The proposed merger of the UK high street travel businesses of Thomas Cook and the Co-op has been dealt a blow after the Office of Fair Trading said the move significantly threatened competition.
The OFT reached its “initial view” following a consultation and has 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 in-depth probe, 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 officer 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 Cooperative 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 £35 million 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.
Cooperative Travel, which employs 3,000 staff, will also include its home-working business, which has 345 staff selling holidays from home, its web and call centre operations and Freedom Travel, its franchise group.
Thomas Cook, which would own 66.5 per cent of the new company, is struggling with a drop in demand for overseas holidays, as anxious Britons opt to stay at home.
Staff at Co-operative Travel, which started life as a day excursion business in 1905, are based at the head office in Burslem, Stoke-on-Trent. The company also operates call centres in Manchester and Barrow, in Cumbria.