m7968.docx EU R O P EAN CO MM I S SI O N Brussels, 22.4.2016 C(2016) 2572 final 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 Where possible the information omitted has been replaced by ranges of figures or a general description. PUBLIC VERSION MERGER PROCEDURE To the notifying party: Dear Sir/Madam, Sub j e c t : Case M . 7968 – EQT S er vic e s U K / K u o n i T r a v e l H ol d i n g Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004 1 and Article 57 of the Agreement on the European Economic Area 2 (1) On 16 M a r c h 201 6 , the Eu r op ea n Com m is s ion r e ce ived not i fi ca t i on of a p r opos e d c on ce nt r a t i on pursu a nt to A r t i c le 4 of the Me r g e r R e g u l a t i on b y whi c h the investm e nt fund EQT V I I , c ontroll e d b y E QT S e rvi ce s ( U K) L i m i t e d ( "EQT" o f Uni t e d Kin g dom), ac qu i r e s with i n the me a ni n g of A r t i c le 3 (1) ( b ) of t h e Me r g e r R e g ulation sole c ontrol of the whole und e rt a king Kuoni T ra v e l H o ld i ng L td 1 OJ L 24 , 29 .
1 . 20 0 4 , p . 1 ( t h e 'M er g er R e g u lati o n ' ) . W i t h e ff e c t f r o m 1 De c e m b er 2009 , t h e T r e a ty o n t h e F un c t i o n i n g o f t h e E u r op e a n U n i o n ( ' T FE U ' ) h a s i n tr od u c e d c er tain c h a n g es, s u ch a s t h e r e p lac e m e n t o f ' C o m m u n i t y' b y ' U n i o n ' a n d ' c o mm o n m a r k e t ' b y ' i n te r n al m a r k e t ' . T h e te r m i n o l og y o f t h e T FEU w ill b e u s ed t h roug h o u t t h is d e c i s i o n . 2 OJ L 1 , 3 . 1 . 19 9 4 , p . 3 ( t h e ' E E A A g r e e m e n t ' ) . Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË Tel : + 3 2 22 9 -91111 .
Fa x : + 3 2 22 9 -64301 . E - m a i l : C O M P - M E R G E R -R E G I S T R Y @ ec . europa . e u . ("Kuoni" of Switzerland), by way of a public bid ("the Transaction"). 3 ETQ and Kuoni are designated hereinafter as the "Parties". 1. THE P A R TI E S (2) EQT V II is a n E QT i nv e st m e nt fund a c t i ve p r i m a ri l y in No r the r n Eu r op e . I ts port f ol i o c ompani e s a r e ac t i ve in a v a ri e t y o f industries, such a s h ea l t h ca r e , c onsum e r g oods, e n e r g y a nd e nviron m ental s ec tors, e tc. EQT a lso c ontrols i.a . S ca nd i c Hot e l G r oups ( " Sc a ndi c "), a publ i c l y l i sted hotel c h a in, ac t i ve p r i m a ri l y in No r the r n Eu r op e .
(3) Kuoni is a s e rvi c e p r ovider to the g lobal tr a v e l i ndust r y a nd g ov e rn m en t s , main l y ac t i ve in t h re e busi n e ss a r e a s: a) Global Travel Distribution ("GTD"), whereby Kuoni is active as a B2B wholesaler and service provider of hotel accommodation and land services to travel agents, tour operators and other intermediaries; b) Global Travel Services ("GTS"), whereby Kuoni provides tailor-made packages of hotels and other local destination services, as well as tailor-made travel logistics services all around the world, to tour operators and travel agents; c) VFS Global, whereby Kuoni provides visa application outsourcing services to governments through the operation of visa application centres.
4 2. THE O P ER A TION (4) On 29 Fe b ru a r y 2016, a publ i c bid w a s laun c h e d b y E QT for t h e ac quis i t ion of a ll Kuoni B S h a r e s throu g h Kiwi Holding I V S . à . r . l . ( " Kiwi"), a n e w l y in c o r por a t e d c ompa n y . Kuoni B S h a res provide f or a v o t i n g p o w e r of 7 5 % of the to t a l o uts t a nding vot i ng s ec u r i t ies of Kuoni . The r e maning 25% of Kuoni ' s vot i ng rights will be h e ld b y the K uoni a nd H u g e n t obler S t i ftung ( " the F ou n d a t i on " ) . 5 (5) As d ec is i ons in r e lation to Kuoni ' s c om m e r c i a l str a te g y will be a d o pt e d [ how d ec is i ons a re a dopted ] , EQT hold i ng a majo r i t y of sha re s a nd votes will e x e r c ise d ec is i ve influ e n c e ov e r Kuoni .
