178 COMPETITION LAW IN TOURISM of Ryanair14. The Commission analysis was upheld on the basis that the merger would have created a dominant position on 35 routes to and from Ireland and the merged entity would have accounted for around 80% of all intra-European traffic from and to Dublin. The Lufthansa/Swiss (2005) decision was subject to a request for a waiver of commitments by Lufthansa in 2014. The Commission rejected the request in 201615, but the EUGeneral Court annulled this decision16.The Court considered that the waiver’s rejection was not justified and that the Commission should have carried out a careful examination of Lufthansa’s arguments regarding significant market changes17. 2. THE HARMLESS EFFECT OF CONCENTRATION HIGHLIGHTED BY AIRLINE ECONOMICS The contestable markets and the natural monopoly theories do not play at the same level. The latter requires the recognition of important economies that require competition not to be entirely practicable on a profitable level for airlines. As profit will be limited if efficiency gains are high, airlines will tend to seek concentration, a situation that will trigger positive and negative externalities. On the contrary, according to the theory of contestable markets, efficiency gains from airline mergers and alliances need to remain relatively slight. This situation is likely to encourage a significant number of airlines, and the probability of a new entrant is not essentially driven by concentration. This large number of players would increase the expectation of profit according to the volume and features of the route. In both theories, concentration is not necessarily an issue. In the contestable markets scenario, there would be no natural trend of the sector toward an atomistic market and a considerable number of different operators. In the natural monopoly hypothesis, there would be a natural trend to concentration, but the market dominance issues can be outweighed by the economies of scales 14 EGC, Case T-342/07 Ryanair Holdings plc v Commission, 6 July 2010, EU:T:2010:280. 15 EU Commission Decision, Lufthansa/Swiss, Case No M.3770 – Lufthansa/Swiss Commission decision on Lufthansa’s request for a partial waiver of the commitments concerning the Zurich–Stockholm and ZurichWarsaw routes. 16 EGC, Case T-712/16, Deutsche Lufthansa v Commission, ECLI:EU:T:2018:269. 17 The effect on competition of the termination of the joint venture agreement between Lufthansa and SAS was not carried out by the Commission on the Zurich-Stockholm route.
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