m8046.docx 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 /2004 1 and Article 57 of the Agreement on the European Economic Area 2 Table of content 1. THE PARTIES AND THE OPERATION 2. EU DIMENSION 3. MARKET DEFINITION 3.1. Introduction 3.2. Supply of travel services by tour operators 3.2.1. Product market definition 3.2.2. Geographic market 3.3. Wholesale supply of airline seats 3.3.1. Product market definition 3.3.2. Geographic market definition 3.4.
Supply of destination management services 3.4.1. Product market definition 3.4.2. Geographic market definition 3.5. Provision of travel agency services 3.5.1. Product market definition 3.5.2. Geographic market definition 4. COMPETITION ASSESSMENT 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 4.1.2. Market-specific analysis 4.2. Assessment of vertical relationships 4.2.1. Legal framework 4.2.2. Overview of the vertically affected markets 4.2.3.
Supply of airline seats and supply of package holidays 4.2.4. Supply of package holidays and provision of travel agency services 4.2.5. Conclusion 5. CONCLUSION (1) On 16 September 2016 , the European Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 3 by which TUI AG ( " TUI ", Germany) acquires within the meaning of Article 3(1)(b) of the Merger Regulation control of the whole o f 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. The refore, 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 : (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 combin e them into package holidays; (c) travel agencies, which distribute travel services to the end- customer (the traveller) . (9) T wo or more levels of intermediaries , i.e. tour operators (wholesalers) and travel agencies (retailers), may sit between the travel suppliers and the customer s . Nevertheless, travel suppliers may choose a disintermediated business model and sell directly their services to end- customer s.
Conversely, tour operators may follow an integrate d 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 g roups. The relevant markets therefore do not only comprise t he market for the supply of travel services by tour operators in France ; t hey 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 t our operator s 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 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 i nternet 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 we re 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 c hanges 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, customer s can easily switch from traditional package holidays to either self-packaged holidays, whereby they source independently flight s, accommodation and various other travel components through separate transactions; or to dynamic packages, whereby customer s 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 customer s 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 rental agencies and other types of travel offers. Last, hotel operators, airlines and other transport suppliers offer customer s 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 appear ed to indicate that a number of differences between package and independent holidays still remain. (20) First, t he majority of respondents to the market investigation submit ted that the prices of a package holiday and an independent holiday consisting of the same elements are differ ent; 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 submit ted that the fluctuation of prices during the year is similar between package and independent holidays. 17 (21) Second, from a demand-side , TUI submits the results of recent survey s showing that the majority of all French customer s 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 conclud e that the majority of the French customer s travelling abroad ask professionals to organis e their travel.
19 (22) S everal market participants responding to the market investigation explain ed 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, prevent ing the latter from providing their services directly to French customers.
20 (23) Third, from the supply side , TUI submits that several OTAs have started offer ing their users the possibility to pay for their independent holiday s in instalments 21 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 transposit ion period ends o n 1 January 2018, therefore such increased protection is not yet available to French customer s. Moreover, tour operators offer additional services in the ir package holidays , such as early check-in, access to airline lounges, 24-hour assistance, tour guides, etc., which cannot be easily replicated by customer s organising their own independent holiday.
23 (24) T our 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 const r ue 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 consider ed that dynamic packages compete with package holidays supplied by tour operators, 27 they also estimate d 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 submit ted 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 definition s .
3.2.1.3. Distinction of p ackage holidays by holiday type 3.2.1.3.1. Introduction (28) A further segmentation of the market for package holiday s by h o liday type could be considered. (29) The Commission has considered in some of its prior decisions in the sector, the possibility of distinct markets for h oliday type s , 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) T he Syndicat des entreprises du Tour Operating ("SETO") , the trade union of the French tour operators, also distinguishes between holiday type s and organises accordingly its reporting .
32 (31) More specifically, SETO distinguishes between the following five different types of package holiday s . 33 (a) P ackage 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) T our package holidays ( "circuits" ) , which refer to itinerant journeys, which typically include travel, accommodation and guided tours to multiple destinations; (c) P ackage 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) P ackage 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 .
