The UK Competition Commission has provisionally cleared the anticipated travel business joint venture between Thomas Cook, the Co-operative Group and the Midlands Co-operative Society. Members of Northern Ireland’s travel industry can submit views on the provisional findings report, in writing, by 11th August 2011.
The Commission has provisionally concluded that the acquisition will not result in a substantial lessening of competition in any markets in the UK, in particular for customers buying package holidays from high street travel agents.
The joint venture would bring together two of the three largest travel agents on the UK high street. Thomas Cook currently has 780 stores, Co-op 360 and Midlands 100. Thomas Cook will continue to conduct its tour operator business separately from the joint venture.
Laura Carstensen, the Commission’s Deputy Chairman and Chairman of the Inquiry Group, said: “We have particularly focused on the effect the joint venture will have on customers buying package holidays. We conducted a survey of customers in those areas most likely to be affected by the joint venture. Whilst the Internet is clearly a choice for many independent holidaymakers, the majority of these customers prefer to book package holidays through high street travel agents.
“Our analysis suggests that the extent to which travel agents respond competitively to nearby rival outlets, particularly through use of discounts, and their ability to ‘flex’ prices at a local level, is quite limited. Our assessment of competition between travel agents at regional and national levels suggest that the joint venture’s incentives to increase prices, or worsen other aspects of their retail offer, was likely to be even weaker than at a local level.
“We also looked at the potential effect of Co-op and Midlands outlets favouring Thomas Cook package holidays over those from other providers – or the possibility that the joint venture might block or hinder other travel agents from selling Thomas Cook holidays in order to drive customers to their own stores. We also found that the additional promotion of Thomas Cook package holidays would make a limited difference and that for the joint venture to seek to prevent other outlets from selling Thomas Cook holidays would not be rational, either financially or strategically.
“We think that the threat of the growth of rivals, entry by package holiday operators looking to ensure their route to market, and the increasing role of the Internet further reduce the scope for price rises over time.
“Therefore, we think that customers are unlikely to suffer from significantly higher prices or reduced choice as a result of the joint venture and we have provisionally concluded that we do not expect the anticipated joint venture to result in an SLC.”
The provisional findings summary is available at: www.competition- commission.org.uk. The full provisional report will be published soon. The Commission is expected to issue its final report by 16th August 2011.
