Ryanair Holdings plc v European Commission.

• Jurisdiction: European Union
• ECLI: ECLI:EU:T:2010:280
• Court: General Court (European Union)
• Date: 06 July 2010
• Docket Number: T-342/07
• Celex Number: 62007TJ0342
• Procedure Type: Recurso de anulación - infundado

Case T-342/07

Ryanair Holdings plc

v

European Commission

(Competition – Concentrations – Air transport – Decision declaring a concentration to be incompatible with the common market – Assessment of the effects of the concentration on competition – Barriers to entry – Efficiency gains – Commitments)

Summary of the Judgment

1. Competition – Concentrations – Assessment of compatibility with the common market – Creation or strengthening of a dominant position – Prospective analysis

(Council Regulation No 139/2004, Arts 2(3) and 8(3))

2. Competition – Concentrations – Examination by the Commission – Commitments by the undertakings concerned capable of rendering the notified transaction compatible with the common market – Obligation on the part of the Commission to examine the concentration as amended by the commitments

(Council Regulation No 139/2004)

3. Competition – Concentrations – Examination by the Commission – Economic assessments – Discretion – Judicial review – Limits

(Council Regulation No 139/2004, Art. 2)

4. Competition – Concentrations – Assessment of compatibility with the common market – Concentration of two airlines

(Council Regulation No 139/2004)

5. Competition – Concentrations – Assessment of compatibility with the common market – Creation or strengthening of a dominant position – Evidence – High market shares – Concentration of two airlines

(Council Regulation No 139/2004)

6. Competition – Concentrations – Examination by the Commission – Definition of the market in question – Concentration of two airlines

(Council Regulation No 139/2004)

7. Competition – Concentrations – Assessment of compatibility with the common market – Criteria – Overall assessment – Assessment based on evidence

(Council Regulation No 139/2004)

8. Competition – Concentrations – Assessment of compatibility with the common market – Taking into account of actual and potential competition – Existence of barriers to entry on the market

(Council Regulation No 139/2004)

9. Competition – Concentrations – Assessment of compatibility with the common market – Taking into account of actual and potential competition – Existence of barriers to entry on the market

(Commission Notice 2004/C 31/03, para. 74)

10. Competition – Concentrations – Assessment of compatibility with the common market – Creation or strengthening of a dominant position – Taking into account of efficiency gains – Criteria – Cumulative nature

(Council Regulation No 139/2004, recital 29; Commission Notice 2004/C 31/03, para. 78)

11. Competition – Concentrations – Assessment of compatibility with the common market – Creation or strengthening of a dominant position – Taking into account of efficiency gains – Criteria – Verifiability

(Council Regulation No 139/2004; Commission Notice 2004/C 31/03, para. 86)

12. Competition – Concentrations – Assessment of compatibility with the common market – Creation or strengthening of a dominant position – Taking into account of efficiency gains – Criteria – Merger specificity

(Council Regulation No 139/2004; Commission Notice 2004/C 31/03, para. 85)

13. Competition – Concentrations – Assessment of compatibility with the common market – Creation or strengthening of a dominant position – Taking into account of efficiency gains – Criteria – Consumer benefit

(Council Regulation No 139/2004; Commission Notice 2004/C 31/03, paras 79, 80 and 84)

14. Competition – Concentrations – Examination by the Commission – Commitments by the undertakings concerned capable of rendering the notified transaction compatible with the common market – Taking into account of commitments given after the deadline – Conditions

(Council Regulation No 139/2004, Arts 2(2), 6(2), 8(2) and 18(3); Commission Notice on remedies acceptable under Regulations Nos 4064/89 and 447/98, para. 43)

15. Competition – Concentrations – Examination by the Commission – Commitments by the undertakings concerned capable of rendering the notified transaction compatible with the common market – Criteria

(Council Regulation No 139/2004)

1. To declare a concentration incompatible with the common market, the Commission has to prove, in accordance with Article 2(3) of Regulation No 139/2004 on the control of concentrations between undertakings, that the implementation of the notified concentration would significantly impede effective competition in the common market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position.

