Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: EC approves Marriott’s acquisition of Starwood Hotels, (Jun 27, 2016)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has cleared under the European Union (EU) merger regulation the acquisition of high end hotel chain Starwood Hotels & Resorts by hospitality company Marriott International, both of the United States, after concluding the takeover would not adversely affect competition in Europe, the EC announced today.

Both companies are primarily active as managers and franchisors of hotels worldwide. Globally, more than 4 500 hotels in 85 countries operate under a Marriott brand and about 1,300 hotels in nearly 100 countries operate under a Starwood brand.

The EC assessed the impact of the proposed acquisition on competition in Europe in the market for hotel accommodation services and in the markets for hotel management and hotel franchising services.

For hotel accommodation services, the EC’s investigation focused on the markets for 4 and 5-star hotels, in which both companies have a significant presence. In particular, the EC looked at the impact of the proposed acquisition in five cities—Barcelona, Milan, Venice, Vienna, and Warsaw—where the combined market presence of Marriott and Starwood was the strongest. In each of these cities, the merged entity will continue to face effective competition from chain hotels and independent hotels.

For hotel management and hotel franchising services, the EC investigated the impact of the proposed acquisition at the level of the European Economic Area. The EC found that the merged entity would face effective competition in Europe from a number of competitors in all those markets, including Accor, Hyatt, Hilton and IHG. The EC therefore concluded that the proposed acquisition would raise no competition concerns.

"This is an important merger for the hotel industry and its customers," said Commissioner of Competition, Margrethe Vestager. "Our investigation confirmed that the hotel sector will remain competitive for customers in Europe following the merger, so I am pleased that the Commission was able to clear the transaction quickly."

PHS joint acquisition. The EC also announced on June 24 that it has approved under the EU merger regulation the acquisition of joint control over PHS Group Investments Limited of the United Kingdom by Anchorage Capital Group of the United States and funds managed by M&G Alternatives Investment Management Limited (MGAIM) and M&G Investment Management Limited (MGIM) of the United Kingdom.

PHS is a workplace services provider specializing in hygiene services and supplies. Anchorage is an investment adviser. MGAIM and MGIM are subsidiaries of Prudential plc, an international insurance group, and operate under the M&G Investments brand across Europe. M&G manages fixed income, equity, and real estate assets. The EC concluded that the proposed acquisition would raise no competition concerns because it would have no impact on the market structure.

Companies: Marriott International, Inc.; Starwood Hotels & Resorts Worldwide, Inc.; PHS Group Investments Limited; M&G Alternatives Investment Management Limited; M&G Investment Management Limited

News: AcquisitionsMergers Antitrust