EU COMPETITION LAW AND POLICY IN THE TOURISM SECTOR 49 To determine whether an enterprise would engage in foreclosing the market upstream or downstream, its ability and incentive to proceed in this direction need to be analysed. According to the Non-Horizontal Merger Guidelines, a foreclosure occurs when the actual or potential rivals’ access to markets is hampered, thereby reducing those companies’ ability and/or incentive to compete147. Such foreclosure can take two forms: (i) input foreclosure, when the access of downstream rivals to supplies is hampered148 and (ii) customer foreclosure, when the access of upstream rivals to a sufficient customer base is hampered149. For input or customer foreclosure to be a concern, three conditions need to be met, post-transaction: (i) the merged entity needs to have the ability or (ii) the incentive to foreclose its rivals; and (iii) the foreclosure strategy needs to have a significant detrimental effect on competition on the downstream market (input foreclosure) or on customers (customer foreclosure)150. If a merger leads to anti-competitive effects, it can still be justified by efficiencies. More specifically, justification is possible if the effects of the concentration benefit consumers, thus being merger-specific and verifiable. This is especially the case for vertical and conglomerate mergers since they could be viewed as complementary in relation to the different levels of the supply chain151. In addition, the competition authorities and courts appear to be able to evaluate innovation as a justification under a broad proportionality test and prohibit improvement in technical and economic progress if, to their judgment, the restrictive effects on competition are not outweighed by the benefits152. In the tourism markets, input foreclosure could consist in limiting the supply of airline seats or holiday packages to unrelated tour operators153 or reducing the access of travel agents to the merged entity’s products in various ways. Moreover, lowering commission rates for independent travel agencies and worsening trading conditions are possible too154. In some cases, the transaction’s effect on the incentive to foreclose the access of third-party retailers to the merged entity’s 147 Non-Horizontal Merger Guidelines, paras. 29-30. 148 Ibid, para. 31. 149 Ibid. para. 58. 150 Ibid. paras. 32 and 59. 151 Ibid, para. 13. 152 Renato Nazzini, Online platforms and antitrust: evolution or revolution?, CPI Antitrust Chronicle September 2018, p. 5. 153 Case M.8046 – TUI/Transat France, paras. 325 and 344. 154 Case M.4600 – TUI / FIRST CHOICE, para. 84.
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