The European Commission is preparing to block the €950 million (£748 million) hostile bid by Airtours for First Choice, its smaller British package holiday rival. But there is still time for Airtours to offer Brussels remedies that would make the deal acceptable under EU competition law.
The draft decision will be presented to a committee of national competition experts next week and is scheduled to go before the full Commission for final approval on September 22nd. A Commission official confirmed that a draft was ready but added that competition officials were in intense negotiations with Airtours. Airtours won majority support for its bid from First Choice shareholders last month, breaking up a rival friendly merger deal between First Choice and Kuoni of Switzerland.
In the Republic, First Choice owns JWT and Falcon, while Airtours owns Panorama.
Competition officials are unlikely to accept offers of divestments or other structural changes beyond Tuesday, a month before the investigation's deadline of October 5th. Airtours is believed to have offered to sell at least two of First Choice's businesses, including Viking Aviation, its aircraft seat broking business, and Eclipse, the tour operating business that sells holidays over the telephone.
But these appear not to have been enough to allay Commission worries that the merger would leave only three big companies in the British package holiday market - Thomson Travel Group, Airtours/First Choice and Thomas Cook. Although none would be dominant, the three together would supply three-quarters of all foreign package holidays.
According to the Commission, this would create the possibility that the market would become concentrated in such a way that the three big companies would have a dominant position.
Competition experts in Brussels believe it would be difficult for Airtours to offer a divestment big enough to satisfy the Commission's competition concerns but not so big that it kills off the rationale for the deal.
