Department Of Justice Finally Approves Of Orbitz Purchase By Expedia

The acquisition of Orbitz by rival Expedia was a bit of a rollercoaster with many up’s and downs during the process. Now the green light has finally been given by the U.S. Department of Justice (DOJ).

OrbExp

The transaction has been reviewed by antitrust experts and it was ultimately assessed that it would have no negative impacts on the consumer that are of significance. 

Yesterday, the Department of Justice released a press statement concerning the matter (you can access it here) outlining the basis for their decision.

“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.

I think one has to see this with two sets of glasses. It might not directly impact the prices so the consumer will not immediately notice it. However those of us who know the tweaks of all the different OTA’s appreciate the variety of promotions such as the recent Orbitz ‘Masterpass’ 100$ discount. Orbitz was always very generous with their promos while Expedia has pretty much nothing available.

“There are several reasons for this conclusion.  First, we uncovered no evidence in our investigation that the merger is likely to result in new charges being imposed directly on consumers for using Expedia or Orbitz.  So we focused our investigation on the commissions Expedia and Orbitz negotiate with airlines, car rental companies and hotels.

“Second, we found that 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 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.

As far as I understand it after reading the material available they [Expedia] will keep both websites (Expedia and Orbitz) active simultaneously. Question is how much need will there be for any generous promotions. I can see why as of right now these promo’s are out there driving the customers a bit given the market share outlined by the DOJ but in the future this might be gone due to lack of reason to compete hard with the big Expedia. Also, as of right now Orbitz sometimes offers interesting flights that do not come up on Expedia. We shall see if this will change as well.

John wrote about this transaction the first time back in February (access here) and I followed up on it earlier this month when the review by regulators made headlines (see article here).

Conclusion

I stick to the point that I like to have as many Online Travel Agents (OTA) available as possible to serve my different booking needs. In the case of Expedia and Orbitz there were (or still are) some noticeable differences in the way that each of them have some ‘special fares’ available from local markets such as Bangkok or Singapore. It’s also useful for Best Rate Guarantees to have additional channels at your disposal.

How all this will be integrated we just have to wait and see. Hopefully some lucrative promotions come along the way.

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