Cook given go-ahead to create UK’s biggest travel retailer

Thomas Cook is expected to complete its retail merger with The Co-operative Group by the end of the financial year after getting a provisional green light for the deal from the Competition Commission.

The deal, which also includes the Midlands Co-operative Society, will create the UK's largest retail travel chain and also the second biggest high street foreign exchange business, after the Post Office.

However, the Competition Commission has decided that the merger of Thomas Cook's 780 shops, Co-op's 360 outlets and Midland Co-op's 100 stores would not cause any substantial lessening of competition for customers buying package holidays on the high street.

All eyes are now on Thomas Cook to see how many of the shops it will close following the merger, which is expected to gain full approval from the Competition Commission when it announces its final conclusion on August 16.

Thomas Cook announced a strategic review of its business following its latest profits warning, but it said it was holding off making any decision on shop closures until after the Commission's decision on the Co-op merger.

Laura Carstensen, deputy chairman of the commission, said the growth of rivals and the increasing role the internet played in helping people book holidays were among the factors that would reduce the likelihood that the merger would lead to 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,” she said.

Welcoming the Commission's findings, Thomas Cook chief executive Manny Fontenla-Novoa said:“This announcement is not only great news for Thomas Cook and the Co-operatives, but also for our customers and staff too and we now look forward to bringing the merged business to life. 

"High street retail remains an important distribution channel for package holidays and one that consumers continue to highly value.  We firmly believe in the highly synergistic nature of this deal and the significant opportunities that it offers; this merger is just one part of the plan to strengthen our UK business.” 

Peter Marks, The Co-operative group chief executive, added:  “We are delighted by the Competition Commission's provisional findings which clear the way for the creation of the most exciting and dynamic travel business in the UK.  We're also sure that when the joint venture launches it will deliver significant benefits for our customers and members thanks to the greater range of holidays and services offered. ”

Companies that object to the move have been given until August 11 to voice their concerns to the Commission.

AITO Specialist Travel Agents chairman Oliver Broad said the loss of Co-op's independent status via the merger would create an opportunity for rival agents. “This is the perfect time for AITO Specialist Travel Agents to shout from the rooftops about their independent status," he said. "No longer can the Co-op promote itself as truly independent, but AITO Agents can and this will give us an even stronger message to communicate to the consumer.”

By Linsey McNeill