Thomas Cook merger faces OFT probe

The planned merger of the high street travel businesses of Thomas Cook and the Co-op has been referred to the UK's Office of Fair Trading for investigation, it emerged today.

Thomas Cook said the European Commission had granted the OFT’s request for jurisdiction over the deal on the grounds that it solely relates to the UK.

The OFT said last month that its initial view of the tie-up was that it significantly threatened competition in the supply of package holidays sold through retail travel agencies in the UK.

With more than 1,300 shops, the newly formed company would be the UK’s largest travel agent and second biggest in foreign exchange.

The OFT will have 45 working days to look at the merger, which it could refer to the Competition Commission for an in-depth investigation.

Thomas Cook said today: “We will continue to work closely with the OFT to obtain a rapid clearance.”

In October, Thomas Cook, the Co-op and Midlands Co-op announced plans to merge their high street travel businesses in a move expected to cost hundreds of UK jobs.

If given the go-ahead, Thomas Cook and Co-operative Travel stores would continue to operate under their own brands, but Thomas Cook’s Going Places shops will be rebranded as Co-operative Travel.

Savings of around £35m (€41.6m) a year from the merger are expected to be achieved through job losses, store closures and the combination of existing head offices into Thomas Cook’s current Peterborough HQ.

Co-operative Travel, which employs 3,000 staff, will also include its home-working business, which has 345 staff selling holidays from home, its web and call centre operations and Freedom Travel, its franchise group.

Thomas Cook, which would own 66.5% of the new company, is struggling with a drop in demand for overseas holidays, as anxious Britons opt to stay at home.

Staff at Co-operative Travel, which started life as a day excursion business in 1905, are based at the head office in Burslem, Stoke-on-Trent. The company also operates call centres in Manchester and Barrow, in Cumbria.