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Klm/ Martinair Regulation (Ec)

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Klm/ Martinair Regulation (Ec) EN This text is made available for information purposes only. A summary of this decision is published in all Community languages in the Official Journal of the European Union. Case No COMP/M.5141- KLM/ MARTINAIR Only the English text is authentic. REGULATION (EC) No 139/2004 MERGER PROCEDURE Article 8 (1) Date: 17/12/2008 COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 17/12/2008 C(2008) 8458 final COMMISSION DECISION of 17/12/2008 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement (Case No COMP/M.5141 – KLM/ Martinair) (Only the English text is authentic) Table of contents 1 INTRODUCTION.......................................................................................................5 2 THE PARTIES.............................................................................................................6 3 THE CONCENTRATION ...........................................................................................6 4 COMMUNITY DIMENSION .....................................................................................7 5 PROCEDURE..............................................................................................................7 6 CONCEPTUAL FRAMEWORK FOR THE COMPETITIVE ASSESSMENT........8 6.1. Introduction .....................................................................................................8 6.2. KLM's joint control over Martinair..............................................................8 6.3. Air France-KLM's Membership in SkyTeam ............................................11 7 AIR TRANSPORT OF CARGO...............................................................................12 7.1. Introduction ...................................................................................................12 7.2. The relevant product and geographic markets...........................................12 7.2.1. Substitutability with other means of transport.............................12 7.2.2. Distinction on the basis of the category or nature of the goods transported ............................................................................13 7.2.3. Continent-to-continent/continent-to-country approach ..............13 7.3. General market conditions ...........................................................................15 7.4. Competitive assessment.................................................................................17 7.4.1. Europe/North America ...................................................................17 7.4.2. Europe/South American countries.................................................18 7.4.3. Europe/Greater Caribbean countries............................................21 7.4.4. Europe/African countries ...............................................................24 7.4.5. Europe/Far Eastern countries........................................................26 7.4.6. Conclusion........................................................................................27 8 AIR TRANSPORT OF PASSENGERS....................................................................28 8.1. Introduction ...................................................................................................28 8.2. The investigation and the survey conducted at Schiphol airport..............28 8.3. The relevant product and geographic market ............................................29 8.3.1. Wholesale supply of seats to tour operators v. sales to end customers..........................................................................................31 8.3.2. The supply of passenger air transport services to end customers..........................................................................................33 8.3.3. The wholesale supply of airline seats to tour operators...............40 8.4. Competitive Assessment................................................................................42 8.4.1. The relevant counterfactual for assessing the effects of the proposed transaction relating to the parties' operations in the air transport of passengers.......................................................42 8.4.2. General market conditions .............................................................46 8.4.3. The supply of air transport services to end customers ................52 8.4.4. The wholesale supply of airline seats to tour operators...............86 9 ASSESSMENT OF EFFICIENCIES ........................................................................96 10 CONCLUSION .........................................................................................................98 4 Commission Decision of 17/12/2008 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement (Case No COMP/M.5141 – KLM/ Martinair) (Only the English text is authentic) (Text with EEA relevance) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Community, Having regard to the Agreement on the European Economic Area, and in particular Article 57 thereof, Having regard to Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings1, and in particular Article 8(1) thereof, Having regard to the Commission's decision of 8 September 2008 to initiate proceedings in this case, Having regard to the opinion of the Advisory Committee on Concentrations, Having regard to the final report of the Hearing Officer in this case, WHEREAS: 1 INTRODUCTION 1. On 17 July 2008, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (the "EC Merger Regulation") by which the undertaking KLM Royal Dutch Airlines N.V. ("KLM", the Netherlands), ultimately controlled by Air France-KLM Holding S.A. ("Air France- KLM", France) acquires control, within the meaning of Article 3(1)(b) of the EC Merger Regulation, of the whole of the undertaking Martinair Holland N.V. ("Martinair", the Netherlands) by way of purchase of shares. 2. After examination of the notification, the Commission has concluded that the proposed transaction falls within the scope of the EC Merger Regulation and would not significantly impede effective competition in the common market or in a substantial part of it and that it is therefore to be declared compatible with the common market and the 1 OJ L 24, 29.1.2004, p. 1. 5 functioning of the EEA Agreement pursuant to Article 8(1) of the EC Merger Regulation and Article 57 of the EEA Agreement. 2 THE PARTIES 3. KLM is a full-service network carrier with its hub at Amsterdam Schiphol. KLM is part of the Air France-KLM group. Both KLM and Air France have two core activities: air transport of passengers and cargo. They also provide engineering and maintenance services. KLM has a subsidiary, Transavia.com, which is active in the passenger market as a low-cost carrier. 4. Martinair is a Dutch point-to-point carrier with its base at Amsterdam Schiphol. Martinair provides charter and scheduled air transport of passengers and cargo. Martinair's fleet only serves intercontinental destinations. It operates passenger flights to the following eleven long-haul destinations: Vancouver, Toronto, Miami, Havana, Varadero, San José, Punta Cana, Puerto Plata, Cancun, Curacao and Aruba.2 The cargo flights operate between Europe and the following regions: Africa, the Middle East, the Far East, North America and Latin America. 3 THE CONCENTRATION 5. KLM currently owns 50% of Martinair, sharing the equity 50/50 with Maersk Holding B.V., a Dutch-based wholly-owned subsidiary of A.P. Moller-Maersk A/S ("Maersk"), a Danish company with interests mainly in sea and land transport. The parties submit that Maersk no longer has a strategic interest in the air transport business and wishes to dispose of its stake in Martinair in order to fully concentrate on the sea shipping industry. Pursuant to a Letter of Intent of 7 April 2008, KLM therefore intends to acquire the remaining 50% shareholding of Maersk in Martinair. 6. According to Martinair's Articles of Association, KLM and Maersk share the voting rights equally in Martinair, as well as the rights to appoint the members of Martinair's management board and supervisory board. Each year, the management board must submit a draft budget to the supervisory board which must be approved by the latter. In addition, the management board needs the approval of the supervisory board for a number of important decisions, including any decisions relating to the acquisition and sale of aircrafts and decisions to take out loans. Operational decisions such as decisions relating to the routes on which Martinair operates, pricing and positioning on the 2 Until very recently, Martinair also operated passenger flights from Amsterdam to Paramaribo. However, Martinair has decided to stop operations on this route from 1 September 2008; cf. http://www.parool.nl/parool/nl/30/ECONOMIE/article/detail/15996/2008/06/03/Vlucht-op-Paramaribo- weer-duur.dhtml, http://www.reisrevue.nl/managementnieuws/id/393/martinair_stopt_met_paramaribo.html, and http://news.caribseek.com/Curaçao/article_66106.shtml. 6 markets are all taken within Martinair. Depending on their importance, management board approval may be required. 7. Given the company organisation and corporate governance of Martinair, KLM and Maersk currently jointly control Martinair. The acquisition of Maersk's 50% shareholding in Martinair by KLM will therefore involve a change from joint to sole control.
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