Expedia has won approval from U.S. antitrust officials to buy rival Orbitz, clearing the way for a $1.3 billion merger of online travel booking companies. The Justice Department said Wednesday that it had closed its six-month investigation into the acquisition after finding no harm to competition would result from the companies merging.
“We concluded that Expedia's acquisition of Orbitz is not likely to substantially lessen competition or harm U.S. consumers,” Bill Baer, head of the Justice Department's Antitrust Division, said in a statement. “Many independent hotel operators, for example, do not contract with Orbitz, and those hotels that do often obtain very few bookings from its site. In addition, beyond Expedia and Orbitz, travel service providers have alternative ways to attract customers and obtain bookings, including Expedia’s largest online travel agent rival, Priceline.”
Yet the tie-up combines the second- and third-largest online travel agencies in the country. The American Hotel & Lodging Association has argued that the merger would create a "duopoly" between Expedia and Priceline, which will now control 95 percent of the online-travel marketplace, a business that generates $152 billion a year, reports the Washington Post.
The AH&LA issued a statement on the approval of the acquisition, stating, “We are disappointed with today’s announcement by the Department of Justice to approve the proposed acquisition of Orbitz by Expedia. Simply put, this decision will hurt consumers and small business owners, and remove choice from the marketplace.”
“By approving this deal, only two players control the online marketplace: Priceline and the behemoth Expedia, now owning Orbitz, Travelocity, Hotels.com, Hotwire, Cheap Tickets, and Trivago. Together, these two players control over 95 percent of the online travel agency bookings in the United States. We continue to believe that increased consolidation is bad for consumers and bad for business,” the statement said.
“As we’ve said all along, this transaction will result in significant negative consequences for consumers and also the large number of our members who are small businesses and independent hotels. It could lead to increased distribution costs for independent hotel owners who risk seeing booking commissions rise by double digits.
“We are not alone in our opposition to this deal. Indeed, key members of Congress, including the Chair and Ranking Member of the Senate antitrust subcommittee and vital leaders in the House, along with leading consumer advocates expressed their concerns about consolidation. We encourage these groups to monitor the outcomes of this deal and take appropriate action to protect consumers," the statement concluded.