EQT will a lso be r e spons i ble for the a ppoin t ment of majo r i t y o f the memb e r s in the B o a rd of Di r e c tors of Kuoni a nd i t s c ompani e s. Conv e rs e l y , the F ound a t i on will on l y a ppoint a m i nori t y o f r e p re s e ntatives in Kuoni ' s b o a rds a nd h a ve v e to r i g hts on is s u e s r e la t e d to the p rot ec t i on o f sha re holde r s ' fin a n c ial i n te re st s . (6) Kuoni will pos t - T ra nsa c t ion be ind i r e c t l y so l e l y c ontro l led b y EQ T . 3 P u b licati o n in t h e O f f icial J our n al o f t h e E u rop e a n U n i o n N o C 10 8 , 23 .
03 . 2 016 , p . 17 . 4 K u o n i 's a c t i v ities u n d er t h e V FS b us i n e s s a r ea d o n o t g i v e r i s e to a n y h or iz o n tal o v e r lap o r v e r tical r elati o n s h ip in t h e c o n t e x t o f t h e T r a ns a c ti o n . T h e r e f or e, K u o n i ' s a c ti v i t y un d er t h e V F S b us i n e s s a r ea w i l l n o t b e f u r t h er a s s e s s ed in t h e f r a m e w or k o f t h i s d e c i s i on . 5 A f ter t h e e x p irati o n o f t h e i n itial a c c ep ta n ce p e r i o d o n 1 3 A pri l 201 6 o f t h e p u b lic te nd er o ff er o f EQ T , t h e a c c ep ta n ce l e v el o f te n d e r ed s h a r es w a s r e a c h e d , n a m e l y 79 .
6 % o f K u on i ' s vo ti n g r i g h t s a n d 74 . 6 % o f K u o n i ' s s h a r e c ap ital ( P a r tie s ' r e p ly to C o m m i s s i on 's R e q u e s t F o r I n f or m ati o n o f 8 April, 2016). (7) The T ra ns a c t i on the re fo r e c onsti t utes a c on ce ntr a t i on with i n the me a ning of A r t i c le 3(1)(b) of the Merger Regulation. 3. E U DI M ENSI O N (8) The und e rt a ki n g s c o n c e rn e d h a ve a c omb i n e d a ggre g a t e wo r l d - wi d e turnov e r o f more than EUR 5 000 m i l l i o n 6 ( EQT Funds: EUR [ … ] mil l ion; Kuoni : E UR 2 753 mil l io n ) . E ac h of them h a s a n EU - wide turnov e r in e x ce ss of EUR 250 m i l l ion ( EQT Funds:
EUR [ … ] mi l l i o n; Kuoni : EUR[ … ] m i l l i on ) , but th e y do not ac h ieve mo r e than two - th i rds of their a ggre g a te E U - wide t u rnov e r with i n one a nd the s a me Memb e r St a te. (9) The not i fi e d op e r a t i on t h e r e f o re h a s a n EU di m e nsion acc o rding to A r t i c le 1 ( 2) o f the M e r g e r R e g ulation. 4. CO M P ETI T IVE AS S E SS M ENT 4.1. M a r k e t de f i n ition (10) EQT c ontrols S ca ndi c , whi c h is ac t i ve in the p r ovis i on of hotel acc o m m od a t i on s e rvi ce s in Euro p e a nd in p a rticul a r in F in l a nd, N o r w a y , D e nma r k a nd S w e d e n.
(11) Kuoni , throu g h GTD a n d GTS is a g lobal in t e rm e dia r y of tr a v e l s e rvi ce s, including hotel acc om m od a t i on s e rvi ce s, to tr a v e l a g e n ts ( " T A " ), onl i ne tr a v e l a g e nts ( " O T As"), tour op e r a tors ( " T O " ) , a nd other in te r m e dia r ies. 4.1.1. Ma r k e t for ho t e l a c c om m od a t i on (12) The Com m is s ion h a s in p r ior d ec is i ons c ons i d e r e d t h a t the m a rk e t for hot e l acc om m od a t i on c ould be s e g ment e d: (i) b y p ri ce / c om f o r t lev e l b a s e d on the g r a di n g or sta r s a w a r d e d to t he p a rticul a r ho t e l, which in d ic a tes the stan d a rd a nd fa c i l i t ies the c usto m e r m a y e x p ec t; a n d/or (ii) b y own e rship, dis t in g uish i ng b e t w ee n c h a in hotels a nd indep e nd e nt hotels.
