Competition Law in Tourism

IS THE AIRLINE INDUSTRY A NATURAL MONOPOLY 187 if the barriers to entry are kept relatively low and if the number of potential existing or new carriers are on the edge of entering the market. In that respect, even though dominance is not formally prohibited by EU antitrust, monopoly situations are seen as potentially increasing the risks of abuses of a dominant position. In the ex-ante approach, the monopolies by means of mergers are blocked by competition law authorities. 4. EU COMPETITION LAW ENFORCEMENT IN THE LIGHT OF AIRLINES ECONOMICS The EU competition law goals were originally centred on consumer welfare and market integration, but they have increasingly broadened to global welfare, producer and economic analysis including some aspects of the Chicago School. The EUMerger Control is based on the Regulation (EC) No. 139/2004 and was reformed in 2004 towards a “more economic approach” (“MEA”). It included the replacement of the structuralist dominance test (“DT”) by the more effects- -based Significant Impediment of Effective Competition (“SIEC”) test, the introduction of economics-based merger guidelines. Our study will focus specifically on the EU merger regulation enforcement and will aim at analysing how the EU Commission has apprehended airline economics. In a pre-merger situation, the EU Commission carries out a prospective assessment of the new competitors’ likelihood of entry. This approach is consistent with the Horizontal Merger Guidelines, which provides methods in order to assess the effect of potential competition and barriers to entry in a market. For the EU Commission, there must be a sufficient number of other potential competitors, which could maintain sufficient competitive pressure after the merger. For potential entrants to exercise sufficient competitive constraint and for entry to be likely, the EU Commission examines whether one or various potential entrants would be able “to constrain the behaviour of incumbents post-merger” and if they would be “sufficiently profitable taking into account the price effects”. The EU Commission will assess “the potential responses of the incumbents” and if there are “high risk” and “sunk costs” associated to entry that would “enhance the likelihood of failed entry”34. The assessment of profitability and risks pre-merger will be determined among another criterion by barriers to 34 Point 69.

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