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Hotel and car rental franchiser Cendant Corp. must refile its European Union regulatory notification for its $2.9 billion acquisition of travel reservation system Galileo International Inc. after EU regulators declared the first notification incomplete Wednesday. The European Commission, the EU’s executive agency and competition watchdog, wants more information from Cendant, which owns rental car company Avis Group Holding, about the European car rental sector. Cendant, based in New York, also owns hotel chain Ramada Inn and real estate brand Century 21. Upon receiving the additional information from Cendant, the Commission will reset its preliminary investigation clock for another one-month inquiry. After the end of the preliminary review, the Commission can clear the deal or launch a second-phase investigation, which would extend the review by four months. The deal had originally been notified to the Commission July 5 and a preliminary ruling was scheduled for Aug. 6, but then the notification was declared incomplete. A deadline for the companies to submit concessions within a preliminary investigation, which is three weeks from the date of notification, had lapsed last week without any offer. Cendant, in a statement Wednesday, said that despite the Commission’s request for more information, it expected the deal with Galileo to be completed in the third quarter of this year, as previously announced. According to the company, the Commission requested information about the relationship between Cendant’s Avis unit and Avis Europe, a separate, independently owned company. Cendant said it expects the Commission to declare notification complete when the information is provided “within the next few days.” “[W]e are confident we can respond promptly to any European Commission inquiries,” said Cendant’s Chairman, President and CEO, Henry R. Silverman, in the statement. “Furthermore, we expect that any investigation by the Justice Department will have no impact on the timing of the Galileo transaction.” It is unclear whether there is any connection between the EU notification being declared incomplete and renewed U.S. Department of Justice concerns. Soon after the deal was announced June 15, the DOJ waved the acquisition through. But the agency recently reopened its investigation. “We are looking at it,” a DOJ official confirmed Wednesday. She would not comment on what aspects of the deal caught the agency’s attention. The Justice Department, however, has previously been interested in vertical mergers that could give the combined company undue power over rivals. In 1999, for instance, the department threatened to block Barnes & Noble Inc.’s acquisition of Ingram Book Group because the agency worried that the giant retailer’s control over the publishing house would give it too much of an advantage over independent bookstores that needed Ingram titles. This deal could raise similar concerns. By acquiring Galileo, Cendant would control the second-largest reservation system. It could use this control to benefit its hotel and rental car units to the detriment of competitors such as Marriott International Inc. and Enterprise Rent-A-Car Co. The department may be seeking written assurances that the Galileo reservation system will not discriminate against rivals. But even before Cendant had clinched the deal to acquire Rosemont, Ill.-based Galileo, reports suggested that Cendant was in talks to buy yet another travel reservation company, Worldspan of Atlanta, which is the third largest in the U.S. Commission spokesman for Competition Michael Tscherny declined to comment directly on whether EU antitrust officials are cooperating with their U.S. counterparts on their respective investigations, although it would appear that recent developments in the two reviews have been made in tandem. “We are fully aware of developments in the U.S.,” he said. Copyright (c)2001 TDD, LLC. All rights reserved.

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