Expedia Acquires Orbitz Following Justice Department Approval

Online travel agency Expedia has acquired one of its largest competitors, Orbitz, for $1.6 billion, it announced this week.

"We are pleased to welcome Orbitz Worldwide to our family of leading travel brands," Expedia CEO Dara Khosrowshahi said in a statement. "Our mission is to revolutionize travel through the power of technology. Given Orbitz's focus on transforming the way consumers around the world plan and book travel, we couldn't be more aligned. As we bring our talented teams and capabilities together, we will be well positioned to accelerate the pace of innovation to deliver even better customer experiences to Orbitz's loyal customer base and to further enhance the marketing and distribution capabilities we offer to our global supply partners."

After months of speculation over the deal's outcome, the acquisition was able to move forward this week due to a decision by antitrust officials in the U.S. Department of Justice, who ruled that the transaction would not create an industry monopoly, as critics have contended.

"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," said Assistant Attorney General Bill Baer of the Justice Department's Antitrust Division. "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."

According to the feds, the merger isn't likely to result in new charges being imposed directly on consumers for using Expedia or Orbitz. As for the commissions Expedia and Orbitz negotiate with airlines, car rental companies, and hotels?

"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," Baer continued. "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."

Not surprisingly, the hotel industry decried the Justice Department's decision.

"We are disappointed with today's announcement by the Department of Justice to approve the proposed acquisition of Orbitz by Expedia. Simply put, this decision will hurt consumers and small business owners, and remove choice from the marketplace," the American Hotel & Lodging Association (AH&LA) said. "By approving this deal, only two players control the online marketplace: Priceline and the behemoth Expedia, now owning Orbitz, Travelocity, Hotels.com, Hotwire, Cheap Tickets, and Trivago. Together, these two players control over 95 percent of the online travel agency bookings in the United States. We continue to believe that increased consolidation is bad for consumers and bad for business."


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