EUROPEAN COMMISSION DG Competition Case M.9546 - GATEGROUP / LSG EUROPEAN BUSINESS Only the English text is available and authentic. REGULATION (EC) No 139/2004 MERGER PROCEDURE Article 6(1)(b) in conjunction with Art 6(2) Date: 03/04/2020 In electronic form on the EUR-Lex website under document number 32020M9546 EUROPEAN COMMISSION Brussels, 03.04.2020 C(2020) 2224 final PUBLIC VERSION In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC) No 139/2004 concerning non-disclosure of business secrets and other confidential information. The omissions are shown thus […]. Where possible the information omitted has been replaced by ranges of figures or a general description. gategroup Holding AG Sägereistrasse 20 CH-8152 Glattbrugg Switzerland Subject: Case M.9546 – GATEGROUP / LSG EUROPEAN BUSINESS Commission decision pursuant to Article 6(1)(b) in conjunction with Article 6(2) of Council Regulation No 139/20041 and Article 57 of the Agreement on the European Economic Area2 Contents 1. THE PARTIES ........................................................................................................4 1.1. Gategroup .......................................................................................................4 1.2. LSG EU .........................................................................................................4 2. THE CONCENTRATION .......................................................................................5 3. EU DIMENSION .....................................................................................................6 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'). Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË Tel: +32 229-91111. Fax: +32 229-64301. E-mail: [email protected]. 4. RELEVANT MARKETS .........................................................................................6 4.1. In-flight catering services ...............................................................................6 4.1.1. Product market definition ..................................................................6 4.1.2. Geographic market definition ............................................................9 4.1.3. Conclusion ...................................................................................... 10 4.2. In-flight equipment services ......................................................................... 11 4.2.1. Product market definition ................................................................ 11 4.2.2. Geographic market definition .......................................................... 13 4.2.3. Conclusion ...................................................................................... 13 4.3. Lounge management services ....................................................................... 14 4.3.1. Product market definition ................................................................ 14 4.3.2. Geographic market definition .......................................................... 14 4.3.3. Conclusion ...................................................................................... 15 4.4. Ready-made food products ........................................................................... 15 4.4.1. Product market definition ................................................................ 15 4.4.2. Geographic market definition .......................................................... 16 4.4.3. Conclusion ...................................................................................... 16 4.5. Retail on-board services ............................................................................... 16 4.5.1. Product market definition ................................................................ 16 4.5.2. Geographic market definition .......................................................... 17 4.5.3. Conclusion ...................................................................................... 17 4.6. Passenger air transport services .................................................................... 17 4.6.1. Product market definition ................................................................ 17 4.6.2. Geographic market definition .......................................................... 18 4.6.3. Conclusion ...................................................................................... 19 5. COMPETITIVE ASSESSMENT ........................................................................... 19 5.1. Horizontal non-coordinated effects ............................................................... 19 5.1.1. Framework for the competitive assessment ..................................... 19 5.1.2. In-flight catering services ................................................................ 20 5.1.3. In-flight equipment services ............................................................ 40 5.1.4. Lounge management services .......................................................... 42 5.2. Vertical effects ............................................................................................. 43 5.2.1. Framework for the competitive assessment ..................................... 43 5.2.2. Vertical relationship between in-flight catering and passenger air transport services ............................................................................ 44 5.3. Conglomerate effects .................................................................................... 47 2 5.3.1. Framework for the competitive assessment ..................................... 47 5.3.2. In-flight catering services and equipment services ........................... 48 5.3.3. In-flight catering services and ready-made food products to the commercial foodservice sector ........................................................ 51 5.3.4. In-flight catering services and retail on-board services .................... 53 5.3.5. Retail on-board services and in-flight equipment services ............... 54 5.3.6. Retail on-board services and ready-made food products .................. 56 5.4. Conclusion of the competitive assessment .................................................... 58 6. PROPOSED COMMITMENTS ............................................................................. 58 6.1. Framework for the assessment of Commitments ........................................... 59 6.2. Initial Commitments ..................................................................................... 60 6.2.1. Description of the Initial Commitments ........................................... 60 6.2.2. Commission’s assessment of the Initial Commitments .................... 62 6.3. Final Commitments ...................................................................................... 67 6.3.1. Description of the Final Commitments ............................................ 67 6.3.2. Assessment of the Final Commitments ............................................ 68 6.4. Conclusion on the Final Commitments ......................................................... 69 7. CONDITIONS AND OBLIGATIONS ................................................................... 69 8. CONCLUSION...................................................................................................... 70 3 Dear Sir or Madam, (1) On 14 February 2020, the European Commission received notification of a proposed concentration pursuant to Article 4 of the Merger Regulation by which Gategroup Holding AG (“Gategroup”) intends to acquire within the meaning of Article 3(1)(b) of the Merger Regulation sole control over parts of the European business of LSG Lufthansa Services Holding AG (“LSG”) by way of a purchase of shares and selected assets (the “Transaction”). The target of the Transaction, the European business of LSG, is referred to as “LSG EU”. (2) Gategroup is referred to as the “Notifying Party”. Gategroup (and its controlling parents) and LSG EU are collectively referred to as the “Parties”. 1. THE PARTIES 1.1. Gategroup (3) Gategroup is headquartered in Switzerland and provides airline catering, retail on- board, equipment services and hospitality products and services to its customers globally. (4) In the EEA, Gategroup is mainly active in aviation-related services. Through its brands Gate Gourmet and Servair, Gategroup provides in-flight catering services, which accounted for […] % of its turnover in the EEA in 2018.3 Gategroup also provides inter alia (i) on-board services through its brands Gateretail and Dutyfly, (ii) packaged food solutions, (iii) equipment services (including the manufacturing) to airlines and foodservice providers through its subsidiary deSter and (iv) lounge management services in Paris Charles de Gaulle, Frankfurt airport and London Heathrow. These activities respectively accounted for […]% of its EEA turnover in 2018.4 (5) Gategroup is ultimately jointly controlled by Temasek Holdings Limited (Singapore) and RRJ Capital (Hong Kong).5 Temasek is an investment company that owns a majority shareholding in Singapore Airlines, which operates passenger flights to/from