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European regulators have not market-tested concessions offered two weeks ago by U.S. tourism company Cendant Corp. on its purchase of reservation system Galileo International Inc., and that has observers wondering if the $2.9 billion deal will undergo a four-month competition review. New York-based Cendant submitted its concessions to EU regulators Sept. 3, thereby extending the usual one-month inquiry by two weeks, to Sept. 24. In most preliminary investigations, such offers would immediately be market-tested, given the time limits. But sources say that after two weeks the EU still has not consulted with market players. Observers say this could mean a four-month review could be coming, or that the EU may already be satisfied with the concessions. “It is conceivable that the companies have resolved things contractually, and the Commission has concluded this does not need to be market-tested,” said a lawyer representing a company the EU initially consulted in its investigation. Competitors have presented three main objections to the Commission. Galileo, of Rosemont, Ill., runs a computer reservation system used widely by travel agencies, and one fear is that Cendant, which operates hotels and car rentals, could better position itself on Galileo’s screens. The second concern is that Cendant could use confidential information competitors provide Galileo, such as pricing and service availability. And the third concern is that Galileo could simply raise its prices to the detriment of Cendant competitors. Three solutions would address these concerns: an agreement not to bias Galileo’s screens, a firewall to protect competitors’ confidentiality, and price controls. All of these solutions could be remedied within the merger agreements between Galileo and Cendant, and would not necessarily need testing. The Commission market-tests concessions by asking the complainants for their views on what the purchaser has offered. “The Commission reserves the right to market-test in a preliminary probe [but] if it believes that the concessions so obviously address its concerns, market tests are unnecessary,” said Commission press officer for Competition Amelia Torres. Torres, however, declined to comment on whether this is the case with Cendant. Copyright (c)2001 TDD, LLC. All rights reserved.

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