G roup 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 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 en compassing 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 , t he majority of respondents to the market investigation indicate d 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 point ed 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 cust o mers interested in purchasing tour package holidays are more likely to switch to à la carte package holidays and vice versa.
37 (34) Furthermore , Orchestra submit ted that it classifies the products it displays according to the type of holiday, as this is the first selection criterion of final customer s. With regard to classifications of package holidays by theme, such as "nature", "well-being", etc ., Orchestra submit ted 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 indicate d that the different types of package holidays are not substitutable, as each product entails a different way for customers t o enjoy their holidays.
Illustratively, whereas young seniors would cho o se 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 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 submit ted a customer survey indicating that French customer s 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, customer s were asked to compare between clubs and hotels offering the same services as clubs . T h eir response to th is 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, question s on whether the customers would switch from certain type of package holiday to another following a price increase of 10% we re asked in the survey in a hypothetical manner , un related 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 s urvey on this basis are unreliable for the purpose of the assess ing 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, point ed 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, bench mark ing 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 submit ted that they regularly monitor the prices of their competitors' product s by type of package holidays. 44 (38) Last, respondents to the market investigation we re split as to whether the different types of package holidays should be analysed separately or together for assessing the Transaction. W ithin the se four types of package holidays , h owever , 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 c an 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 p ackage 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 destination s , define d as package holidays involving flights that s ubstantially 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. (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 customer s.
Moreover, in light of the dynamic character of the market, tour operators can swiftly modify the ir 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, Cap e 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 Barth é lemy ; 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 r espondents to the market investigation consider ed 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 indicate d that there are 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 estimate d 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 submit ted 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 T he majority of tour operators responding to the market investigation also submit ted 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 (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 customer s shows that the majority views the count r ies 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 g roups .
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, t he results of the market investigation were rather inconclusive on this point . On one hand, the majority of respondents consider ed that i n 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 consider ed 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 r egion 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 group of destination countries. 62 Regarding the specific regions proposed by TUI, t he 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 regard ing 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 indicate d 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 d id 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 include d Turkey and Balkan countries in Southern Europe or Mexico in North America. Conversely, some respondents limit ed 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 d istinction 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 n arrower 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 s egments of the market for all package holidays b ased on destination will be assess ed , namely on markets for domestic and foreign package holidays, for short /medium haul and long haul 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 hol idays 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 customer s 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 submit ted 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 customer s 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 i ndustry more generally, as SETO monitor s 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 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 con clude s 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 s upply of airline seats 3.3.1. Product market definition (66) In its prior decision practice, t he Commission has defined a separate wholesale market for airline seat s , 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 airli ne seats, based on (i) the type of flights (cha rter 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, c onsidering 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 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 indicate d 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, f or 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 defini tion . 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 haul 82 and long haul flights , 83 along the same criteria than those used in the cont ex t 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 d o not put forward elements that would question the Commission's practice. (77) Nevertheless, f or 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 destinatio n 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, f or 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 F or 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 segment s 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 i n 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 question s 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 i n its prior decision practice .
(93) TUI does not discuss that issue in detail . (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, t he 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 b usiness travel services 91 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 consider ed 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 services 96 and relies on the Commission 's p rior 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 (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 defini tion .
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 t he 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 defini tion .
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 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 result s in the creation of homogeneous market condition s 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 defini tion . 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, t he 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 Transac tion 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. (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, a fter the Transaction, the merged entity would be the lead ing tour operat or in France. The Commission has considered several elements, which are relevant for the assessment of the effects of the Transaction across t he 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 , f rom the results of the market investigation 107 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 i f markets are further sub-segmented by both product type and country of destination for most affected markets . (118) Only when assessing the following products did the market investigation not reveal any clear alternative as respondents mentioned many bran ds: (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 c lub 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 benchmarke d 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 T ra n sat '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, th ese conclusions are also similar when evaluating the results of manual benchmarks for tours , although the Commission notes that the monitoring practices of the Parties for this type of package holidays are less systematic . 110 (123) Having regard to the markets affected by the T ransaction , 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 , i n 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 agen ts 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 increase d 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 packag es ), 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 . 4.1.1.3. Barriers to e ntry 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 n otable 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 investigation 118 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 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 i f 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 , s ome 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 p ackage 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 operator s 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 c ompetitive 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 20 03 , 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 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, w hile 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, c onversely, the majority of travel agents indicate that the y do not enjoy this ability .
