Cook/Co-op merger gets green light
Thomas Cook has been given the green light for its proposed merger with the Co-operative Group
and the Midlands Co-operative Society.
The Competition 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.
Laura Carstensen, Competition 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."
The CC will publish its final report by August 16. Interested parties are invited to make their views known to the CC before August 11.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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