ACCC GIVES TICK OF APPROVAL FOR WOTIF TO FLY
Written on the 2 October 2014 by Laura Daquino
THE ACCC will not oppose Expedia’s proposed acquisition of Wotif.com Holdings Limited (ASX: WTF).
The consumer watchdog considered claims that moving the business offshore to the US would diminish competition in the Australian hospitality and tourism industry and thus pass on a rate rise to providers.
Concerns were laid out in a report issued by the ACCC early last month, where the authority speculated whether removing Wotif.com (CEO Scott Blume pictured) from the domestic market would allow competitors such as Expedia.com to increase their commission rate.
The report noted that Wotif.com currently charges a lower rate, and questioned whether lower commissions offered by Expedia.com and Booking.com in the Australian market could be reflective of Wotif.com’s presence.
The nature of the issue caused the ACCC to defer its decision until today, when the ACCC chairman Rod Sims resolved that WTF’s removal from the market will not affect the health of the industry due to its dynamic nature.
“The ACCC considered that the acquisition was unlikely to diminish the dynamic nature of the industry,” says Sims.
The ACCC indicated that metasearch websites, such as TripAdvisor and Google Hotels Finder, are becoming a larger part of the online travel industry.
“Disruptive developments from smaller OTAs and from companies in related online sectors, such as the metasearch providers, can be expected to constrain Expedia in the future.
“Metasearch websites increasingly facilitate hotels’ ability to promote themselves alongside OTAs, and transact directly with consumers.”
Expedia’s proposed takeover was announced in July for $703 million, subject to WTF shareholder and court approval and to be finalised in October.
WTF shares were trading up 6.63 per cent today at $3.30 per share.