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Commission Decision of 21 August 2007 declaring a concentration compatible with the common market and the functioning of the EEA Agreement (Case COMP/M.4523 — Travelport/Worldspan) (notified under document number C(2007) 3938) (Only the English text is authentic) (Text with EEA relevance) (2007/781/EC)

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  1. Introductory Text

  2. I. SUMMARY

    1. (1) Travelport LLC, a subsidiary of the Blackstone Group (Blackstone, USA),...

      1. Travelport LLC, a subsidiary of the Blackstone Group (Blackstone, USA),...

    2. (2) Worldspan Technologies Inc. (Worldspan) provides travel distribution services through the...

      1. Worldspan Technologies Inc. (Worldspan) provides travel distribution services through the...

    3. (3) Pursuant to the operation, based on a referral pursuant to...

      1. Pursuant to the operation, based on a referral pursuant to...

    4. (4) The Commission’s market investigation has revealed that the proposed concentration...

      1. The Commission’s market investigation has revealed that the proposed concentration...

  3. II. EXPLANATORY MEMORANDUM

    1. II.1. Relevant Product Market and Possible Alternative Market Definitions

      1. (5) In previous cases, the Commission has defined a GDS as...

        1. In previous cases, the Commission has defined a GDS as...

      2. (6) The product market affected by this transaction is defined in...

        1. The product market affected by this transaction is defined in...

      3. (7) The Commission has assessed whether — as the notifying party...

        1. The Commission has assessed whether — as the notifying party...

      4. (8) The inclusion of the first three in the relevant product...

        1. The inclusion of the first three in the relevant product...

      5. (9) On the upstream side of the market, ‘supplier.com’ allow TSPs...

        1. On the upstream side of the market, ‘supplier.com’ allow TSPs...

      6. (10) Conventional airlines are thus able to compete better with Low...

        1. Conventional airlines are thus able to compete better with Low...

      7. (11) The in-depth investigation has shown that the extent to which...

        1. The in-depth investigation has shown that the extent to which...

      8. (12) On the downstream side of the market, when booking through...

        1. On the downstream side of the market, when booking through...

      9. (13) Considering that substitution upstream is only partial, leaving substantial volumes...

        1. Considering that substitution upstream is only partial, leaving substantial volumes...

      10. (14) The Decision recognises however that the rapid uptake of ‘supplier.com’...

        1. The Decision recognises however that the rapid uptake of ‘supplier.com’...

    2. II.2. Relevant Geographic Markets

      1. (15) The Decision defines the geographic market delineation of the upstream...

        1. The Decision defines the geographic market delineation of the upstream...

      2. (16) The Decision defines the downstream side of the market as...

        1. The Decision defines the downstream side of the market as...

    3. II.3. Competitive Assessment of theories of harm

      1. II.3.1. The theories of harm

        1. (17) In its Decision of 3 May 2007, the Commission found...

          1. In its Decision of 3 May 2007, the Commission found...

        2. (18) In the Article 6(1)(c) Decision it was argued that the...

          1. the merger would allow the parties to use their strong...

      2. II.3.2. Vertical cross-market effects (multi-homing vs. single-homing)

        1. (19) During the initial stage of the investigation, concerns were raised...

          1. During the initial stage of the investigation, concerns were raised...

        2. (20) After the merger, Galileo/Worldspan would obtain large market shares with...

          1. After the merger, Galileo/Worldspan would obtain large market shares with...

        3. (21) If a TSP has a particular interest in having an...

          1. If a TSP has a particular interest in having an...

        4. (22) The market for GDS services is characterised by a platform...

          1. The market for GDS services is characterised by a platform...

        5. (23) As long as TAs use ‘single-homing’, GDS providers have exclusive...

          1. As long as TAs use ‘single-homing’, GDS providers have exclusive...

        6. (24) The Commission has however found that the bargaining interaction between...

          1. The Commission has however found that the bargaining interaction between...

        7. (25) Apart from the threat to withhold travel content via ‘supplier.com’,...

