EC launches probe into Travelport buyout
The European Commission has announced an “in-depth” inquiry into Travelport’s proposed purchase of Worldspan. The Commission said the “detailed investigation” would be carried out under the EU Merger Regulation.
Travelport, one of the largest travel conglomerates in the world, already owns Galileo, another of the world’s four leading GDSs. It also owns online agencies Orbitz Worldwide and OctopusTravel.com and travel services provider GTA.
Travelport bought Worldspan last December for $1.4bn. In a statement immediately after the purchase, it said Galileo and Worldspan together served 750 travel suppliers, 63,000 travel agencies and “millions of end consumers.”
The EC said its initial investigation found the proposed purchase “would give rise to competition concerns on the market for the provision of GDS services to travel service providers (airlines, car rental companies and hotels) in the European Economic Area (EEA) and to travel agents in several Member States (Belgium, Hungary, Ireland, Italy, The Netherlands and UK).”
The Commission stressed that its decision to open an investigation did not prejudge the final result. It now has 90 working days, from the start of the inquiry to decide if the purchase would “significantly impede effective competition” within the EC area.
The EC said that Galileo and Worldspan were, respectively, the second and fourth largest GDSs in Europe with Amadeus the largest and Sabre the third largest. The EC said that its initial probe had “identified serious concerns that the acquisition by Travelport of Worldspan might lead to significant impediments to competition within the EEA.”
It said that the two GDSs would have a combined market share of between 40% and 70% in services to travel agents in Belgium, Hungary, Italy, The Netherlands, Ireland and the UK.
In the last two countries Galileo is the dominant GDS. In the market for the provision of GDS services to suppliers, Galileo/Worldspan would be the second largest GDS behind Amadeus. The EC said its investigation would “assess the effects of the reduction of the number of GDSs from four to three and the elimination of competition between Galileo and Worldspan on competition in the EEA, and in particular whether prices for GDS services to travel service providers would increase.”
Report by Chitra Mogul
Chitra Mogul
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