126 In particular , some travel agents , wh ich 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 v is-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) C onsidering 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.
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 t he 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 holiday s , two affected markets would arise: supply of short /medium haul club 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 holidays 137 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) I f 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 . Table 1 : Affected markets in package holidays by type and destination 139 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]% 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]% 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) D etails on the competitive assessment are provided in each market-specific section below.
4.1.2.2. P ackage holidays to all destinations – distinction by holiday type (150) After the Transaction, TUI would be the leading tour operator in France. When considering further distinction s 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 , s ignificant competitors such as ClubMed, NG Travel, Thomas Cook , 140 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 Section s 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 oth er 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 market s for package holidays from France to all destinations, when considering the various types of package holiday s .
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 market s for package holidays from France to all destinations , under any plausible segmentation by holiday type . (156) T he competitive assessment s 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.
(159) In addition, the increment brought upon by the Transaction in the package holiday s ta ys market would be limited at [0-5] % , so that there would be no material Transaction-specific effect in this market . (160) Significant c ompetitors 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 market s 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 market s 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 mo derate 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 t o [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 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 market s 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, s ignificant competitors with respect to Canada and the US A remain, such as Salaun and Voyamar. In particular, r espondents 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 s tays 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 (w h ich does not raise serious doubts as mentioned above) and (ii) Transat's 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 pres ence of significant competitors, the fact that a majority of respondents to the market investigation expect s 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 market s 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 market s for package holidays to the USA and Canada , neither separately nor viewed together as a possible group of countr ies , 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. (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 pac kage 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 C uba , at [30-40] %. (181) In addition, the increment brought upon by the Transaction in the all package holiday s 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 th is 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) T here are numerous competitors active in the supply of package holidays and tours from France to C uba , such as E mpreinte , Kuoni , Karavel/ Fram or Havanatour .
155 (184) Although some competitors have mentioned that the Transaction may reinforce barriers to entry or expansion in Cuba 156 , no material concern has been 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 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 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, t he 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]% (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 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 market s 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 market s 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 countr ies , 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 holiday s 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 th is market. 170 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 Greece . 171 (211) T here 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) Re spondents 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 th is market.
175 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 Italy . 176 (217) T here are numerous competitors active in the supply of package holidays and clubs from France to Italy , such as NG Travel, Hé liades, 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 club s 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 th is 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 (222) T here 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 club s 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.
(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 market s 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 market s for package holidays to Greece , Italy and Spain , neither separately nor viewed together as part of a possible Southern Europe an group of countr ies , 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 holiday s 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 th is market. 187 (233) T here 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 France to Iceland correspond to less than [10-20] % of the total travellers from France to Iceland. 190 (234) F inally , a majority of respondents t o t he 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 holiday s 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) T here 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 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) T here 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] % . (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 Europe an group of countr ies , 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) T here 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 package holidays has contracted in recent years , and that the Parties are currently in the process of red ucing 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 holiday s 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 th is 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 (258) T here 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 red ucing 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 over all 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 th e s e market s . (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, r espondents 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, s ignificant 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 red ucing 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 market s 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 market s for package holidays to Morocco and Tunisia , neither separately nor viewed together as part of a possible Northern Africa n group of countr ies , under any plausible segmentation. 4.1.2.8. Other countries (268) T he 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] % i n the tour package holidays market.
(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 . 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.
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 holiday s 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 th is 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. 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]% (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 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. A ssessment 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 f oreclosure 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 foreclos ur e, 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 customer s (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) T UI and Transat, as t our 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. 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 operato rs. 236 TUI and Transat already enter, pre-Transaction, into such exclusive agreements with operators of hotel s which, once provid ed 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. Airline seats (314) TUI acts as a wholesale supplier of airline se ats 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, Trans at 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 s hort /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 th os e 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 . 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 Greece 245 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:
(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 th e 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 in to input foreclosure would not increase as a result of the Transaction . T he 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.
