A statement released on behalf of all three parties said the OFT has “agreed to our request to refer the proposed JV to the Competition Commission with immediate effect” and added that the two co-ops and Thomas Cook looked forward to working with the Commission to obtain clearance “as soon as possible”.
Added the spokesman: “The benefits of the joint venture are as compelling as ever and we remain fully committed to seeing it through to a successful completion.”
The OFT were given 45 working days to investigate the proposals in early January, but although that period had not expired, it is understood Co-operative Travel and Thomas Cook agreed that time could be saved in the long run by asking for the Competition Commission’s involvement to be fast-tracked.
However, the Commission can take up to six months to decide whether the deal breaches competition laws and is in consumers’ interests. If cleared, the deal — first announced last October — would create the UK’s largest travel agency network with more than 1,200 stores. Thomas Cook will be the dominant partner, owning 70 per cent of the merged entity.
The deal could ensure cost saving of around £35 million per year, but hundreds of jobs and up to 100 high street travel branches will go as a result of the merger. The OFT said the proposed joint venture could “significantly affect competition in the supply of travel services via retail travel agency outlets in the UK” and confirmed there is sufficient evidence to justify a detailed inquiry by the Competition Commission.
A spokesman said: “The proposed joint venture brings together two of the largest high street travel agencies in the country. It is therefore important that it is carefully considered to assess whether it will lead to a substantial loss of competition.”
Meanwhile Co-operative Group Chief Executive Peter Marks has admitted the proposed joint venture will be “painful” for some Group members because of the long period of time the society has been involved in the sector. But, speaking at the recent National Retail Consumer Conference at Stratford-upon-Avon, he insisted that the Group had no alternative but to embrace the opportunity offered.
“Quite frankly, there was no choice,” said Mr Marks. “Travel was not making any money and wasn’t going to make any money, so this joint venture saves 3,000 jobs, at least for the next five years.
“In fact, the agreement significantly increases the profit we can drive from the travel business and, probably more importantly, ensures that our brand on the high street — our Co-operative Travel shops — remains there for at least the next five years.”