays and provision of travel agency services
(344) The Commission has assessed whether the Transaction could lead to input
foreclosure, with the merged entity's holiday packages being the input to unrelated
travel agencies active in France, or to customer foreclosure, with the merged
entity's travel agencies being the customers of holiday packages produced by
unrelated tour operators.
4.2.4.1. Input foreclosure
TUI's views
(345) TUI submits that the Transaction does not lead to concerns of input foreclosure by
reducing access of travel agents to the products of the merged entity or worsening
trading conditions. TUI argues in particular that the Parties have no choice but to
go through third-party travel agency networks and large retailers such as Voyages
Leclerc and Voyages Carrefour for the distribution of their products.271
Commission's assessment
(346) Considering that the Parties are tour operators integrated on the downstream market
for the provision of travel agency services, the Parties have the ability to redirect
their sales of package holidays from unrelated travel agencies to their own multi-
channel distribution network, made of their own outlets, own online portals and
own call centres. Nevertheless, the Transaction is not likely to raise competitive
concerns as a result of input foreclosure.
(347) First, the Transaction has a limited effect on the ability of the Parties to engage into
an input foreclosure strategy, since Transat's increment on the market for the
provision of travel agency services is minimal ([0-5]% for offline distribution and
[0-5]% for online distribution).272 In fact, TUI's attempt to increase direct sales of
travel services to customers seems to pre-date the Transaction.273 Likewise, Transat
has already renounced to a third-party distribution network pre-Transaction.274
271 Form CO, paragraph 706.
272 Form CO, Tables 6.1.164 and 6.1.169.
273 See Article "Les tour-opérateurs doivent s'adapter aux mutations d'un marché en croissance" by Le
Figaro dated 20 September 2016: "TUI France, premier tour-opérateur en France avec 12 % de part
de marché, proposera lui de "construire" ses vacances sur son site Internet tui.fr, à partir de janvier.
« Le client, qui a l’habitude d’aller sur plusieurs sites spécialisés, aura sous le même toit un vaste
choix d’hôtels et de compagnies aériennes, détaille Pascal de Izaguirre, PDG de TUI France. Nous
toucherons des commissions sur leurs achats. Mais, pour nous, c’est surtout l’occasion d’augmenter
le nombre de visites sur notre site et la notoriété de notre marque." ("TUI France, first tour operator
in France with a 12% market share, will propose as from January to "build" your own holidays on its
website tui.fr. Pascal de Izaguirre, CEO of TUI France, explains: "Customers, who are used to go on
a number of specialised websites, will find on the same website a large choice of hotels and airlines.
69
(348) Second, in the upstream market for the supply of package holidays in France
(including all products and destinations), the Parties combined market share
remains limited ([10-20]% in revenue and [10-20]% in PAX). The market for the
provision of travel services is vertically affected only if sub-segments of the
upstream market for the supply of package holidays (per destination, or as a
combination of a product and a distance / destination) are taken into account.
(349) Considering that the Parties' main travel agency customers are generalists (Leclerc
Voyages, Selectour Afat, Havas Voyages, Carrefour Voyages)275 which usually
enter into distribution contracts with generalist tour operators for the full portfolio
of their products,276 the Parties' position on segments of the tour operating sector
narrower than the supply of package holidays is less relevant. In any case, the
Parties' combined market shares never exceed [40-50]% (in PAX).
(350) Since the Parties do not have a significant market power in the upstream market,
input foreclosure is not likely to be a concern.277
(351) Third, the Transaction would only have a limited effect on the merged entity's
incentive to foreclose access of third-party retailers to its products. The Parties
have already a strong incentive pre-Transaction to forego third-party retailers, as
the cost of external distribution is higher than the cost of internal distribution.278 In
addition, the acquisition of Transat will add a limited distribution capacity to TUI's
channels and will initially increase the dependence of the merged entity on third-
party retailers ([50-60]% of Transat's sales vs. [40-50]% of TUI's sales are made
via third-party retailers).279
(352) Fourth, even if the merged entity were to have the ability and incentive to engage
into input foreclosure, the effects of such attempts would be limited. There would
indeed remain sufficient downstream competitors whose costs are not likely to be
raised, since (i) some travel agencies are also vertically integrated (e.g.