(329) Second, TUI's market share on the upstream market for the wholesale supply of airline s eats 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 operator s 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 operat ed 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 (333) In addition, the extension of the customer base served by TUI's in-house would ha ve 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. P ost-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 c harter or scheduled airlin es 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 re selling 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 seats 263 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. 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 . C ustomer 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 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. S upply of package holidays and p rov ision 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 trave l 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, t he 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) F irst , the Transaction has a limited effect on the ability of the Parties to engage into a n 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 (348) Second , i n the upstream market for the supply of package holidays in France (including all products and destinations) , th e 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, e ven if the merged entity were to have the ability and incentive to engage in to input foreclosure , the effects of such attempts would be limited . T here 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 themselves enter the upstream market by assembling their own packages, using e.g.
IT tools such as Orchestra. (353) Finally, m ost 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 defini tion s 283 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 need to m aximise 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 (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'). (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 . (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 franchise d to third parties , and 61 outlets operating under the Transat brand (Look Voyages), among which 42 are owned by Transat and 19 are franchise d 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. (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 autonom ous 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 2 1 and following. (14) Form CO, paragraph 15 2 and f ollowing. (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 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" , Ins t itut 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 o f 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 F orm 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 P arliament 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. (23) See Minutes of a call with a cust omer 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 wi th the Syndicat des Entreprises du Tour Operating of 4 July 2016. (25) See Minutes of a call w ith a competitor of 4 July 2016, paragraph 9. (26) Form CO, paragraphs 649 and f ollowing; 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 – Questionna ire 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. (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 it s 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. (35) See replies to Q1 – Questionnai re 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. (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 "Gf K consumer survey, July 2016", slide 24. (42) See replies to Q1 – Questionnai re 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. (45) See replies to Q1 – Questionnaire to tour operators, questions 11 to 1 3 ; Q2 – Questionnaire to travel agents, questions 12 to 1 4 . (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, t he 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. (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 destina tion 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 1 6 ; Q2 – Questionnaire to travel agents, questions 16 and 1 7 . (52) See Minutes of a c all 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 w ith 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. (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 w ould not, even though the Parties place d 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; s ee replies to Q1 – Questionnaire to tour operators, questions 19 to 25;
Q2 – Questionnaire to travel agents, questions 20 to 26. (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. (65) See among others, M.6704 – REWE Touristik GmbH / Ferid NASR / EXIM Holding SA, recital 2 8; 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 2 2 .
(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. (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 ab ove. (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 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 3 4. (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. (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 re pli es to Q1 – Questionnaire to tour operators, question 27 ; Q2 – Questionnaire to travel agents, question 28 . (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. (91) * Should read: geographic 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. (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. (103) Form CO, paragraph 689. (104) Form CO, paragraph s 678 and f ollowing. (105) Form CO, paragraph 186. (106) Form CO, paragraph 1003 and following. (107) Replies to Q1 – Q uestionnaire to tour operators, question 37; Q2 – Q uestionnaire to travel agents, question 34. (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. (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 – Q uestionnaire to tour operators, question 36; Q2 – Q uestionnaire to travel agents, question 33. (112) Replies to Q1 – Q uestionnaire to tour operators , question 41.2 ; Q2 – Q uestionnaire to travel agents , question 38.2. (113) Replies to Q1 – Q uestionnaire to tour operators , question 36 ; Q2 – Q uestionnaire to travel agents , question 33. (114) Form CO, paragraph 216 and following. (115) Form CO, Annex es 6.27 to 6.32. (116) Form CO, Annex 6.33. (117) These new entrants include: FTI Grou p 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 N G Travel with approximately [0-5] %. Form CO, paragraph 1006. (118) Replies to Q1 – Q uestionnaire to tour operators , question 39 ; Q2 – Q uestionnaire to travel agents , question 36. (119) Form CO, paragraph 431. (120) Replies to Q1 – Q uestionnaire to tour operators , question 39 ; Q2 – Q uestionnaire 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).
