CMA confirms start of probe into Hays Travel takeovers

The Competition and Markets Authority (CMA) confirmed the “launch of merger inquiries” into Hays Travel’s takeover of Millington Travel and Polka Dot Travel last week.

The CMA issued Initial Enforcement Orders halting Hays’ integration of the businesses in mid-December but is only required to begin a formal ‘Phase 1 investigation’ once it has “sufficient information”, having sought comments from “interested parties”. It now has 40 working days to complete this, meaning a deadline for a decision on Polka Dot Travel by April 26 and Millington Travel by April 27.

The regulator will decide by that point whether to allow the takeovers to proceed or move to a more detailed Phase 2 investigation which could take almost six months.

Hays announced the takeover of Polka Dot and its 15 shops in the northwest and North Wales on October 30, and acquisition of Millington Travel with 14 outlets in the East Midlands on November 5.

The CMA’s intervention almost six weeks later came as a surprise. Hays had made a series of acquisitions over the previous two years, expanding to 530 branches, and the only previous takeover to attract CMA attention was that of Cruise.co.uk parent Victoria Travel Group in July last year. In that case, Hays was able to satisfy the CMA’s competition concerns without an investigation.

40 days: Timeline to complete Phase 1 investigation into autumn deals

The addition of Polka Dot and Millington’s branches would have little overall impact on Hays’ market share. So, the investigation seems likely to focus on the regional impact on competition among agencies – probably in the northwest.

The businesses must remain separately run and with “no significant changes” while the CMA investigates whether there could be a “substantial lessening of competition”.

The CMA will launch a Phase 2 assessment if it finds “a realistic prospect” of this unless offered “remedies” that address its concerns. The bill for a Phase 1 investigation alone could run to £500,000.

However, the CMA has agreed ‘derogations’ from the initial enforcement orders allowing Hays and Millington Travel to cooperate on anti-money laundering policies and practices and related training, subject to safeguards. These include a requirement that staff do not share “business secrets, know-how, commercially sensitive information or any other confidential or proprietary information” and sign non-disclosure agreements approved by the CMA.