Such a decision, adopted on the basis of Article 8(3) of the merger regulation, is based on the outcome of a prospective analysis carried out by the Commission. That prospective analysis consists of an examination of how the notified concentration might alter the factors determining the state of competition on a given market in order to establish whether it would give rise to a serious impediment to effective competition. Such an analysis makes it necessary to envisage various chains of cause and effect with a view to ascertaining which of them are the most likely.

(see paras 26-27)

2. Where commitments have been validly proposed by the parties to a concentration during the administrative procedure in order to obtain a decision that the concentration is compatible with the common market, the Commission is required to examine the concentration as modified by those commitments. It is then for the Commission to demonstrate that those commitments do not render the concentration, as modified by the commitments, compatible with the common market.

(see para. 28)

3. The basic provisions of Regulation No 139/2004 on the control of concentrations between undertakings, in particular Article 2, confer on the Commission a certain discretion, especially with respect to assessments of an economic nature. Consequently, review by the Courts of the European Union of the exercise of that discretion, which is essential for defining the rules on concentrations, must take account of the margin of discretion implicit in the provisions of an economic nature which form part of the rules on concentrations.

Whilst the Courts of the European Union recognise that the Commission has a margin of discretion with regard to economic matters, that does not mean that they must refrain from reviewing the Commission’s interpretation of information of an economic nature. Not only must they establish, in particular, whether the evidence relied on is factually accurate, reliable and consistent but also whether that evidence contains all the information which must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it.

(see paras 29-30)

4. In order to analyse the competitive relationship between two airlines which are parties to a concentration, one providing a low-cost and no-frills service and the other providing a ‘mid-frills’ service, the Commission may take the view that those two companies are, of all the competitors operating on the various routes affected by the concentration, ‘closest competitors’, even though their operating costs and the prices they charge are different, since their operating costs and prices are beginning to resemble each other, and can be differentiated from those of network airlines in the market for those routes.

The fact that they have the same base airport enables these two airlines, inter alia, to benefit from similar advantages and may therefore corroborate the finding that the two companies are ‘closest competitors’.

The Commission is also able to rely on the existence of similar yield management systems, on the monitoring of the competitive behaviour of competitors, on the reactions of one of the parties to the concentration to the promotions carried out by the other or on the monitoring of the competitive behaviour of one party by the other. The Commission is entitled to take that evidence into account in the set of factors which it uses to evaluate the competitive situation.

(see paras 35, 79, 83, 85, 94, 124, 133)

5. Although the importance of market shares may vary from one market to another, the view may legitimately be taken that very large market shares are in themselves, save in exceptional circumstances, evidence of the existence of a dominant position. That may be the situation where there is a market share of 50% or more.

Where the Commission finds that the implementation of a concentration results in very high market shares on a large number of markets affected and a high concentration level, it does not therefore fail to have regard to the burden of proof in finding that such market shares constitute, in themselves, evidence of a dominant position. Such evidence may be dismissed if there are circumstances which might exclude a dominant position despite the high market shares.

As regards a concentration between two airlines, the Commission may decide, by carrying out an analysis of the effects of the concentration on each route affected, that the transaction would significantly impede effective competition as a result of the creation of a dominant position on a number of routes. As those positions are monopolistic, quasi monopolistic or very significant, they are sufficient, in themselves, subject to the analysis of possible commitments and efficiency gains, for a finding that the merger should be declared incompatible with the common market.

(see paras 41, 53-56, 336, 383-385, 445)

6. The Commission does not exceed the limits of its power of appraisal by defining, for the purposes of examining a concentration between two airlines, the markets for passenger air transport on the basis of air routes between two cities or bundles of air routes to the extent that there is substitutability between them according to the specific features of the transaction, and by using different criteria to characterise the substitutability of the routes, inter alia...