46 COMPETITION LAW IN TOURISM 4.1. Horizontal concentrations Major competitive harm stemming from horizontal concentrations relates to non- -coordinated (also referred to as “unilateral”) effects, i.e. the accumulation of market power post-merger and subsequent price increase or quality degradation for customers. The coordination of post-transaction behaviour is another possible risk, however, it may generate efficiencies and, as a result, consumers may benefit from economies of scale, leading to a price reduction or product innovation. According to the Horizontal Merger Guidelines131, non-coordinated effects imply the post-merger creation or strengthening of market power that will ultimately lead to increased prices or another kind of deterioration of competitive conditions132. Following the general practice, in cases involving the tourism sector, the Commission has looked, inter alia, at: the market share post- -transaction; whether the parties were each other’s closest competitors pre- -merger; whether the barriers to entry and expansion were high; whether the remaining actors would exercise sufficient competitive pressure on the merged entity; and the existence of countervailing buyer power. In order to apply these conditions, the Commission typically conducts a market-specific analysis133. Coordinated effects relate to the increasing coordinationbetweenundertakings remaining on the market post-transaction134. The three conditions for its determination were established by the EU judiciary, upon the annulment of the Commission’s decision blocking the tour operators’ merger (Airtours/First Choice case135). First, the coordinating firms must be able to monitor, to a sufficient degree, if the terms of coordination are being followed. Second, there should be a credible deterrent mechanism that can be activated upon the detection of a deviation from the common strategy. Finally, the reactions of outsiders (e.g. current and future competitors not adhering to coordination; customers) should be unable to jeopardise the results expected from the coordination. Since the threshold of proving coordination is quite high, even in cases in which the merger leads to a reduction from four to three of the major vertically integrated tour operators active in given geographic markets, the outcome of the analysis may be negative and the merger may be allowed to go through136. 131 Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings, OJ C 31, 05.02.2004, pp. 5-18; hereinafter: “Horizontal Merger Guidelines”. 132 Horizontal Merger Guidelines, para. 25. 133 See e.g.: Cases M.4600 – TUI / First Choice; M.4601 – KarstadtQuelle/ MyTravel; M.8046 – TUI / Transat France. 134 Horizontal Merger Guidelines, para. 39. 135 Case T-342/99, Airtours plc v Commission, Judgment of 6 June 2002, ECLI:EU:T:2002:146. 136 See, e.g. Case COMP/M.4601 – KarstadtQuelle/ MyTravel (2007).
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