Brussels, 08 May 2001
Commission opens in-depth probe into travel joint venture between T-Online, TUI and Neckermann
The European Commission has started a full investigation into a planned online travel agency between German Internet service provider T-Online, TUI and C&N (Neckermann), also German. Although only one of the parent companies has important activities currently in the market for online travel services, the venture would combine the content of the two leading German tour operators with Europe's largest Internet access provider. At this stage, this powerful and unique combination raises strong concerns that the joint venture would achieve such a strong position that it could potentially result in a reduction of choice for end consumers of travel online services.
T-Online is a subsidiary of Deutsche Telekom which provides Internet and portal access services. Preussag-owned TUI and C&N (Neckermann), which is jointly controlled by Lufthansa and Karstadt Quelle, are two tour operators and travel agents providing touristic services, including flight seats, package tours, last minute trips and hotel accommodation. The joint venture, yet to be named, would be an online-travel agency offering various touristic products in Germany, in particular leisure package trips, last minute trips, flight seats, which end-consumers could book online.
The Commission's preliminary investigation identified online travel agency services as a product market in its own right, distinct from traditional "bricks and mortar" travel agencies. Both demand- and supply-side elements support such conclusion: online-consumers can search and book trips any time, i.e. including outside regular shopping hours, and without leaving their home while, on the other hand, online suppliers face lower distribution costs.
At this stage, the Commission has concerns that because of the strength of the parent companies, the joint venture may achieve such a strong position in online travel that it could progressively foreclose this still emerging market. The venture would have privileged access to the content of TUI and Neckermann, the leading tour operators in Germany, as well as to T-Online's very large Internet customer base. Competing online agents have submitted that they depend on TUI's and Neckermann's product offer and brands and they fear that the new company would end up dominating the online segment. They are also concerned about potential discriminatory measures with regard to access to essential content.
To address these concerns, TUI and Neckermann offered to conclude supply contracts with any other online agents. But a number of conditions were attached to this general commitment which would have provided numerous opportunities for circumvention and de-facto discrimination.
The Commission, therefore, concluded that the commitments offered did not fully and clearly remove the competition concerns and decided to enter into an in-depth ("Second-phase") inquiry. The Commission has now a maximum of four months to assess these competition concerns in detail and to come to a final decision.