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Published on Tuesday, May 8, 2007

Galileo-Worldspan deal faces in-depth competition probe

The European Commission is to probe the planned $1.4 billion takeover of Worldspan by Galileo owner Travelport.

The Commission said that during its initial investigation it identified "serious concerns" that the acquisition by Travelport of Worldspan might lead to "significant impediments to competition" within the European Economic Area.

It said: "The Commision's initial market investigation has found that the proposed transaction would give rise to competition concerns on the market for the provision of GDS services for travel service providers (airlines, car rental companies, hotels etc) and to travel agents in several member states."

The Commission said the parties would have combined market shares ranging from 40% to over 70% in Belgium, Hungary, Ireland, Italy, Netherlands and the UK.

"On the market for the provision of GDS services to travel service providers, the merged entity would remain the second largest GDS [behind Amadeus].

"In its in-deth investigation, the Commission will 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 within the EEA, and in partictular whether prices for GDS services to travel service providers would increase."

Travelport said it welcomes the European Commission’s competitive review of the travel distribution industry.

"Alternative distribution channels, such as supplier websites and other direct channels, have expanded considerably in recent years and exert strong competitive pressures on GDS such as Galileo," a company statement said. 

"The contemplated merger of Worldspan into Galileo, a subsidiary of Travelport, will establish a more effective and efficient travel distribution provider as the combined company will promote technology innovation and compete more effectively in an increasingly competitive market driven by demands for lower prices. 

"Travelport believes that the proposed transaction will both enhance competition and benefit travel suppliers and travel agents. 

"Travelport and Worldspan will continue to work with the European Commission during its review of the transaction. Both companies anticipate the transaction to close in the third quarter, following regulatory approvals."

by Phil Davies

 

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