The Netherlands Authority for Consumers and Markets (ACM) has cleared the acquisition of Dutch tour operator Corendon by rival operator Sunweb. ACM has looked at the competitive landscape with respect to beach holidays along the Mediterranean coast, in particular the so-called package tours, as both operators offer such package tours. ACM has come to the conclusion that, after the acquisition, sufficient competition will remain on the market, although the number of large tour operators goes down from three to two. Besides Sunweb and Corendon, tour operator TUI is a major competitor, and several smaller tour operators also offer package tours.
Martijn Snoep, Chairman of the Board of ACM, comments: “Over the past few years, consumers looking for beach holidays have had many options, also in part because of the growing selection online. Package tours remain as popular as ever because of their low prices and the convenience of a one-stop-shop with regard to the booking process. Sunweb and Corendon are currently the numbers 2 and 3 in the market, and, after the acquisition, will become about as big as the market leader TUI. That is why we wanted to conduct a thorough investigation into whether this acquisition would restrict competition, which would lead to higher prices or reduced quality. That has turned out not to be the case here.”
Consumers predominantly look at the prices of beach holidays
After the acquisition, two major tour operators will offer package tours: TUI and the combination of Sunweb/Corendon. When booking package tours, consumers simultaneously purchase flights and accommodations. ACM’s investigation has shown that consumers looking for beach holidays consider several countries, and that price is often the deciding factor. For consumers, the package tours offered by TUI are an important alternative to those offered by Sunweb and Corendon. In that context, Sunweb and Corendon are not each other’s main competitors. Smaller competitors and new entrants, such as Transavia Holidays, are also active, which are able to exert competitive pressure. And finally, when booking holidays, a large group of consumers also looks into the option of putting a beach holiday together themselves by purchasing individual components (plane tickets and hotel reservations) separately. All in all, ACM has come to the conclusion that sufficient competition will remain on the market.
The coronavirus (COVID-19) crisis erupted during the assessment of this acquisition. This crisis has a major impact on the travel industry. It is difficult to predict what the effects of the crisis are and whether they will be permanent. That is why ACM took as its starting point the market situation right before the outbreak of the pandemic.
How does ACM assess mergers and acquisitions?
With any merger or acquisition, there is a question of whether sufficient competition will remain on that market after the concentration. Competition ensures that products are of high quality, that they are offered on the market at competitive prices, and that innovation is stimulated. That is why ACM decides in advance whether or not companies are allowed to merge or acquire other companies. ACM assesses whether the markets involved will continue to work well for people and businesses, now as well as in the future.