## Facts

- Airtours plc, a UK tour operator, notified a proposed acquisition of First Choice plc under the EU Merger Regulation (Reg. 4064/89).
- The Commission defined the relevant product market as short-haul foreign package holidays sold in the UK, and the geographic market as the United Kingdom.
- The market featured several large integrated operators, including Airtours, Thomson, First Choice, and Thomas Cook, with high concentration among leading firms.
- The Commission prohibited the merger under Article 2(3) of Reg. 4064/89, finding it would create a collective dominant position among Airtours (post-merger), Thomson, and Thomas Cook.
- The Commission’s theory was that market characteristics (including concentration, advance capacity setting, and entry barriers) would enable tacit coordination resulting in higher prices and reduced output.
- Airtours sought annulment, arguing the Commission misapplied collective dominance and failed to meet the required evidentiary burden for predicting oligopolistic coordination.

## Issues

1. Whether the Commission properly applied Article 2(3) of Regulation 4064/89 in concluding the merger would create a collective dominant position that would significantly impede effective competition.
2. Whether the Commission supported, with convincing evidence, the cumulative conditions required for post-merger tacit coordination and its stability.
3. Whether the Commission satisfied its duty of careful, impartial examination and its burden of proof when prohibiting a merger based on predicted coordinated effects.

## Decision

- The General Court annulled the Commission decision prohibiting the Airtours/First Choice concentration.
- The Court held the Commission did not prove to the requisite legal standard that the merger would create a collective dominant position.
- The Court found a series of errors of assessment and concluded the Commission’s factual and economic evidence was not sufficiently cogent and consistent to support prohibition.

## Legal Principles

- A collective dominant position exists where, even without an agreement or other links, firms together can act to an appreciable extent independently of competitors, customers, and consumers.
- A finding of collective dominance based on tacit coordination requires cumulative conditions, including:
  - sufficient market transparency to monitor rivals’ conduct;
  - sustainability over time, including credible mechanisms and incentives deterring deviation; and
  - absence of effective external constraints from remaining competitors or customers.
- In merger prohibition decisions resting on predictive coordinated-effects theories, the Commission must provide convincing evidence that the concentration would (not merely might) lead to collective dominance.
- Judicial review of complex economic assessments requires verifying that findings are factually accurate, reliable, consistent, and capable of substantiating the conclusions drawn, and that relevant facts were examined seriously and impartially.

## Conclusion

The General Court set aside the merger prohibition because the Commission failed to substantiate, with convincing and consistent evidence, that post-merger market conditions would permit transparent monitoring, stable tacit coordination, and insulation from competitive or customer constraints sufficient to establish collective dominance under the Merger Regulation.


Airtours plc v. Commission of the European Communities, Case T-342/99, 2002 E.C.R. II-2585 (Gen. Ct. 2002)