          1. Apart from the threat to withhold travel content via ‘supplier.com’,...

        8. Impact of the merger

          1. (26) The reduction in the number of GDS providers is unlikely...

            1. The reduction in the number of GDS providers is unlikely...

          2. (27) On the TSP side, the in-depth investigation confirms that TSPs...

            1. On the TSP side, the in-depth investigation confirms that TSPs...

          3. (28) This conclusion also applies to other TSPs, such as rental...

            1. This conclusion also applies to other TSPs, such as rental...

          4. (29) On the TA side, a sufficient number of GDS platforms...

            1. On the TA side, a sufficient number of GDS platforms...

          5. (30) In the Decision, the Commission concludes that these elements (effective...

            1. In the Decision, the Commission concludes that these elements (effective...

      3. II.3.3. Loss of Worldspan as ‘pricing maverick’

        1. (31) A second theory of harm investigated by the Commission relates...

          1. A second theory of harm investigated by the Commission relates...

        2. (32) The Commission's in-depth investigation shows however, that this theory of...

          1. The Commission's in-depth investigation shows however, that this theory of...

        3. II.3.3.1. Worldspan is not charging lower prices

          1. (33) The notifying party submitted a comparison of the merging parties'...

            1. The notifying party submitted a comparison of the merging parties'...

          2. (34) The Commission therefore concludes in the Decision that in most...

            1. The Commission therefore concludes in the Decision that in most...

        4. II.3.3.2. Worldspan has lost market share

          1. (35) Another reason why, according to the notifying party, Worldspan does...

            1. Another reason why, according to the notifying party, Worldspan does...

          2. (36) The evolution of Worldspan's market share between 2003 and 2006...

            1. The evolution of Worldspan's market share between 2003 and 2006...

          3. (37) Finally, according to the notifying party, Worldspan can not be...

            1. Finally, according to the notifying party, Worldspan can not be...

        5. II.3.3.3. Galileo/Worldspan are not each others' closest competitors

          1. (38) The notifying party considers that the scope for price increases...

            1. The notifying party considers that the scope for price increases...

          2. (39) The in-depth investigation confirms that Galileo is generally perceived by...

            1. The in-depth investigation confirms that Galileo is generally perceived by...

        6. II.3.3.4. There are no incentives for Worldspan to increase its prices...

          1. (40) The fact that the merging parties are not each others'...

            1. The fact that the merging parties are not each others'...

          2. (41) The likelihood of higher post-merger prices upstream is further reduced...

            1. The likelihood of higher post-merger prices upstream is further reduced...

          3. (42) In summary, the Commission's in-depth investigation shows that there is...

            1. In summary, the Commission's in-depth investigation shows that there is...

      4. II.3.4. Very large market shares of the parties on the downstream...

        1. (43) As regards the downstream side of the market, the transaction...

          1. Member State Galileo Worldspan Combined market share Belgium [20-30] [10-20]...

        2. (44) The size of the high combined market shares in these...

          1. The size of the high combined market shares in these...

        3. (45) However, the in-depth investigation shows that the merger will not...

          1. However, the in-depth investigation shows that the merger will not...

        4. II.3.4.1. Downward trend of Galileo's market share

          1. (46) The notifying party argues that Galileo has lost significant market...

            1. The notifying party argues that Galileo has lost significant market...

          2. (47) The decrease in Galileo's market shares would, according to the...

            1. The decrease in Galileo's market shares would, according to the...

          3. (48) The trend in Galileo's market shares as well as the...

            1. The trend in Galileo's market shares as well as the...

          4. (49) TAs are in general net receivers as they receive more...

            1. TAs are in general net receivers as they receive more...

          5. (50) This development shows the importance of TAs to GDSs and...

            1. This development shows the importance of TAs to GDSs and...

        5. II.3.4.2. Switching costs

          1. (51) An additional reason why the transaction is unlikely to result...

            1. An additional reason why the transaction is unlikely to result...

          2. (52) Although the quantification of switching costs is difficult, both in...

            1. Although the quantification of switching costs is difficult, both in...

          3. (53) Whereas the in-depth investigation confirmed that switching costs exist, it...

