EU Phase 2 look should cost Travelport money but not a deal

The EU is planning a Phase 2 investigation of the Travelport (Galileo) and Worldspan merger (here is the Travelmole article. This does not mean that the merger will be blocked as it is really just the equivalent of the Competition Commission saying "hmm...let me think about it". It does however create a headache for Travelport as the cost of submissions and approvals just went up - somewhere in Brussels there is a partner in the EU practice of a big law firm rubbing his/her hands with glee. It also delays synergies and strategic plans causing more costs and pain.

I would be surprised if the Commission ultimately decides to reject the deal. While their initial analysis is right that this would give the combined organisation a powerful number two status in the European GDS wars but that does not mean what it used to mean 10 years ago. There is so much inventory now being booked off GDS such as through low cost and full service airlines direct online, hotels online through extranet based intermediaries (just look at the killer results coming out of Priceline in Europe) and even the interactive tools that the wholesalers are using. Being dominant or strong in GDS should not be the concern for competition that an siilar analysis in 1995 would determine. If the European Commission can clear the MyTravel and Thomas Cook merger then would be strange to make a stand here.

This should make it almost a certainty however that the Commission will want to have a phase 2 look at the Pegaus/Wizom deal. More joy for regulatory lawyers.