Consumer Watchdog today called on the US Department of Justice to block the proposed billion dollar1 merger of online travel agents Expedia and Orbitz 'to maintain vital competition that ensures fair prices for consumers.'
“The proposed deal would give the combined company monopolistic control of the online booking market, enabling it to impose higher fees on hotels, which would inevitably mean higher costs for consumers,” wrote John M. Simpson, Consumer Watchdog’s Privacy project director, in a letter to the Justice Department.
Read Consumer Watchdog’s letter here or click for a PDF version:
Expedia announced the Orbitz merger in February just after it closed the deal to buy another online booking service, Travelocity.
“Market analysts have estimated that the merger with Orbitz would give Expedia and its affiliates 75 percent of the online travel agent market in the United States,” wrote Simpson. “The merger would effectively leave a powerful duopoly with Expedia and competitor The Priceline Group Inc. controlling 95 percent of the online travel agency bookings.”
The market share figures come from the market research firm Phocuswright's U.S. Online Travel Overview Fourteenth Edition.
Consumer Watchdog said part of the problem is that consumers don’t understand the extent that seemingly independent brands are owned by the industry behemoths. Orbitz Worldwide Inc. owns HotelClub.com, Orbitz.com and CheapTickets.com. Expedia Inc. owns Expedia.com, Hotels.com, Check Tickets, Trivago and Hotwire.com. Priceline owns sites such as Booking.com and Kayak.
“If this merger is allowed to go forward, then the vital competition between Expedia and Orbitz will be lost,” wrote Simpson. “Eliminating Orbitz as an independent option will severely impact consumers and limit consumer choice.”
1 - $1.3 billion
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