Dem warns DOJ on Expedia-Orbitz merger

The ranking member of the House Judiciary Committee subcommittee that handles antitrust law on Monday sent a letter to the Department of Justice asking it to carefully examine the merger of travel booking services Expedia and Orbitz.

Rep. Hank Johnson (D-Ga.), the ranking member of the Regulatory Reform, Commercial and Antitrust Law subcommittee, said that allowing the two services to merge could have a negative effect on competition.

{mosads}“In short, where there were four primary competitors in the online travel booking market as recently as last year, there will only be two dominant competitors following this transaction, and potentially even less should the Justice Department approve the merger and Expedia subsequently pursue other acquisitions.”

He asked the Justice Department’s antitrust division to narrowly define the travel industry, and draw on the distinction between booking services like Expedia and search sites like Kayak.

In the letter, Johnson claimed that “defining the online travel market broadly would arguably justify the future merger of Expedia and its primary competitor, Priceline. If controlling 80% of the online travel agency market is not anticompetitive, there is little upward limit on further consolidation in online travel agency market.”

Johnson said that the deal, which is valued at $1.3 billion and was announced in February, could hurt consumers, exacerbate confusion between booking sites and their third-party affiliates and “endanger innovation and competition” by new services.

Expedia hopes to use the deal to gain a competitive advantage over Priceline, but has met with resistance from the hotel industry and a major consumer group. On Monday, Consumer Watchdog said it opposed the deal on competition grounds. Hoteliers and lodging trade groups have said they would suffer from the merger.

“In light of these strong reservations, I urge you to take all appropriate actions to promote competition and ensure consumer affordability and choice in online travel,” he said.

Expedia has said it believes there will still be substantial competition in the marketplace if the merger goes through.