            1. Whereas the in-depth investigation confirmed that switching costs exist, it...

          4. (54) Even if switching cost exist, it seems unlikely that the...

            1. Even if switching cost exist, it seems unlikely that the...

          5. (55) Therefore, the Commission concludes in the Decision that non-coordinated effects...

            1. Therefore, the Commission concludes in the Decision that non-coordinated effects...

      5. II.3.5. Coordinated effects

        1. (56) Furthermore, the in-depth investigation further analysed the possibility of coordinated...

          1. Furthermore, the in-depth investigation further analysed the possibility of coordinated...

        2. II.3.5.1. Upstream

          1. Reaching terms of coordination

            1. (57) Generally, the less complex and the more stable the economic...

              1. Generally, the less complex and the more stable the economic...

            2. (58) Although during the last five years no significant GDS market...

              1. Although during the last five years no significant GDS market...

            3. (59) Further, the growth of ‘supplier.com’ during the last five years...

              1. Further, the growth of ‘supplier.com’ during the last five years...

            4. (60) Even if the above circumstances do not totally rule out...

              1. Even if the above circumstances do not totally rule out...

          2. Monitoring of deviations

            1. (61) Only the credible threat of timely and sufficient retaliation keeps...

              1. Only the credible threat of timely and sufficient retaliation keeps...

            2. (62) Although, the services offered by a GDS are of a...

              1. Although, the services offered by a GDS are of a...

            3. (63) Although it would appear from the market investigation that the...

              1. Although it would appear from the market investigation that the...

            4. (64) A number of respondents to the market investigation pointed to...

              1. A number of respondents to the market investigation pointed to...

            5. (65) Considering the characteristics of the relevant markets, and in particular,...

              1. Considering the characteristics of the relevant markets, and in particular,...

          3. Deterrent mechanisms

            1. (66) Coordination is not sustainable unless the consequences of deviation are...

              1. Coordination is not sustainable unless the consequences of deviation are...

            2. (67) Immediate retaliation through the reduction by the coordinating GDSs of...

              1. Immediate retaliation through the reduction by the coordinating GDSs of...

            3. (68) A more realistic retaliatory measure would be for a GDS...

              1. A more realistic retaliatory measure would be for a GDS...

            4. (69) The Commission therefore concludes in the Decision that retaliation by...

              1. The Commission therefore concludes in the Decision that retaliation by...

          4. Reactions of outsiders

            1. (70) For coordination to be successful, the actions of non-coordinating companies...

              1. For coordination to be successful, the actions of non-coordinating companies...

            2. (71) In the present case there would seem to be significant...

              1. In the present case there would seem to be significant...

            3. (72) Considering the circumstances described above and the fact that the...

              1. Considering the circumstances described above and the fact that the...

        3. II.3.5.2. Downstream

          1. Reaching terms of coordination

            1. (73) The issue of coordination could in principle also arise on...

              1. The issue of coordination could in principle also arise on...

            2. (74) Competition between GDSs on the downstream market is strong and...

              1. Competition between GDSs on the downstream market is strong and...

            3. (75) The above suggests that the market positions of the merging...

              1. The above suggests that the market positions of the merging...

          2. Monitoring of deviations

            1. (76) The terms and conditions of TA contracts are generally non-transparent...

              1. The terms and conditions of TA contracts are generally non-transparent...

            2. (77) Considering the limited degree of transparency on the downstream side...

              1. Considering the limited degree of transparency on the downstream side...

          3. Deterrent mechanisms

            1. (78) The deterrent mechanisms that can be applied are essentially the...

              1. The deterrent mechanisms that can be applied are essentially the...

          4. Reactions of outsiders

            1. (79) In case of coordinated behaviour, there are not many readily...

              1. In case of coordinated behaviour, there are not many readily...

            2. (80) Considering the fact that the criteria that have to be...

              1. Considering the fact that the criteria that have to be...

  4. III. CONCLUSION

    1. (81) The Commission concludes in the Decision that the proposed concentration...

      1. The Commission concludes in the Decision that the proposed concentration...

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