Ult i mat e l y ho w e v e r, the Com m is s ion le f t the p r e c ise s c ope of the p r odu c t m a r k e t o p e n . 7 (13) A cc o r di n g to the Pa rties, a s e g ment a t i on b a s e d on p r ic e /co m fo r t le v e l a nd g r a ding of sta r s is not a ppro p ri a te since o v e rl a ps in p r i c e s a nd fa c i l i t ies a mo n g hotels in dif fe r e nt star ca t e g o r ies le a d to a c ont i nuous c h a in of subs t i t ut i on a m ong ho t e ls. W i t h r eg a rd to a s e gment a t i on b a s e d on o wn e rship, the P a rties submit that indep e nd e nt a nd c h a in h otels a re e nt i r e l y subs t i t utable f r om a d e mand p e r sp ec t i v e , in pa r t i c ular a t l o c a l l e v e l .
6 T u r n o v er c a lc u lated in a c c ord a n ce w i t h A r ticle 5 o f t h e M e r g er R e g u la t i o n . 7 See c a s es M .673 8 – G o l d m a n Sac h s /K K R /QM H ; M .605 8 – B a n k o f Sc o tla n d / B a r cl a y s B a nk /K e w G r e e n H o te l s ; M .385 8 – L e h m a n Bro t h e r s / S C G / Sta r w ood / L e M er i d ie n ; M .219 7 – Hilt o n / A c cor /Fo r te/ T r a v el Se r v ices J V a n d M .12 6 – A c cor / W a g o n - L i t s . (14) I n p r ior d ec is i ons, a l t h ou g h the Com m is s ion le f t the e x ac t g e o g r a p h ic ma r k e t d e finit i on op e n, it not e d that that the r e lev a nt g e o g r a phic m a rk e t m a y b e bo t h n a t i on a l a nd l o ca l.
N a t i on a l , b e c a use the str u c tu r e of supp l y m a y c h a n ge f r om o n e c ount r y to a nother, since the hot e l i ndust r y is l ink e d to national ec onom i c t r e nds, a n d loc a l, b e c a use c usto m e r s ' hotel sel ec t i on is h ea vi l y d e te r m i n e d b y loc a t i on . 8 (15) The P a rties submit that the Com m is s ion ' s c o n side ra t i ons in p re vious d ec is i ons re g a rdi n g the g e o g ra phic ma r k e t d e finit i on do n o t a pp l y to the p r e s e nt c a se a s both GTD a nd GTS a re g lobal in t e rm e dia r ies a nd c on s ol i d a tors of hotel c ontent that make th i s b r o a d invento r y a v a i lable to the r e tail side of dis t ribution.
The P a rties the re f or e c onsid e r that the m a rk e t for t he p r ovis i on of ho t e l acc om m od a t i on should be d e fin e d a s EEA - wi d e . As how e v e r GTD a nd GTS, a s w e l l a s their c ompeti t o r s, p r ovide hotel invento r y in v a rious p a r ts of Eu r op e , the P a rties submit that a d e l i n ea t i on of the r e lev a nt ma rk e t at n a t i o n a l l e v e l cou l d a lso be r e l e v a nt. (16) F or the p u rpose of th i s ca s e , the p re c ise p r odu c t a nd g e o g r a phic ma r k e t d e finit i on ca n be le f t op e n, since the T ra nsa c t i on do e s not raise s e rious doubts on a n y plausible ma r k e t.
4.1.2. Ma r k e t for ho t e l i nte r m e diation 4.1.2.1. GTD business (17) The P a rt i e s c laim that Kuoni is ac t i ve throu g h GTD on a tw o - sided ma r k e t f o r in t e rm e diat e d hotel r e s e rv a t i ons, whi c h c ould be fu r t h e r s e g m e nted b e tw ee n r e s e r v a t i ons made b y o nl i ne tr a v e l a g e nts ( " O TAs " ) a nd r e s e r v a t i ons made to c o r por a t e c usto m e rs ( " B 2B " ). T h e P a r t ies dis t in g uish in t e rm e diat e d hotel r e s e r v a t i ons f r om those made dir ec t l y to the hotels. Conv e rs e l y , bookin g s made throu g h g lobal dis t ribution s y stems, other fo r ms of B 2 B whol e s a l e rs, su c h a s GT D , tr a v e l a g e n c i e s a nd tour op e r a tors, a s w e ll a s onl i ne tr a v e l a g e nts a re c onsid e red in t e rm e diat e d hotel r e s e r v a t i ons b y the Pa rties.
