Watchdog blow to travel firm merger

The OFT reached its 'initial view' following a consultation and yesterday asked the European Commission for permission to take over the investigation into the proposed joint venture.

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

Following an detailed investigation, the OFT could refer the proposed merger to the Competition Commission, which would have the power to block the plans.

Manny Fontenla-Novoa, chief executive of Thomas Cook, said: "We always knew that this request was a possibility and we will continue to work closely with the relevant authorities. We remain confident that the transaction will be cleared in due course.

"The joint venture is a clear demonstration of our commitment to the high street."

The EC has until January 6 to decide whether to let the OFT take over, after which the OFT would have up to 45 working days to refer it to the Competition Commission.

The companies had hoped to wrap up the deal by early December.

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 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.