Expedia Gets Go Signal To Buy Orbitz From The Justice Department
The Justice Department has recently announced that it will not be challenging Expedia’s proposal to acquire rival Orbitz for about $1.6 billion. This was the conclusion reached by the department after six months of investigation involving lawyers and economists from the Antitrust Division. It is believed that the merging of the two online travel companies is “unlikely to harm” rival companies as well as customers.
In February, both Expedia, Inc. and Orbitz Worldwide, Inc. announced their merger, with the former acquiring the latter at about $12 per share. Expedia, Inc. President and Chief Executive Officer Dara Khosrowshahi has said that they love that Orbitz has a “devoted customer base,” helping expand their own set of travelers.
Meanwhile, Justice Department Antitrust Division’s Assistant General Bill Baer explained that the way they had reached the decision was to study several factors related to the proposed merger, including rates and the post-merger competition landscape. First, they believe that the Expedia-Orbitz merger would not mean new charges on customers who will be making bookings via Expedia or Orbitz. Second, it was also determined that the merger bears no significant impact on Expedia’s commission as Orbitz is a relatively small source of bookings for airlines, hotels and car rental companies. Moreover, Expedia’s rival, Priceline, will also keep the market competitive. And lastly, the continuous evolution of the online travel market, making the said merger non-threatening to market competition.
Related: Expedia Acquires Rival Orbitz
In 2014, Forbes reported that there are actually four brands that control approximately 95% of the U.S. online travel agency market. These are Expedia, Orbitz Worldwide, Priceline and Travelocity.