Mor e ov e r, t h e g e o g r a ph i c s c ope o f such ma r k e t should b e , acc o r di n g to the P a rties a t le a st EE A - wid e , if not wo r l d - wid e . (18) The Com m is s ion h a s n o t a ssess e d a m a rk e t for hotel in t e rm e di a t i on in t he p a st. I n p r ior d e c is i on s 9 it h a s h o w e v e r c o n c luded that the ma r k e t for the p rovision of g lobal dis t ribution s y stem s ' s er vic e s c onsti t utes a s e p a r a te ma r k e t . 1 0 Ev e n thou g h some ma r k e t p a rticip a nts in p r ior c a s e s c onsid e r e d that dir ec t dis t ributi o n a nd oth e r c ontent a g g r e g a tors a nd met a s ea r c h c ompan i e s c ompete to some e x tent with g lobal dis t ribution s y stem s , the Com m is s ion h a s so f a r c on c luded on a m a r k e t for t h e p r ovis i on of g lobal distr i but i on s y s t e ms' s e rvi c e s on l y .
11 8 M .385 8 – L e h m a n Bro t h e r s / S C G/Sta r w ood / L e M er i d ie n ; M .219 7 – Hilt o n / A c cor /Fo r te/ T r a v el Services JV and M.126 – Accor/Wagon-Lits. 9 See c a s e M .4523 , T r a v el por t / Wor l d s p a n . 1 0 Gl ob al di s tri b u ti o n s ys t e m s pro v i d e a p lat f or m t h a t all o w s tra v el a g e n cies to c o m p a r e i n f o r m ati o n o n s c h e du les, c ap a c i t y , i n v e n t or y , a v aila b ili t y a n d pr ices a n d m a k e r ese r v ati o n s o n a la r g e a n d v a r ied n u m b er o f tra v el pro v i d e r s , s u ch as airl i n es, h o te l s a n d c a r r e n tal c o m p a n ies, w or l d w i d e.
1 1 See c a s e M .4523 , T r a v el por t / Wor l d s p a n . (19) As to the g e ogr a phic s c o pe of th i s ma r k e t, the C o m m is s ion r e ce nt l y c on c l ud e d that it is wo r l d - wide on t h e up s tr ea m side, i.e. the p r ovi s ion of booking invento r y b y t r a v e l s e rvi c e p r ovid e rs, such a s hotels a nd a t le a st n a t i o n a l on the downstr ea m s i d e , i.e. the p r ovis i on of se r vic e s t o t r a v e l a g e nts, t our o p e r a to r s, et c . 12 (20) F or the p u rpose of th i s ca s e , the p re c ise p r odu c t a nd g e o g r a phic ma r k e t d e finit i on ca n be le f t op e n, since the T ra nsa c t i on do e s not raise s e rious doubts on a n y plausible ma r k e t.
4.1.2.2. GTS business (a) Market for group travel (21) Kuoni ' s GTS busin e ss f o c uses on g roup tr a v e l c o ntent to TAs, OT A s a nd TOs, who then r e s e ll to leisure a nd c o r por a te e nd c usto m e rs und e r their own b r a nds. GTS ' s p ac k a g e d g r oup tr a v e l c ontent inclu d e s ac c ommodation , r e stau ra nts, dif fe r e n t e nte r tainm e nt a nd a t t r a c t i on opt i ons a nd other l o ca l d e st i n a t i on s e rvi ce s such a s g uides a nd s i g hts e e ing; it do e s not how e v e r i n c lude fli g hts to the d e st i n a t i on s . Airline ti c k e ts a r e us u a l l y a d d e d b y the B 2B c usto m e rs pu rc h a si n g G TS ' s p ac k a g e s.
(22) The P a rties submit that for the purp o se of the p res e nt tr a nsa c t i on the B 2B supp l y o f g roup to u r p ac k a g e s sh o uld be c onsid e r e d a s the r e lev a nt p rodu c t ma r k e t a nd the r e lev a nt g e o g ra phic m a r k e t as g lo b a l i n sc o p e . (23) The Com m is s ion h a s n o t p re vious l y a ssess e d t h e d e finit i on of a ma r k e t for B 2 B g roup tr a v e l p r ovide r s. I t h a s how e v e r c onsid e r e d a wid e r ma r k e t for dis t ribution of tr a v e l s e rvi ce s in p r ior d ec is i ons, a nd a l t ho u gh ul t i m a te l y l ea vi n g t h e p r ec i s e d e finit i on op e n, it c ons i d e r e d potential subdivis i ons b e tw ee n busin e ss a nd l e isure tr a v e l l e rs , fo re i g n a nd domestic d e st i n a t i ons, tr a v e l to shor t - h a ul a nd lon g - h a ul d e st i n a t i ons a s w e ll a s p a c k a g e hol i d a y s and in d e p e nd e nt ho l id a y s .
