612 COMPETITION LAW IN TOURISM effects28: for a lot of O&D pairs market, there exist market demand at the retail level for very low airfares with minimal services instead of rich content or ancillaries (hence the emergence of LCCs). This demand is then served by travel intermediaries who create a demand for such product at the distribution level vis-à-vis airlines and other service providers. It may well be economical and profitable to serve this portion of market demand by a smaller GDS simply through EDIFACT-based price & schedule pumping instead of using NDC at all. How well these small legacy GDS can compete with new NDC-pipelines (and thus pose significant competitive restraint on aggregators using NDC) depend very much on the market condition of a particular O&D pair and commercial factors (e.g. cost). 4. THIRD THEORY: EXCLUDING GDS AT THE WHOLESALE/ DISTRIBUTION LEVEL The third theory of harm is this: the purpose of having NDC is a collective boycott to exclude all existing GDS companies. Since NDC allows “direct connect” between airlines and intermediaries, GDS companies are to be completely bypassed and thus eliminated. If this happened to be the object of Resolution 787, then no further discussion is warranted as it will constitute a by-object restriction under Article 101TFEU29. However, Resolution 787 did not say so. One therefore turns to examine the objective intent of the airlines under Resolution 787, and it is submitted that there are a few reasons why the object of NDC seems very far from a collective boycott. The first two reasons have already been covered above. First, airlines still have complete freedom to adopt NDC or not. It is not an agreement of collectively ceasing to use all GDS or all forms of EDIFACT-based data transmission systems. Second, given that the airline industry is a network market, by opening up competition at the wholesale/distribution level, the competitive pressure exerted on legacy GDS (especially on each of the major global GDS which possesses some market power) will pass-on to the retail level. NDC will eventually lead to increase in consumer benefits by an intensified competition at the retail level. 28 See e.g. Case C-382/12 P MasterCard v European Commission, para 180. 29 Horizontal Guidelines, para 273.
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