Hays Travel faces competition watchdog probe over two agency acquisitions

Hays Travel faces a competition watchdog probe following the acquisitions of Millington Travel and Polka Dot Travel.

 

The Competition and Markets Authority issued an order preventing their further integration ahead of a formal antitrust review.  

 

The CMA confirmed it was considering whether the takeovers by the UK’s largest travel agency group “has resulted or may be expected to result in a substantial lessening of competition”.

 

The intervention came in the form of Initial enforcement orders issued by the CMA under section 72(2) of the Enterprise Act 2002 on Tuesday.

 

In both cases the CMA said it has “reasonable grounds for suspecting that it is or maybe the case” that Hays Travel and the two acquired agencies “have ceased to be distinct”.

 

The deal for 14-branch Millington Travel, based in the Midlands, was announced a week after the acquisition of Polka Dot Travel’s 15 branches at the end of October.

 

Millington became the fourth acquisition of the year by Hays Travel, bringing its branch network up to around 530 outlets.

 

The authority is considering “whether it is or may be the case that a relevant merger situation has been created and whether the creation of that situation has resulted or may be expected to result in a substantial lessening of competition in any market or markets in the UK”.

 

Hays Travel has been blocked from integrating the businesses, transferring ownership or impairing their ability to compete independently until the “determination proceedings” are concluded.

 

The company must also ensure “all times during the specified period” that the two acquired agencies conduct business separately from Hays; that “sufficient resources” are made available for them to be maintained as going concerns; no “signifiant changes” are made to the organisational structure of management responsibilities; and the goods and services supplied are “maintained and supplied”.

 

Among the other CMA stipulations, customer and supplier lists shall be operated and updated separately and any negotiations with existing or potential customers and suppliers will be carried out by Millington and Polka Dot Travel alone.

 

The CMA added that “for the avoidance of doubt” Hays will not negotiate on behalf of the acquired agencies or enter into any joint agreements.

 

All contracts should continue to be serviced by the business to which they were awarded and no changes to key staff made.    

 

Additionally, no “business secrets, know-how, commercially-sensitive information, intellectual property or any other information of a confidential or proprietary nature relating to either of the businesses” shall pass between them “except where strictly necessary in the ordinary course of business”.

 

The CMA said that “should the transaction be prohibited, any records or copies (electronic or otherwise) of such information that have passed, wherever they may be held, will be

returned to the business to which they relate and any copies destroyed”.

 

Hays and both agencies have been required to provide information on December 30 and every two weeks “for the purposes of monitoring compliance” with the CMA’s order.

 

A Hays Travel spokesperson said: “We are committed to co-operating with the CMA throughout the review process. Each brand will operate separately.”