13 (24) As re g a rds the g e o g r a ph i c s c op e , the Com m is s ion h a s in p r ior d ec is i ons c on ce rni n g the distributi o n of t ra v e l se r vic e s d e fin e d the m ar k e ts as n a t i on a l . 14 (b) Market for Meetings, Incentives, Conferences and congresses and Exhibitions (25) A small e r p a rt with i n the GTS' busin e ss is d e dic a ted to M ee t i n g s, In c e nt i v e s, Conf e r e n c e s a nd c o n g r e sses, a nd E x hib i t i ons ( " M I CE"). T h e M I CE ac t i vi t ies c omprise a r a n g e of s e rvi ce s r e lat e d to the o r g a nisation a nd man a g e m e nt of me e t i n g s, c o n g r e sses, c o n fe r e n ce s, e x hib i t i ons a nd si m i l a r e v e nts, such a s p r oje c t man a g e ment, l o g is t ic plannin g , a cc om m od a t i on, tr a nsport, c ontent, ac t i vi t ies e tc.
Hot e l acc om m od a t i on is thus on l y a p a rt of the s e rvi ce s o f f e r e d. Th e se busin e ss e v e nt s e rvi ce s a re p r i ma ri l y o f f e r e d to in te rn a t i o n a l tour op e r a tors, t r a v e l a g e n c ies, me e t i ng plan n e rs, in c e nt i ve hous e s and c o n g re ss o rg a nise r s . 1 2 See M .4523 , T r a v el por t / W o r l d s p a n , M .780 2 – A m a d e u s / N a v itair e . 1 3 See cases C a s e M .152 4 - A irt o u r s /F i r s t C h o ic e , C ase M .460 0 - T U I /F i r s t Ch o ic e , M . 46 0 1 , - Ka r s ta d tQ u ell e / M y T r a v el, C a s e M .586 7 - T h o m a s C oo k / Ö g er T o u r s .
1 4 See cases M .4601 , Ka r s ta d tQ u elle / M y T r a v el, C a s e M .15 2 4 , A irt o u r s /F i r s t, C ase M .4600 , T U I /F i r s t Choice. (26) A cc o r di n g to the P a rties, the s c ope of t h e g e o g r a p hic ma r k e t c a n be c onsid e r e d to b e EEA - wide since o r g a ni z e rs with i n the EEA c ompete for the o r g a n i z a t i on of me e t i n g s, in c e nt i v e s, c o n fe r e n ce s a nd c o n g r e s s e s. I t is o f ten the c on t e nt of the p ac k a g e , r a ther than t he g e o g ra phi c a l loc a t i o n, that is d e t e rmin a t i ve for t h e c usto m e r.
(27) The P a rti e s ind i ca te that the r e is no Com m is s ion p rece n d e nt c on c e rning t h e potential ma r k e t for M I CE. (c) Conclusion (28) F or the purp o se of th i s ca s e , the p r ec ise p r od u c t a nd g e o g ra phic d e fi n i t ions of the ma r k e ts i n whi c h GTS is a c t i ve thro u g h the pro v i s ion of both g roup t r a v e l a nd M I C E s e rvi ce s, ca n b e le f t op e n, since the T ra nsa c t i on do e s not r a ise s e rious doubts on a n y plausible ma r k e t. 4.2. C o m p e ti t ive ass e s s me n t (29) The T r a nsa c t i on will not g i v e r ise to a n y hori z ontal ov e rl a p a s no n e of t h e port f ol i o c ompani e s c ontroll e d by EQT h a s a n y busin e ss ac t i vi t ies c ompeting with the ac t i vi t ies of Kuoni .
(30) Th er e is a l i m i ted v e r t i ca l l i nk b e tw ee n S ca n d ic ' s upstre a m hotel ac t i vi t ies a nd Kuoni ' s G T D a nd GTS busi n e ss: both GTD a nd GTS sour c e room inv e nto r y f r om S ca ndic a nd r e s e ll such invento r y a s p a rt of the B 2B s e rvi ce s th e y p r ov i de to the tr a v e l i ndust r y . (31) S u c h v e rti c a l l i nk le a ds t o a f f ec ted ma r k e ts b e ca u se S ca ndi c ' s e st i mat e d sha r e on t h e upstr e a m ma r k e t for the p r ovis i on of hotel a c c om m od a t i on s e rvi ce s b y h o tel c h a i n s in S w e d e n a moun t s to [ 30 - 40 ] % .
The P a rties c ould not acc u r a te l y e st i mate S ca ndi c 's ma r k e t sha re s on potential sub - s e g m ents of t h e ma r k e t for the p r ovis i on of hotel acc om m od a t i on b y 3 - st a r , 4 - star or 3 - a nd 4 - star hotel c h a ins in S w e d e n ; 1 5 t h e se su b - s e g ments would how e v e r a lso be a f f e c ted b y the T ra nsa c t i o n , g iven S ca n dic ' s s h a r e on the b r o a d e r ma r k e t f o r the p r ovis i on of hotel acc om m od a t i on b y hotel c h a ins in S w e d e n. (32) Mor e ov e r, 18 lo c a l ma r k e ts for the p rovision of hotel a cc om m od a t i on s e rvi ce s in S w e d e n, F in l a nd a nd N o r w a y would a lso be v e rtic a l l y a f f ec ted b y t h e T r a nsa c t i o n , a s s e t out in the table b e l ow.
