Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Justice Department clears Expedia’s acquisition of Orbitz, (Sep 16, 2015)

Expedia’s $1.3 billion acquisition of Orbitz will not be challenged by the Department of Justice Antitrust Division. The Antitrust Division has closed its investigation into the combination of the travel websites without taking action.

In February 2015, Expedia announced that it had entered into an agreement to acquire rival Orbitz Worldwide Inc. The parties disclosed in March that the Justice Department had issued a second request for additional information and documentary material under the Hart-Scott-Rodino Act.

“The Antitrust Division investigated the concerns that have been expressed about this transaction,” said Bill Baer, Assistant Attorney General in charge of the Antitrust Division in a statement released today. “We took those concerns seriously and factored into our analysis all of the information provided by third parties. At the end of this process, however, we concluded that the acquisition is unlikely to harm competition and consumers.”

“We know online travel booking is important to U.S. consumers and to the airlines, car rental companies and hotels that serve those consumers,” Baer noted. “Over the course of a six-month investigation, lawyers and economists from the Antitrust Division reviewed tens of thousands of business documents, analyzed transactional data from the merging companies and from other industry players and interviewed over 60 industry participants of various types and sizes.”

The government focused its investigation on the commissions Expedia and Orbitz negotiate with airlines, car rental companies, and hotels. “Orbitz is only a small source of bookings for most of these companies and thus has had no impact in recent years on the commissions Expedia charges,” it was noted. “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.”

The Justice Department also decided not to challenge the deal in light of the rapidly evolving online travel business. Offerings from TripAdvisor and Google were highlighted.

“In the past 18 months, for example, the industry has seen the introduction of TripAdvisor’s Instant Booking service and Google’s Hotel and Flight Finder with related booking functionality,” Baer stated. “Looking at the facts and applying our Horizontal Merger Guidelines, we concluded that Expedia’s acquisition of Orbitz is not likely to substantially lessen competition or harm U.S. consumers.”

Companies: Expedia Inc.; Orbitz Worldwide Inc.

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