Karavel/Fram, ClubMed, Thomas Cook); (ii) third-party retailers, including those
not belonging to a tour operator, could source services from a sufficient number of
alternative suppliers of package holidays;280 and (iii) travel agencies may
We will charge fees on their purchases. But, for us, what really matters is to increase our website
traffic and brand awareness.")
274 See Minutes of a call with a travel agent of 9 June 2016, paragraph 7.
275 Form CO, paragraph 930.
276 See Minutes of two calls with travel agents of 9 June 2016, paragraph 4, and of 4 July 2016,
paragraph 4.
277 Non-Horizontal Merger Guidelines, paragraph 35.
278 Form CO, Annex 6.9.9, "Les ratios d’exploitation et les ratios bilanciels des Tour –Opérateurs – Mars
2014" by KPMG. According to that study, the average cost of external distribution for tour operators
is 12.7% of their turnover, while the average cost of their own travel agencies is 11.2% of their
turnover and of their own websites is 2.9% of their turnover. See also Form CO, Annex 6.9.54, which
shows, in TUI's specific case, the higher gross profit reached through own distribution network
(owned and franchised outlets, web, call centre) compared to third-party distribution channels.
279 Form CO, paragraph 930.
280 See Minutes of two calls with travel agents of 9 June 2016, paragraph 21, and of 10 June 2016,
paragraph 29.
70
themselves enter the upstream market by assembling their own packages, using e.g.
IT tools such as Orchestra.
(353) Finally, most respondents to the market investigation confirmed that, if the Parties
decided not to distribute leisure travels through multi-brand travel agencies, those
agencies could still maintain themselves on the leisure travel retail market.281
Conclusion
(354) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns access to package holidays
(input) by travel agencies.
4.2.4.2. Customer foreclosure
TUI's views
(355) TUI submits that the Transaction does not lead to concerns of customer foreclosure
by reducing access to leisure travel services providers to the merged entity retail
distribution.282
Commission's assessment
(356) The Commission notes that the combined market shares of the Parties are low
under all plausible product market definitions283 and the increment brought about
by Transat is minimal (less than [0-5]% in all cases).
(357) In addition, tour operators competing with the Parties would have a sufficient
number of alternative distributors, should the merged entity decide to stop
distributing their products. Although the views of respondents were split about
whether multi-brand travel agencies would favour the Parties' offering to the
detriment of their competitors' offering,284 it is unlikely that integrated travel
agencies would adopt such a line of conduct.
(358) Finally, the Transaction has a limited effect on the Parties' incentive to engage in a
customer foreclosure strategy, since the merged entity would remain subject to the
281 See replies to Q1 – Questionnaire to tour operators, question 44 and to Q2 – Questionnaire to travel
agents, question 40.
282 Form CO, paragraphs 701, 718, 740, 756, 780, 791, 809 and 819.
283 Provision of travel agency services based on the number of outlets in France: [5-10]%; Distribution of
leisure travel services in France: [5-10]%; Distribution of leisure travel services through outlets in
France: [0-5]%; Online distribution of leisure travel services in France: [5-10]%; Distribution of
package holidays through outlets in France: [5-10]%; Online distribution of package holidays in
France: [5-10]%; Distribution of flight tickets in France: [0-5]%; Distribution of flight tickets through
outlets in France: [5-10]%; Online distribution of flight tickets in France: [0-5]%; Distribution of
hotel accommodation in France: [0-5]%; Distribution of hotel accommodation through outlets in
France: [0-5]%; Online distribution of hotel accommodation in France: [0-5]% (Form CO, Tables
6.1.163 to 6.1.203).
284 See replies to Q1 – Questionnaire to tour operators, question 45 and to Q2 – Questionnaire to travel
agents, question 41.
71
need to maximise income of its outlets and amortise their costs over a broad range
of products from different tour operators.
Conclusion
(359) In view of the above, and considering all evidence available to the Commission, the
Transaction does not raise serious doubts as concerns access to travel agencies
(customers) by tour operators.
4.2.5. Conclusion
(360) The Commission concludes that the Transaction does not raise serious doubts about
its compatibility with the internal market due to vertical effects.
5. CONCLUSION
(361) For the above reasons, the European Commission has decided not to oppose the
notified operation and to declare it compatible with the internal market and with the
EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the
Merger Regulation and Article 57 of the EEA Agreement.
For the Commission
(signed)
Margrethe VESTAGER
Member of the Commission