OFT to review Thomas Cook-Co-operative Travel tie-up
THE OFFICE of Fair Trading has asked the EU to allow it to look into the deal to merge the Co-Operative Group’s travel business with industry giant Thomas Cook.
The deal, which was announced in October, sees Thomas Cook taking 70% of the combined venture and the Co-operative gaining 30% in a move which would give the joint venture more than 1,2000 high street stores. Thomas Cook also had an option to buy the remaining 30% stake in the future.
However, the OFT has stepped in and asked the EU’s competition authorities to refer the deal to the OFT as the most appropriate authority to judge its impact, which would largely be limited to the UK.
The OFT said that following its own consultation, its initial view was that the proposed tie-up “threatens significantly to affect competition in the supply of travel services, such as package holidays, via retail travel agency outlets in the UK”.
If the EU grants its request, the OFT will then carry out a review to decide whether on not the deal should come under the scrutiny of the Competition Commission
In October, Co-operative Group chief executive Peter Marks that the deal was good for both its staff and its members as it would give the stores a more secure long-term future.
He also argued that the organisation would benefit from a guaranteed annual dividend of £40m over four years that would be paid back to Co-operative members – more than its travel business could have returned as a standalone venture, he argued.
