U.S. Justice Department Gives Expedia-Orbitz Deal the Nod

After six long months of interviews, investigations, and input from a wide variety of leaders in hospitality, the United States Justice Department Antitrust Division announced on September 16 that Expedia’s $1.3 billion acquisition of Orbitz will be allowed to progress as planned.

This news in in line with expectations highlighted in our recent article breaking down the Justice Department’s investigation, which noted three factors as to why the deal will progress:

• A Major OTA Presence, but Minor Presence Across the Entire Travel Industry
• Increased Competition from Other Entities like Google, Amazon and TripAdvisor
• A Lack of Momentum from Opponents

Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division released the following statement as to why the Justice Department closed its investigation and will not challenge this acquisition:

“We know online travel booking is important to U.S. consumers and to the airlines, car rental companies and hotels that serve those consumers.  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 Antitrust Division investigated the concerns that have been expressed about this transaction.  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.”

Baer noted three reasons for this decision:

• No Harm to Consumers: No evidence that the merger will result in new charges imposed directly on consumers. This led to an investigation into possible changes to commissions charged to airlines, car rental companies, and hotels.
• Minimal Impact, Still a Competitive Business Environment: 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. Many independent hotels do not contract with Orbitz, and beyond these two companies, travel management providers have alternative ways to attract customers.
• The Constant Evolution of Online Travel: In the past 18 months alone, TripAdvisor has introduced instant booking and Google began to provide booking functionality on its Hotel and Flight Finder tool.

These three factors combined, resulted in the Justice Department’s decision to not proceed.

“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.”

This deal is now expected to be completed in late 2015 or early 2016, and Expedia will acquire consumer-travel brands such as CheapTickets and HotelClub, as well as business-to-business websites such as Orbitz Partner Network, according to Skift.

Looking forward, this brings the major OTA number to two: Expedia and Priceline. But with metasearch platforms seeing additional usage and new methods of booking (Airbnb) coming of age, the travel market will continue to evolve for consumers, businesses, and travel and hospitality brands.

Learn more by watching the Tnooz webinar, How the Hotel Guest Can Be at the Center of a Payment Strategy, featuring our very own Mike Carlo, head of travel solutions; Peter Turco, formerly of Starwood Hotels; Nick Vivion, global events lead and moderator at Tnooz; and Gene Quinn, CEO and producer, Tnooz.

We look forward to helping you navigate this and other travel payments trends. Follow WEX on LinkedIn to stay up to date with the latest in travel, payments, and more.