The P a rties c ould not r e l i a b l y e st i mate S ca nd i c ' s m a rk e t sha re s on fu r t h e r subs e gments b y p r i c e /com f o r t l e v e l or own e rship. All t h e se su b - s e g ments would ho w e v e r a lso l i k e l y b e a f f e c t e d, given S ca ndi c ' s ma r k e t s h a re on t h e to t a l l o ca l m a rk e ts for t h e p r ovis i on of hotel a c c o m m od a t i on s e rvi ce s . 16 1 5 A c cord i n g to t h e P a r tie s , t h e r e a r e n o p u b lic o r un i f o r m pr e v aili n g s ys t e m s f o r g r a d i n g h o tels i n Sweden and Scandic does not market hotels with reference to any official star classification.
1 6 A c cord i n g to t h e P a r tie s , t h e r e a r e n o p u b lic o r un i f o r m pr e v aili n g s ys t e m s f o r g r a d i n g h o tels i n Sweden and Scandic does not market hotels with reference to any official star classification. L ocal 1 7 mar ke t S candi c m arke t s ha r e , b a se d o n n umber of a v ailabl e rooms (%vo lume ) Swe den Arvika [30-40]% Bollnäs [30-40]% Borås [20-30]% Fa l un [30-40] % Gällivare Gällivare [ 20-30 ]% Gävle [30-40]% Kar ls krona [20-30]% Kar ls tad [30-40]% Linkoping [40-50]% Strömstad [30-40]% Södertalje [50-60]% T rollhattan [50-60]% Vämamo [50-60]% Örebro [30-40]% Östersund [30-40]% Fi n land Ka j ana [40-50]% Norw a y Finnmark [40-50]% S ø r - Trøndelag [30-40]% (33) 4 .
2 . 1. (34) Accor d i n g to t h e P arti e s , t h e verti cal l inks bro u g ht ab o ut by t h e T r a n sac t i o n w o u l d n ot give r ise t o a n y c o m p etiti o n c o n c e rn s. T h e P artie s e x p l a in t h at G TD and GTS, in p r ovi d i n g bo t h gr o u p t r avel a n d M I C E s e r vices, so u r ce h o t e l acc o m m odati o n at E EA-lev e l a n d p r ov i d e t h e i r c u st o m e r s w ith a b road i n v e n t or y of h otels i n d i ffer e n t l ocati o n s in t h e variou s E EA coun t r ies. T h e r efor e , t h e vertical relati o n s h ip s , w h i c h w i ll a r ise as a re s ult of t h e T r a n sacti o n s h o u l d be assess e d on a n EE A - ba s i s.
S im i l a r l y , G T D and GTS f o r a ll s e r vices i t provide s , s o u r ce f r o m b o t h c h ain and i n dep e n dent h ot e l s as w e ll as h ot e l s of diff e r ent p r ic e / c o m fort l ev e l s. Theref o r e , t h e v e r t i c a l r e l a ti o n s h i ps s h o u l d be assess e d o n t h e b asis of t h e total m arket for t he p r ovisi o n o f h ot e l acc o m m od a t i o n s e r vices. Inpu t fo r eclos u re T h e Co mmi ssio n assessed w h et h e r t h e P arties wo u l d l ikely f o r eclose K u o n i's co m petito r s fro m access to h o t e l in ve n tory po s t -Tr a n sactio n .
In particular , t h e Co mm issio n co n s i de r ed whet h e r t h e P arties woul d h ave (i) t h e a b i l ity to fo r eclose o th er int e 1 me di a r ies' access to hotel in ve n tory , (ii) any in ce n tive to do so and (ii i ) 17 In Arvika , Gä llivare and Värn am o , t he only Scandic h o t el in the area i s a franchised hotel. In Östersund , there are two Scandic hotel s of w hich one is franchi s ed hotel. In Strömstad , the only Scandic hotel i s a partner hotel. In S ø r - Trøndelag two of the seven Scandic hotel s are partner hotels. [information about control of partner and franchi s ed hotel] ( franchi s ed hotels are considered hotel s , which are neither owned nor managed by Scandic). whether such foreclosure strategy would result in significant detrimental effects for consumers.
