Judgments nº T-430/18 of Tribunal General de la Unión Europea, December 16, 2020

• Resolution Date: December 16, 2020
• Issuing Organization: Tribunal General de la Unión Europea
• Decision Number: T-430/18

(Competition - Concentrations - Air transport market - Decision declaring a concentration compatible with the internal market and the EEA Agreement - Commitments - Decision granting Grandfathering rights - Error of law - Concept of appropriate use)

In Case T-430/18,

American Airlines, Inc., established in Fort Worth, Texas (United States), represented by J.-P. Poitras, Solicitor, J. Ruiz Calzado and J. Wileur, lawyers,

applicant,

v

European Commission, represented by T. Franchoo, H. Leupold and L. Wildpanner, acting as Agents,

defendant,

supported by

Delta Air Lines, Inc., established in Wilmington, Delaware (United States), represented by M. Demetriou, QC, C. Angeli and I. Giles, lawyers,

intervener,

APPLICATION under Article 263 TFEU for annulment of Commission Decision C(2018) 2788 final of 30 April 2018 granting Grandfathering rights to Delta Air Lines (Case M.6607 - US Airways/American Airlines),

THE GENERAL COURT (First Chamber, Extended Composition),

composed of H. Kanninen, President, M. Jaeger (Rapporteur), N. Półtorak, O. Porchia and M. Stancu, Judges,

Registrar: E. Coulon,

gives the following

Judgment

Background to the dispute

The Merger Clearance Decision and Commitments

1 On 18 June 2013, the European Commission received a notification of a proposed concentration pursuant to which US Airways Group, Inc. (‘US Airways’), would enter into a merger with AMR Corporation (‘AMR’) (together, the parties to the merger, ‘the Parties’).

2 The Commission considered that the transaction would give rise to serious doubts as to its compatibility with the internal market as regards one long haul route between London and Philadelphia in respect of London Heathrow (United Kingdom) and Philadelphia International Airport (United States).

3 In order to address the serious doubts expressed by the Commission concerning the transaction, the Parties proposed certain commitments.

4 In that regard, the Parties offered a first draft of commitments on 10 July 2013 (‘the Draft Commitments of 10 July 2013’).

5 The Parties’ counsel indicated in the e-mail accompanying those draft commitments that they were based on recent commitments, including those in Case COMP/M.6447 - IAG/bmi (‘the IAG/bmi Case’), which gave rise to Commission Decision C(2012) 2320 of 30 March 2012 (OJ 2012 C 161, p. 2), and Case COMP/AT.39595 - A++ (‘the A++ Case’), which gave rise to Commission Decision C(2013) 2836 of 23 May 2013 (OJ 2013 C 201, p. 8).

6 Clause 1.2.6 of the commitments in the A++ Case (‘the A++ Commitments’) stated the following:

‘The Slots obtained by the Prospective Entrant as a result of the Slot Release Procedure shall only be used for the purpose of providing the service proposed in the bid in accordance with Clause 1.3.9, for which the Prospective Entrant has requested the Slots, and cannot be used on another route.’

7 Clause 1.11 of the Draft Commitments of 10 July 2013 provided as follows:

‘The Slots obtained by the Prospective Entrant as a result of the Slot Release Procedure shall only be used for the purpose of providing the Competitive Air Service proposed in the bid in accordance with Clause 1.24, for which the Prospective Entrant has requested the Slots, and cannot be used on another route.’

8 On 12 July 2013, the Commission rejected the Draft Commitments of 10 July 2013 and insisted, in particular, that Grandfathering rights would need to be incorporated into those commitments.

9 On 14 July 2013, the Parties submitted revised commitments, but did not include any Grandfathering rights, being of the view that that was not appropriate in the present case (‘the Draft Commitments of 14 July 2013’).

10 Clause 1.11 of the Draft Commitments of 14 July 2013 provided as follows:

‘The Slots obtained by the Prospective Entrant as a result of the Slot Release Procedure shall only be used for the purpose of providing the Competitive Air Service in accordance with Clause 1.23, and cannot be used on a route other than LHR-PHL.’

11 The Draft Commitments of 14 July 2013 were accompanied by a track-changes version reflecting the changes to the Draft Commitments of 10 July 2013.

12 On 15 July 2013, the Commission rejected the Parties’ draft commitments again and insisted that Grandfathering rights ‘based on’ the IAG/bmi Case had to be included. The Commission was of the view that Grandfathering rights were necessary in order to remove all serious doubts regarding the transaction.