(124) Form CO, paragraph 236. (125) Replies to Q1 – Q uestionnaire to tour operators , question 40 ; Q2 – Q uestionnaire to travel agents , question 37. (126) Replies to Q1 – Q uestionnaire to tour operators , question 41.1 ; Q2 – Q uestionnaire to travel agents , question 38.1. (127) Replies of two travel agents to Q2 – Q uestionnaire to travel agents, question 38.1. (128) Replies to Q1 – Q uestionnaire to tour operators , question 42 ; Q2 – Q uestionnaire to travel agents , question 39. (129) Replies to Q1 – Q uestionnaire to tour operators , question 44 ; Q2 – Q uestionnaire to travel agents , question 40.
(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, paragraph s 185 and following, and 195 and following . (134) The Commission has nevertheless verified that should market shares be established on pa ssenger numbers rather than on turnover , the conclusion s 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. (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 market s 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 effect s 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] % .
T he 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 – Q uestionnaire to tour operators, question s 37 and 46; Q2 – Q uestionnaire to travel agents, question s 34 and 42 . All the aforementioned markets will not be further assessed in this Decision on the basis of passenger market shares. (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 Barthéle my ; (iv) Southern Europe: Croatia, Cyprus, Greece, I taly, Malta, Portugal and Spain; (v) North America: USA and Canada. (140) In the Commission's market investigation, a travel agent consider ed 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 wer e 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 operat ing 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 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, v igorously with the Parties post- Transaction, including in France.
(141) P arties' response to RFI 3 of 3 October 2016 . (142) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (143) Form CO, paragraph 564 and Annex 6.33 (144) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (145) Form CO, paragraph 351 and Annex 6.33. (146) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (147) Replies to Q1 – Q uestionnaire to tour operators , question 37 ; Q2 – Q uestionnaire to travel agents , question 34.
(148) Replies to Q1 – Q uestionnaire to tour operators , question 46 ; Q2 – Q uestionnaire to travel agents , question 42. (149) * S hould read: stays Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (150) Form CO, Annex 6.33. (151) Replies to Q1 – Q uestionnaire to tour operators, question 39. (152) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (153) Replies to Q1 – Q uestionnaire to tour operators , question 37 ; Q2 – Q uestionnaire to travel agents , question 34.
(154) Replies to Q1 – Q uestionnaire to tour operators , question 46 ; Q2 – Q uestionnaire to travel agents , question 42. (155) Form CO, paragraph 351. (156) Replies to Q1 – Q uestionnaire to tour operators, question 39. (157) Form CO, paragraph 374. (158) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (159) Form CO, Annex 6.33. (160) Replies to Q1 – Q uestionnaire to tour operators, question 39. (161) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45.
