Brussels, 06/06/2007 (Agence Europe) - On Monday 4 June, the European Commission approved the proposed acquisition of First Choice, a UK travel services company, by TUI, parent of the German TUI group, active in tourism and shipping services. The Commission's decision is conditional upon the divestiture by TUI of its Irish business operating under the 'Budget Travel' brand.
The proposed takeover could result in horizontal overlaps, in particular in the supply of package holidays, inter alia in the UK and Ireland. The UK and Irish markets have vertically integrated tour operators (Thomas Cook/MyTravel, TUI and First Choice), a large number of smaller independent tour operators for short-haul holidays and a few medium-size operators like Virgin Holidays and Kuoni for long-haul package holidays.
The Commission found that the proposed transaction as initially notified would raise serious competition concerns in Ireland, where the parties would be by far the leading tour operator for short-haul package holidays, controlling more than 50% of the market, and would have the largest, nationwide network of travel agencies. To address the Commission's concerns, TUI offered to divest its Irish business, 'Budget Travel'.
As regards the UK, the Commission's recent investigations demonstrated that the increased availability of internet access to travel services and the expansion of low cost airlines have weakened the hold of the travel agencies on the market, which represents a significant change to the sector since the in-depth analysis, carried out in 1999 in the context of the Airtours/First Choice case (this decision was subsequently annulled by the Court of First Instance on 6th June 2002: EUROPE 8227). The Commission's investigation found that in this context, the proposed concentration would not enable the parties to independently raise prices. The parties would in particular continue to experience competition from Thomas Cook/MyTravel, as well as from numerous small package holiday operators.
The Commission also assessed the impact of the proposed transaction on tour operating and/or travel agency services markets in France, the Netherlands, Austria and Germany and on the cruise markets in the UK and Ireland. The Commission concluded, however, that the proposed acquisition would not give rise to a significant impediment of competition in light of the parties' position on these markets and the presence of effective competitors. (cd)