13 The relevant part of the commitments in the IAG/bmi Case (‘the IAG/bmi Commitments’) reads as follows:

‘1.3 Grandfathering of slots

1.3.1 As a general rule, the Slots obtained by the Prospective Entrant from IAG as a result of the Slot Release Procedure shall be used only to provide a Competitive Air Service on the Relevant City Pair for which the Prospective Entrant has requested them from IAG through the Slot Release Procedure. These Slots cannot be used on another city pair unless the Prospective Entrant has operated the Relevant City Pair for which these Slots have been transferred for a number of full consecutive IATA Seasons (“Utilisation Period”).

1.3.2 The Prospective Entrant will be deemed to have grandfathering rights for the Slots once appropriate use of the Slots has been made on the Relevant City Pair for the Utilisation Period. In this regard, once the Utilisation Period has elapsed, the Prospective Entrant will be entitled to use the Slots obtained on the basis of these Commitments exclusively to operate services on any European Short-haul City Pair or the Identified Long-haul City Pairs (“Grandfathering”).

1.3.3 Grandfathering is subject to approval of the Commission, advised by the Monitoring Trustee, …’

14 Clause 1.3.5 of the IAG/bmi Commitments, relating to misuse, was set out in the same section, entitled ‘Grandfathering of slots’.

15 With the statutory deadline for formally submitting commitments expiring on 17 July 2013, the Parties on 16 July 2013 submitted revised commitments notably introducing Grandfathering rights (‘the Draft Commitments of 16 July 2013’). The document sent to the Commission also included a track-changes version reflecting the changes to the Draft Commitments of 14 July 2013.

16 As regards the incorporation of Grandfathering rights into those draft commitments, the e-mail accompanying the Draft Commitments of 16 July 2013 merely stated that Grandfathering rights had been included ‘as requested’ by the Commission.

17 Clauses 1.9 to 1.11 of the Draft Commitments of 16 July 2013 were incorporated for the first time in that draft. They read as follows:

‘1.9 As a general rule, the Slots obtained by the Prospective Entrant as a result of the Slot Release Procedure shall be used only to provide a Competitive Air Service on the Airport Pair. The Slots cannot be used on another city pair unless the Prospective Entrant has operated a nonstop service on the Airport Pair in accordance with the bid submitted pursuant to Clause 1.24 for a number of full consecutive IATA Seasons (“Utilisation Period”).

1.10 The Prospective Entrant will be deemed to have grandfathering rights for the Slots once appropriate use of the Slots has been made on the Airport Pair for the Utilisation Period. In this regard, once the Utilisation Period has elapsed, the Prospective Entrant will be entitled to use the Slots obtained on the basis of these Commitments on any city pair (“Grandfathering”).

1.11 Grandfathering is subject to approval of the Commission, advised by the Monitoring Trustee at the end of the Utilisation Period …’

18 On 18 July 2013, the Parties provided the Commission with a Form RM relating to the Draft Commitments of 16 July 2013 (‘the Form RM of 18 July 2013’).

19 In a Form RM, the content of which is set out in Annex IV to Commission Regulation (EC) No 802/2004 of 21 April 2004 implementing Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (OJ 2004 L 133, p. 1, Corrigendum OJ 2004 L 172, p. 9, (‘the Implementing Regulation’), undertakings are expected to specify the information and documents which they submit when offering commitments pursuant to Article 6(2) of Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ 2004 L 24, p. 1, ‘the Merger Regulation’).

20 Following the market test, the Parties had further discussions with the Commission regarding the Draft Commitments of 16 July 2013 and made some changes.

21 Thus, on 25 July 2013, the Parties submitted to the Commission their final commitments (‘the Final Commitments’) and, on 30 July 2013, the Parties provided the Commission with the Form RM accompanying the Final Commitments (‘the Form RM of 30 July 2013’).

22 The wording of Clauses 1.9 to 1.11 of the Final Commitments remained the same as that appearing in the Draft Commitments of 16 July 2013, as reproduced in paragraph 17 above.

23 In Section 1, point 1.1(i), the Form RM of 30 July 2013 stated as follows:

‘The Slot Commitment is primarily based on the Commission practice in the most recent cases involving airlines mergers such as [the] IAG/bmi [Case]. In particular, to increase the attractiveness of the remedy, the Proposed Commitments include provisions on Grandfathering of the slots released by the Parties once the new entrant has operated a non-stop service on the Airport Pair for six consecutive seasons.’

24 In Section 3, under the heading ‘Deviation from Model Texts’, of the Form RM of 30 July 2013, the Parties were expected to draw attention to any discrepancies between the proposed commitments and the standard-form commitments published by the Commission’s services, as revised periodically, and to explain the reasons underlying those discrepancies.

25 In the present case, in Section 3 of the Form RM of 30 July 2013, the Parties stated the following:

‘The commitments offered by the Parties diverge from the Model Commitments texts published by Commission services to the extent necessary to deal with...