European Commission today announced that it had cleared Marriott’s purchase of Starwood based on the fact that it wouldn’t affect competition in Europe.
The commission investigated five markets where both Marriott and Starwood have strong presence and found out that they would still face competition from other chains and independent hotels.
Here’s the press release from the European Commission:
Brussels, 27 June 2016
The European Commission has cleared the acquisition of Starwood Hotels & Resorts by Marriott International, both of the US. The Commission found that the takeover would not adversely affect competition in Europe.
Commissioner for Competition, Margaret Vestager, said “This is an important merger for the hotel industry and its customers. Our investigation confirmed that the hotel sector will remain competitive for customers in Europe following the merger, so I am pleased that the Commission was able to clear the transaction quickly”.
Both companies are mainly active as managers and franchisors of hotels worldwide. At global level, more than 4 500 hotels in 85 countries operate under a Marriott brand and about 1 300 hotels in nearly 100 countries under a Starwood one.
The Commission assessed the impact of the proposed acquisition on competition in Europe in the market for hotel accommodation services and in the markets for hotel management and hotel franchising services.
For hotel accommodation services, the Commission investigation focused on the markets for 4 and 5-star hotels, in which both companies have a significant presence. In particular, the Commission investigated the impact of the proposed acquisition in five cities, namely Barcelona, Milan, Venice, Vienna and Warsaw, where the combined market presence of Marriott and Starwood was strongest. In each of these cities, the merged entity will continue to face effective competition from chain hotels and independent hotels.
For hotel management and hotel franchising services, the Commission investigated the impact of the proposed acquisition at the level of the European Economic Area. The Commission found that the merged entity would face effective competition in Europe from a number of competitors on all those markets, including Accor, Hyatt, Hilton and IHG.
The Commission therefore concluded that the proposed acquisition would raise no competition concerns.
The transaction was notified to the Commission on 23 May 2016.
Marriott then put out a press release saying that they still expect the acquisition of Starwood to close in July 2016. Both companies continue to operate as separate entities until the deal closes.
It is rather interesting that Marriott decided to put the W and JW brands to the illustration on the press release. These two brands have very little in common.