(Adds quote from ACCC, detail on concerns, M&A data)
SYDNEY, Oct 2 (Reuters) - Australia’s antitrust regulator on Thursday cleared online travel giant Expedia Inc to buy local rival Wotif.com Holdings Ltd, saying it did not expect the A$699 million ($610 million) deal to substantially lessen competition.
The Australian Competition and Consumer Commission (ACCC), which had earlier raised concerns about the deal, said it had noted some accommodation providers’ concerns about higher commissions if the deal went ahead.
“However, the ACCC found that there has been considerable change in the competitive dynamics of the online accommodation distribution market in recent years,” the regulator said in a statement, noting a number of new entrants. “The ACCC considered that the acquisition was unlikely to diminish the dynamic nature of the industry.”
Greenlighting the deal makes it easier for U.S-based Expedia - the world’s No. 2 travel website - to grow in Australia and the Asia-Pacific. It also ends uncertainty about the future of Wotif.com, which in August said annual profit fell by a sixth because of business lost to Expedia and another large U.S. rival, Priceline Group Inc.
Last month the ACCC said industry players were concerned that removing Wotif.com as an independent competitor would lift a “significant competitive constraint on Expedia”, enabling the U.S. firm to increase commissions.
It added that joining two of Australia’s three biggest accommodation sites would leave Expedia competing only with Priceline Group Inc and could hurt competition.
Australian inbound M&A activity in the first nine months of 2014 more than doubled to $32.4 billion from the previous year. But activity slumped 86 percent in the June-September period from the previous quarter, the sharpest such decline since 1989 as falling commodity prices and a faltering stock market challenged overseas investors’ appetites.
Wotif.com shares traded as high as A$5.94 in early 2013 before a profit warning in December saw them tumble to a record low of A$2.29 on March 17. On Wednesday, the shares closed at A$3.09, compared with Expedia’s A$3.30 offer price, having fallen more than 7 percent last month when the ACCC raised its competition concerns.
Expedia’s Nasdaq-listed shares last closed at $84.78.
1 US dollar = 1.1456 Australian dollar Reporting by Byron Kaye and Lincoln Feast; Editing by Stephen Coates