OFT requests UK review of Thomas Cook merger plan
Saturday 04 December 2010
Thomas Cook's plans for a joint venture with the Co-operative Group should be referred for investigation under UK competition rules, the Office of Fair Trading (OFT) recommended yesterday.
The regulator yesterday made the request to the European Commission (EC), which is the first point of review for the deal. The EC has until 6 January to either clear the scheme, start an investigation itself, or refer it to the UK authorities.
The OFT believes the merger should be reviewed in Britain because any adverse effects will be felt exclusively here.
"The OFT's initial view is that the proposed joint venture significantly threatens to affect competition in the supply of travel services, such as package holidays, via retail travel agency outlets in the UK," the regulator said yesterday. If the EC agrees to the referral, the OFT will have 45 days to conclude its investigations. It must then either sign off the deal, propose "undertakings" that allow it to proceed, or refer the plan to the Competition Commission.
The tie-up between Thomas Cook, the Co-operative Group and the Midlands Co-operative Society was first proposed in early October. It will create a 1,200-strong travel agency network and cut costs by up to £35m.
Thomas Cook expressed disappointment at the OFT stance yesterday, but downplayed the request to the EC as largely routine.
"The joint venture is a clear demonstration of our commitment to the high street," Thomas Cook chief executive Manny Fontenla-Novoa said. "We always knew this request was a possibility and we will continue to work closely with the relevant authorities. We remain confident that the transaction will be cleared in due course."
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