The online travel world just got a little smaller with Expedia yesterday completing its purchase of Orbitz Worldwide after an investigation by the US Department of Justice concluded that that “the acquisition is unlikely to harm competition and consumers.”
Which leaves the Expedia’s phalanx of online travel companies to battle it out with the Priceline Group for global domination, although TripAdvisor may ultimately have something to say about that.
Expedia has bought Orbitz for an enterprise value of USD1.6bn and the company – the third biggest US OTA – is no longer being traded on the New York Stock Exchange.
Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division released the following statement on its decision.
“ Over the course of a six-month investigation, lawyers and economists from the Antitrust Division reviewed tens of thousands of business documents, analysed transactional data from the merging companies and from other industry players and interviewed over 60 industry participants of various types and sizes.
“The Antitrust Division investigated the concerns that have been expressed about this transaction.
“We took those concerns seriously and factored into our analysis all of the information provided by third parties.
“At the end of this process, however, we concluded that the acquisition is unlikely to harm competition and consumers.
“There are several reasons for this conclusion.
“First, we uncovered no evidence in our investigation that the merger is likely to result in new charges being imposed directly on consumers for using Expedia or Orbitz.
“So we focused our investigation on the commissions Expedia and Orbitz negotiate with airlines, car rental companies and hotels.
“Second, we found that Orbitz is only a small source of bookings for most of these companies and thus has had no impact in recent years on the commissions Expedia charges.
“Many independent hotel operators, for example, do not contract with Orbitz, and those hotels that do often obtain very few bookings from its site.
“In addition, beyond Expedia and Orbitz, travel service providers have alternative ways to attract customers and obtain bookings, including Expedia’s largest online travel agent rival, Priceline.
“Third, the evidence suggests that the online travel business is rapidly evolving.
“In the past 18 months, for example, the industry has seen the introduction of TripAdvisor’s Instant Booking service and Google’s Hotel and Flight Finder with related booking functionality.
“Looking at the facts and applying our Horizontal Merger Guidelines, we concluded that Expedia’s acquisition of Orbitz is not likely to substantially lessen competition or harm U.S. consumers.”