The European Commission opened a "detailed investigation" under the EU Merger Regulation into Travelport's proposed acquisition of Worldspan, citing concerns over the competitiveness of the deal.
The Commission has 90 working days from the investigation's launch to reach a final decision on whether the concentration would significantly impede effective competition within the European Economic Area, which comprises the European Union plus Norway and Iceland, or a significant part of it.
The European Commission opened a "detailed investigation" under the EU Merger Regulation into Travelport's proposed acquisition of Worldspan, citing concerns over the competitiveness of the deal.
The Commission has 90 working days from the investigation's launch to reach a final decision on whether the concentration would significantly impede effective competition within the European Economic Area, which comprises the European Union plus Norway and Iceland, or a significant part of it.
The deadline is Sept. 13. The Commission said its initial market investigation found that the proposed transaction would give rise to competition concerns for both travel suppliers in the EEA and for travel agents in several member states. The Commission noted that Travelport owns Galileo, the second largest GDS in the EU. Worldspan is the smallest. (Amadeus is by far the largest.)
The acquisition would provide the combined companies with travel agency market shares ranging from 40% to 70% in Belgium, Hungary, Ireland, Italy, the Netherlands and the U.K., according to the commission.
A merged Galileo/Worldspan would remain the No. 2 GDS in terms of supplier market share in the EU.
The Commission said it 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 in the EEA, and in particular whether prices for GDS services to travel service providers would increase."
The EC said its decision to open an in-depth inquiry "does not prejudge the final result of the investigation." In a statement, Travelport 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 also noted that alternative distribution channels, such as supplier Web sites and other direct channels, "have expanded considerably in recent years."
Travelport said it expects the transactions to close in the third quarter, following regulatory approvals.