Two U.S. Senators, who are the ranking member and the chair of a Senate Judiciary subcommittee on antitrust matters, asked the Department of Justice to review competition issues involved in Expedia Inc.’s proposed acquisition of Orbitz Worldwide.
The letter comes as the New York Post reports that the merger will get DOJ clearance by the end of August.
We’ve argued that the merger will get done without the Justice Department standing in the way because of the emergence of TripAdvisor, Google and Amazon as hotel-booking competitors, strides made by Booking.com in taking U.S. market share from Expedia, and the minority position that U.S.-based online travel agencies command in the overall global travel market.
Regarding the Senators’ letter, the DOJ, of course, is already looking at the competition issues of the merger.
Congressional criticism of the merger has been fairly muted until now, and the letter takes no position on the legality of the online travel agencies’ marriage.
U.S. Senators Amy Klobuchar, a Minnesota Democrat and the ranking member of the Subcommittee on Antitrust, Competition Policy and Consumer Rights, and Mike Lee, a Utah Republican who heads the subcommittee, questioned whether the merger would give independent hoteliers no alternative but to pay higher commissions to Expedia-Travelocity-Orbitz and possibly pass on those costs to consumers in higher rates.
After Expedia Inc. acquired an online travel agency in Australia, Wotif, last year, shortly thereafter Wotif hiked the commissions it demanded from hotels.
“While we take no position about the legality of the merger under the antitrust laws, we do think it raises important competition issues that the Department should carefully review and closely scrutinize,” the letter to the Justice Department states.
While consolidation is rarely good for consumers — just take a look at the airline industry — there are new hotel-booking sites emerging, including TripAdvisor, Google and Amazon, that could serve as a counterweight to the online travel duopoly of Expedia Inc. and the Priceline Group.
We’ve argued that despite the noise, the Justice Department will likely not stand in the way of the Expedia-Orbitz merger.
The Senators’ letter states: “The issue is whether other options for online, comparison shopping, including recent and potential entrants, will provide sufficient alternatives to prevent any anticompetitive threat.”
Here’s the full text of the letter, which incidentally cites a Skift article in the footnotes: