The decision is highly embarrassing for the UK government, which in May rejected the chance to have the case referred back to UK competition authorities on the grounds that it did not warrant further investigation. Last night Kim Howells, the competition minister, said that UK policy would have to be reviewed in light of the "new criteria" Brussels was using to evaluate deals.
Mr Monti vetoed the deal on the grounds that it would have left three UK operators - Airtours, Thomson Travel and Thomas Cook - "collectively having a dominant position" and added that the Commission was increasingly likely to face similar oligopolistic cases. The only other deal that Brussels has blocked such grounds - namely that it would leave a few players collectively dominating a market - was the merger of Lonrho and Gencor's platinum interests.
At a packed press conference in Brussels, Mr Monti indicated that the way Airtours had handled its application counted against it. He said it had only just met the final deadline for submitting its first set of revised proposals. These were rejected on the grounds that they would not stop the merged company enjoying a dominant position. A second set submitted several days ago was not considered as there were no exceptional circumstances to justify a late plea.
Kuoni, the Swiss group that bid for First Choice earlier this year, yesterday confirmed it would not bid again. Analysts say a more likely contender is Karstadt, the German department store operator that controls Neckermann, Germany's number two tour operator.
Tim Byrne, Airtours' finance director, said he was "bitterly disappointed" at the outcome.
Outlook, page 21Reuse content