18 (35) The Com m is s ion c onsi d e rs that S ca ndi c ' s ma r k e t posit i on is such that it would not p r ovide it with the a bi l i t y a nd inc e nt i ve to f o r e c lo s e Kuon i ' s c ompeti t o r s f r o m acce s s to i ts i nv e nto r y . (36) F irst, Kuoni ' s ma r k e t sha r e on the ma r k e ts wh e r e GTD a nd GTS a re ac t i ve is b e low [20-30]% under any plausible market definition. (37) S ec ond l y , other in t e rm e d ia r ies c ould r e pla c e S ca ndic with other hotel c h a i ns, such a s A cc o r , B e st W e ste r n a nd I nt e r c ont i n e ntal G r o up a nd indep e nd e nt hotels in the v a rious loc a t i ons a c ross the EE A , should Sc a ndic c hose to r e str i c t i t s hotel c onte n t sole l y to GTD a nd G T S .
(38) Third l y , Sc a ndic acc ou n ted for [ … ] % of the to t a l room n i g hts sold in t he EEA i n 2015 and therefore its room inventory is unlikely to be an important input for intermediaries. (39) F ourth l y , b y r e stricti n g i t s hotel c ontent, S ca ndic would be e x c luded f r o m most of the hotel bookin g s made throu g h in t e r m e dia r ies g lobal l y a nd in the EEA a nd th i s is not i n l i ne with S ca ndic ' s in t e r e st t o inc rea s e i t s o c c up a n c y r a te. (40) F ifth l y , dis t ribution thro u g h G T D a cc ounted for [ … ] % of S ca ndi c ' s sold r oom ni g hts a nd GTS acc ounted for e v e n less in 2015.
T h e r e f o r e , S ca ndic would h a ve no inc e nt i ve to l i m it the dis t ribution of i t s invento r y on l y to Kuoni . (41) As a r e sul t , the Com m is s ion c on c ludes that the P a rties will not h a ve the a bi l i t y o r inc e nt i ve to e n g a ge in a n y input f o r ec losure st r a t eg y pos t - T r a ns a c t i on. 4.2.2. Custo m e r f o rec losu r e (42) The Com m is s ion a lso a ssess e d wh e ther pos t - T r a nsa c t i on the P a rties w o uld l i k e l y fo rec lose S ca nd i c ' s c ompeti t o r s f r om acce ss i n g c u sto m e rs on the downstr ea m ma r k e t for dis t ribution of hotel acc om m od a t i on s e rvi c e s.
I n p a rticul a r, the Com m is s ion c onsid e r e d w h e ther t h e P a rties would h a ve (i) the a bi l i t y to r e du c e i t s pur c h a s e s f r o m S ca ndi c ' s c ompeti t o r s, (ii) a n y in c e nt i ve to do so a nd (iii) wh e ther such f o rec losu r e str a t eg y would re sult in s i g nifi ca nt d e triment a l e ff ec ts for c onsu m ers . 19 (43) Kuoni ' s m a rk e t posit i on in the EEA is such th a t it would not p r ovide it with the a bi l i t y a nd in c e nt i ve to f o rec lose oth e r hot e ls. (44) F irst, a c onsid e r a b l e p r oportion of hotel rooms a re sold throu g h the h otels' own dis t ribution c h a nn e ls (d i r e c t c usto m e rs c ont a c ts, hotel/ch a in w e bsi t e s, ca ll ce ntr e s ) without d e p e nding on GTD a nd GT S .
2 0 Th e r e f o re , e v e n if Kuoni w o uld cea s e 1 8 N o n - H or iz on tal M er g er G u i d eli n es, p a r a g r a ph s 3 1 - 32. 1 9 N o n - H or iz on tal M er g er G u i d eli n es, p a r a g r a ph s 5 8 - 59. 2 0 I n Sc a n d ic ’ s c a s e a s an e x a mp le, t h ese c h a n n e l s r e pr ese n t a ppro x i m a te l y [ … ] % o f a l l roo m n i g h t s s o ld in t h e E E A (r e f e r e n ce p e r i o d Q 1 - Q2 20 1 5) . Si m ilar s it u a ti on s w o u ld a pp e a r li k e l y f o r o t h er h o te l s i n t h e r el e v a n t ar e a s . sourcing from Scandic's competitors, these would continue to have access to customers through their own channels.
(45) S ec ond, a s re g a rds the d i stribu t ion throu g h in t e rm e diato r s, hotels make their c ontent a v a i l a ble thro u g h a ll G DSs, throu g h OT A s a nd t h r ou g h mu l t i ple B 2B whol e s a le r s that s e ll identic a l or e q uival e nt hotel invento r y in c ompeti t ion with eac h othe r . Hot e ls a lso c on c lude a g r ee ments with o f fline TAs a nd tour op e r a t o rs. GT D ’s e st i mat e d sha r e of hotel invento r y s a les in the B 2B in t e rm e d i a t i on s e gment is [ 5- 10]%, both globally and in the EEA. Similarly, it is estimated that GTS accounts for [0-5]% of group travels sold globally.
