Sair Group/AOM - Air transport

S Airlines (SSAALL), controlled by Sair Group (SSAAGG), and Taitbout and Antibes B.V., a vehicle company controlled by Marine-Wendel SA, have acquired joint control of AOM Participations S.A. (AOM). AOM is an airline based in France. Sair Group is the holding of a group of airlines (including Swissair) and related companies. Marine-Wendel is a financial holding company with interests in numerous sectors, including abrasives, real estate and energy, technical assistance, biotechnology, information technology and automobile parts.

The Commission did not raise any objections. It identified two product markets: passenger transport on the one hand and cargo transport, ground handling services, catering services, aircraft maintenance services on the other hand. For the latter services, the Commission did not delineate the relevant markets as the parties’ activities do not overlap at all or only to an insignificant degree. In the market for passenger transport, the Commission did not delineate whether a distinction had to be made between time sensitive and the price sensitive passengers. The parties’ activities are largely complimentary and although overlaps exist on a limited number of routes, none of the will negatively affect competition.

The Commission looked at whether there was a risk of collective dominance by the combined entity (Swissair and AOM) and Air France AND found that the operation will not create nor strengthen a collective dominant positioN. Price transparencyis limited, since not all standard fares are published. Moreover, for some passengers, pricing alone does not determine the outcome of competition as other parameters are important, such as punctuality, reliability, quality of service, general airline reputation and accompanying benefits schemes. The fact that the product offered on this kind of route is more differentiated than mere transport is a factor that tends to favour competition. Finally, the Commission found that the competing airlines costs on the routes concerned are relatively intransparent as costs are not only determined by the load factor but also by expenditure on staff, infrastructure, maintenance, etc.

Looking at incentives for parallel behaviour, the Commission found that there is an incentive to compete for passengers as demand is growing considerably as Swissair and Air France have an existing excess capacity. The Commission cleared the operation as it will not restrict competition. For this purpose it shows that AOM’s operations would not have been viable on the basis of its stand-alone sales, without the existing code share arrangement with Swissair. (Case No. IV/M.1494, decision of 3.08.99)