(162) Form CO, Annex 6.33. (163) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (164) Form CO, Annex 6.33. (165) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (166) Form CO, Annex 6.33. (167) Replies to Q1 – Q uestionnaire to tour operators, question 39. (168) Form CO, paragraph 374. (169) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (170) Replies to Q1 – Q uestionnaire to tour operators , question 37 ;
Q2 – Q uestionnaire to travel agents , question 34. (171) Replies to Q1 – Q uestionnaire to tour operators , question 46 ; Q2 – Q uestionnaire to travel agents , question 42. (172) Form CO, paragraph 466. (173) Replies to Q1 – Q uestionnaire to tour operators, question 39. (174) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (175) Replies to Q1 – Q uestionnaire to tour operators , question 37 ; Q2 – Q uestionnaire to travel agents , question 34. (176) Replies to Q1 – Q uestionnaire to tour operators , question 46 ;
Q2 – Q uestionnaire to travel agents , question 42. (177) Form CO, paragraph 470 . (178) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (179) Replies to Q1 – Q uestionnaire to tour operators , question 37 ; Q2 – Q uestionnaire to travel agents , question 34. (180) Replies to Q1 – Q uestionnaire to tour operators , question 46 ; Q2 – Q uestionnaire to travel agents , question 42. (181) Form CO, paragraph 462. (182) Replies to Q1 – Q uestionnaire to tour operators, question 39. (183) Replies to Q1 – Q uestionnaire to tour operators , question 48 ;
Q2 – Q uestionnaire to travel agents , question 45. (184) Form CO, Annex 6.33. (185) Replies to Q1 – Q uestionnaire to tour operators, question 39. (186) Replies to Q1 – Q uestionnaire to tour operators, question 48; Q2 – Q uestionnaire to travel agents, question 45. (187) Replies to Q1 – Q uestionnaire to tour operators , question 37 ; Q2 – Q uestionnaire 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. (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 – Q uestionnaire to tour operators , question 46 ; Q2 – Q uestionnaire to travel agents , question 42. (192) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (193) Form CO, Annex 6.33. (194) Replies to Q1 – Q uestionnaire to tour operators , question 48 ;
Q2 – Q uestionnaire to travel agents , question 45. (195) Form CO, Annex 6.33. (196) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (197) Form CO, Annex 6.33. (198) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (199) Form CO, paragraph 340. (200) Form CO, paragraph 338. (201) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (202) Replies to Q1 – Q uestionnaire to tour operators , question 37 ;
Q2 – Q uestionnaire to travel agents , question 34. (203) Replies to Q1 – Q uestionnaire to tour operators , question 46 ; Q2 – Q uestionnaire to travel agents , question 42. (204) Form CO, paragraph 466. (205) Form CO, paragraph 549. (206) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (207) Replies to Q1 – Q uestionnaire to tour operators , question 46 ; Q2 – Q uestionnaire to travel agents , question 42. (208) Replies to Q1 – Q uestionnaire to tour operators , question 37 ; Q2 – Q uestionnaire to travel agents , question 34.
(209) Form CO, Annex 6.33. (210) Form CO, Annex es 6.27 to 6.32. (211) Replies to Q1 – Q uestionnaire to tour operators, question 48; Q2 – Q uestionnaire to travel agents, question 45. (212) Form CO, Annex 6.33. (213) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (214) Form CO, Annex 6.33. (215) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (216) Form CO, Annex 6.33. (217) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45.
(218) Replies to Q1 – Q uestionnaire to tour operators , question 37 ; Q2 – Q uestionnaire to travel agents , question 34. (219) Replies to Q1 – Q uestionnaire to tour operators , question 46 ; Q2 – Q uestionnaire to travel agents , question 42. (220) Form CO, Annex 6.33. (221) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (222) Form CO, Annex 6.33. (223) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire to travel agents , question 45. (224) Form CO, Annex 6.33. (225) Replies to Q1 – Q uestionnaire to tour operators , question 48 ;
Q2 – Q uestionnaire to travel agents , question 45. (226) Form CO, Annex 6.33. (227) Replies to Q1 – Q uestionnaire to tour operators , question 48 ; Q2 – Q uestionnaire 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-Hori zontal Merger Guidelines, paragraphs 32 and 59.
(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. (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. (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]% (s ee TUI's answer of 10 October 2016 to RFI 5). (246) Form CO, paragraph 934. (247) S ee 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. (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. (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 call s 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) Fo r which TUI, through Jetaifly, operates charter flights. (260) Such a pro-competitive effec t 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 th at 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 – Q uestionnaire 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 – Q uestionnaire to travel agents, question s 4.1.1, 30.2 and 32.1 . (265) Fo rm 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 m inutes of a call with a tour operator of 10 June 2016, paragraph 23). (267) Form C O, 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 S ection 4.2.3.1. (271) Fo rm 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 o perator 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. 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 call s 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 call s with travel agents of 9 June 2016, paragraph 21, and of 10 June 2016, paragraph 29.
(281) See replies to Q1 – Questionnaire to tour operators, question 44 and to Q2 – Questionnaire to travel agents, question 40 . (282) Fo rm 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]%; D istribution 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.