On a global B2B market for group trips, GTS's share would be well below [20-30]%. GTS’s share is estimated to be well below [10- 20]% in Europe on the same market, and its share of EEA room nights booked through B2B intermediaries will therefore be similar. Therefore, Scandic's competitors would have numerous alternatives in relation to the B2B distribution of their inventory. (46) Third, Kuoni ’ s GTD a nd GTS busin e ss r e p r e s e nt a v e r y s m a ll sha r e of the to t a l hotel bookin g s in the EE A . GT D ’s a nd GTS’s g lo b a l s a les' ac t i vi t ies acc ount e d for the booking of [ …] m i l l ion a nd [ … ] % m i l l ion ro o m ni g hts in the EEA respe c t i v e l y , whi c h would c o r r e spond to [ … ] % of the to t a l n umber of room n i g hts s old in the EE A .
Th e r e f o r e , Kuoni would not h a ve the a bi l i t y to fo r ec lose S ca ndi c ' s c ompeti t o r s f r om a c ce ss i n g the m a r k e t for dis t ribution of hotel acc om m od a t i on s e rvi ce s. (47) F ourth, S ca ndic a cc oun t e d for [ … ] % a nd [ … ] % of the room ni g hts book e d thou g h GTD a nd GTS a t hotels in the EEA r e spe c t i v e l y . Th e r e f o r e , Kuoni wou l d h a ve no inc e nt i ve to c ea s e sour c i ng hotel invento r y f r om S ca ndi c ' s comp e t i tors. (48) I n l i g ht of the a bove c o n side ra t i on s , the Com m is s ion c on c ludes that the P a rties will not h a ve the a bi l i t y or inc e nt i ve to e n g a g e in a n y c usto m e r fo r ec losu r e str a te g y pos t - T ra nsa c t i on.
4.2.3. Assessment at national and local level (49) The a n a l y sis would not c h a n g e e v e n wh e n c ons i d e ring the a f f e c ted ma r k e ts a rising pos t - T ra nsa c t i on a t n a t i on a l and lo ca l l e v e l . (50) S u c h ma r k e ts would be a f f e c ted on l y d u e to Sc a ndi c ' s e st i mat e d s h a r e s upstr e a m . However, any ability or incentive to foreclose input for rivals of GTD and GTS on these markets can also be excluded. (51) At n a t i on a l lev e l in S w e d e n, S ca ndic la c ks a n y s i g nifi ca n t d e g r e e o f ma r k e t pow e r a nd a c c ounted f o r [ … ] % of the room ni g hts book e d thro u g h G T D in 201 5 .
C onv e rs e l y , GTD a nd G TS acc ounted for a p p r o x i m a te l y [ … ] % a nd [ … ] % of sold room ni g hts i n S w e d e n i n 2015 re spe c t i v e l y . (52) S i m i l a r l y , a t l o ca l lev e l, such ma r k e ts a re not a n i m port a nt input to the d o wnstr e a m ma r k e ts, in whi c h GT D , GTS a nd the c ompeti t o r s of these busin e s s e s op e r a te. In a ddi t ion, a number of c ompeting hotels a re p r e s e nt a t loc a l lev e l , including in the two c i t ies wh e re S ca nd i c a c hiev e s t h e h i g h e st m a rk e t s h a r e , n a me l y S ö d e rt ä l j e a nd T r ol l h ä t t a n .
I n p a rticul ar , in S öd e rt ä l j e S ca ndic f ac es c om p e t i t i on f r om hotel c h a ins such as Nordic Choice and Sweden Hotels; in Trollhättan, additional hotel chains include Nordic Choice, Best Western, Sweden Hotel and Countryside Hotels. 21 (53) I n l i g ht of the a bov e , the T ra nsa c t i on do e s not r a ise s e rious doubts a s to i ts c ompatib i l i t y with t he in t e rn a l m a r k e t . 5. CON C LUSI O N (54) F or the a bove re a sons, the Eu r op ea n Com m is s i on h a s d ec ided not to o ppose the not i fi e d op e r a t i on a nd to d ec la r e it c ompatib l e w i th the in t e rn a l ma r k e t a nd with the EEA A g r ee ment.
This d ec is i on is a dopted in a p pl i ca t i on of A r t i c l e 6 ( 1 ) (b) of t h e Me r g e r R e g u l a t i on a nd A r t i c le 57 of the E E A A g r ee men t . For the Commission (Signed) Margrethe VESTAGER Member of the Commission 2 1 I n S öd e r täl j e , Sca n d ic f a c es c o m p et i ti o n a l s o f r o m i n d e p e nd e n t h o tels su c h as V i n d e u s H o tels.