[SOLVED] A U.K.-based travel company, Airtours (

A U.K.-based travel company, Airtours (now MyTravel), sought to purchase a travel agency known as First Choice. It announced its planned merger to EC authorities in early 1999. Later that year, the merger Task Force blocked the proposed merger, asserting that such a proposed combination of travel powerhouses would necessarily create a “collective dominant” position in the U.K. market for so-called short-haul travel vacations. The merger Task Force asserted that this would lead to higher prices for consumers as well as the elimination of smaller, less visible agencies. Airtours appealed to the Court of First Instance.

PRESIDENT JUDGE LINDH
The prospective analysis which the Commission has to carry out in its review of concentrations involving collective dominance calls for close examination in particular of the circumstances which, in each individual case, are relevant for assessing the effects of the concentration on competition in the reference market … .
[W]here the Commission takes the view that a merger should be prohibited because it will create a situation of collective dominance, it is incumbent upon it to produce convincing evidence thereof. The evidence must concern, in particular, factors playing a significant role in the assessment of whether a situation of collective dominance exists, such as, for example, the lack of effective competition between the operators alleged to be members of the dominant oligopoly and the weakness of any competitive pressure that might be exerted by other operators … .
Finally, contrary to the Commission’s contention … the fact that to some extent (30 to 40% of the shares) the same institutional investors are found in Airtours, First Choice and Thomson cannot be regarded as evidence that there is already a tendency to collective dominance in the industry. It is sufficient to point out in that regard that … there is no suggestion in the Decision that the group of institutional shareholders forms a united body controlling those quoted companies or providing a mechanism for exchange of information between the three undertakings. Furthermore, the Commission cannot contend that those shareholders are a further force for cautious capacity management, unless it has examined to what extent they are involved in the management of the companies concerned. Finally, even assuming that it were proved they are capable of exercising some influence on the management of the undertakings, since the concerns of the common institutional investors with respect to growth (and thus capacity) merely reflect a characteristic inherent in the relevant market, the Commission would still have to establish that the fact that institutional investors hold shares in three of the four leading tour operators amounts to evidence that there is already a tendency to collective dominance … .
It is apparent from the foregoing that, since it did not deny that the market was competitive, the Commission was not entitled to treat the cautious capacity planning characteristic of the market in normal circumstances as evidence substantiating its proposition that there was already a tendency to collective dominance in the industry …. In the light of……………………….

Required:
1. Does the order prevent Airtours from entering into mergers in the future with companies that have a smaller share of the U.K. market?
2. If Airtours proposed a merger with another firm with a very large share of the German market but no share of the U.K. market, how would the merger be treated, based on this opinion?
3. What “product” is Airtours selling? Would this decision prevent a merger with a party in the travel business that sold a different “product”?

Question: A U.K.-based travel company, Airtours (