Investing.com -- U.S. federal regulators cleared the way for a $1.3 billion merger between two prominent online travel booking companies when the U.S. Department of Justice said on Wednesday afternoon that it will not challenge Expedia 's (NASDAQ:EXPE) acquisition attempt of Orbitz (NYSE:OWW).
The companies announced the proposed merger in February, shortly after Expedia completed its acquisition attempt of Travelocity. In the six months that have ensued, a spate of trade groups, legislators and consumer watchdog agencies have condemned the deal, issuing stark warnings on how it could stifle competition in the travel business. Some estimates claim that a deal could provide the newly-created company with approximately three-quarters of internet bookings through online travel agents.
Last month, Rep. Hank Johnson (D – Ga.), the ranking member of the Regulatory, Reform, Commercial and Antitrust Law subcommittee, expressed further concern on the ramifications of a deal, noting that an already thin marketplace could be reduced to only two primary competitors – Expedia and Priceline – if the acquisition is completed.
Still, the Department of Justice dismissed the concerns after careful consideration. During a six-month investigation, the Department met with lawyers and economists from the Antitrust Division, reviewed tens of thousands business documents, analyzed transactional data from the merging companies and interviewed more than 60 industry participants, it said on Wednesday in a statement.
"We uncovered no evidence in our investigation that the merger is likely to result in new charges being imposed directly on consumers for using Expedia or Orbitz. So we focused our investigation on the commissions Expedia and Orbitz negotiate with airlines, car rental companies and hotels," U.S. Assistant Attorney General Bill Baer said in a statement. "We (also) found that Orbitz is only a small source of bookings for most of these companies and thus has had no impact in recent years on the commissions Expedia charges. Many independent hotel operators, for example, do not contract with Orbitz, and those hotels that do often obtain very few bookings from its site."
Shares in Expedia gained 1.00 or 0.80% to 125.68 in after-hours trading, while shares in Orbitz rose by 0.07 or 0.59% to 11.99. Earlier in the regular session, shares in Expedia and Orbitz each closed more than 4.75% higher.