IS THE AIRLINE INDUSTRY A NATURAL MONOPOLY 189 route, where both Ryanair and Air Europa operated a base at Madrid in competition with British Airways that had a base at London Gatwick. Potential competition in the case of airlines that both have a base at the same airport was recognised.. The EU Commission considered that “The General Court implies that potential competition leads to lower fares”39. In Ryanair/Aer Lingus III (2013), when considering routes out of Dublin where Aer Lingus is the only carrier, the EU Commission noted that the presence of Ryanair at Dublin airport was associated with Aer Lingus charging lower prices on these routes. The EU Commission even stated that this analysis is “economically and statistically significant”40, a reasoning that should apply when two potential competitors merge (thus eliminating potential competition between them), but also in the case of potential competition between merged parties and third parties. Therefore, when applying this reasoning to potential third parties carriers operating from the same airport base or in close markets, the theory of contestable markets would be relevant. In Ryanair/Laudamotion (2018), the EUCommission considered that several significant carriers would exercise a sufficient competitive constraint over the merged entity: “strong airlines already well-established on leisure routes out of Germany, Austria and Switzerland, such as the Lufthansa Group, easyJet, Condor or TUI, or which have announced their expansion in these countries, such as IAG, are likely potential competitors which would prevent the merged entity from raising prices on non-overlap routes on which Laudamotion might have entered”41. In Ryanair/Aer Lingus III (2013), a few potential competitors expressed the view that any strong dominance on routes from Dublin airport would not be a sufficient threat to reverse the contestable market assumption: “Flybe, while identifying a number of barriers to entry that it considers as ‘significant’, nevertheless indicates that the existence of these barriers would not, as such, prevent it from entering on the routes post-Transaction42 […] In particular, IAG indicate that they are used to operating into the hubs of 39 Aegean/Olympic (2011) paragraph 1480 about the interpretation of the Case EU General Court T-342/07 Ryanair Holdings v Commission (2010]) ECR, paragraph 162. 40 Case T-342/07 Ryanair Holdings v Commission [2010] ECR, paragraph 160. 41 Ryanair/Laudamotion (2018), paragraph 88. 42 Ryanair/Aer Lingus III, paragraph 645, Flybe, response to question 37 of questionnaire Q1 – competitors.
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