Sabre’s Move to Acquire Farelogix Raises a Few Eyebrows
The Competition & Markets Authority has warned Sabre’s proposed takeover of Farelogix raises competition concerns in the supply of IT systems used by airlines and travel agents to sell airline tickets. The organisation has been investigating the proposed $360 million takeover.
Both companies provide IT systems that enable airlines to sell tickets, as well as related add-ons such as on-board Wi-Fi, meals and seats with extra legroom, through travel agents, to businesses and consumers.
Sabre is one of three large and well-established suppliers of such systems worldwide, including in the UK. The market also includes Travelport and Amadeus.
The CMA’s initial, phase one, investigation has found that Farelogix is much smaller at present but is an important competitive threat to Sabre and recognised as an important innovator with a disruptive business model.
Farelogix has already had a significant impact in the industry through its use of new and innovative technology to distribute more sophisticated airline products and, without the merger, would have been expected to further develop and grow the use of its technology in future.
Should the deal go ahead as planned, the CMA is concerned that Sabre would not face enough competition from other suppliers, leading to higher prices or lower quality services, as well as reduced innovation in the industry generally, which could have adverse effects for airlines, travel agents and consumers across the UK.
The deal is also being investigated by the US department of justice, and the two authorities are continuing to cooperate closely.
If the merging businesses are unable to overcome the CMA’s concerns, the deal will be referred for an in-depth phase two investigation. This would be carried out by a group of independent CMA panel members.