The Office of Fair Trading has asked the Competition Commission to investigate the joint venture.
If cleared, the deal would create the UK’s largest travel agency network with more than 1,200 stores. Thomas Cook will be the dominant partner, owning 70% of the merged entity.
The OFT says the venture could “significantly affect competition in the supply of travel services via retail travel agency outlets in the UK”.
It continues: “’Travel services such as package holidays represent a big area of spending for many UK consumers and this proposed joint venture brings together two of the largest high street travel agencies in the country. It is therefore important that the proposed joint venture is carefully considered to assess whether it will lead to a substantial loss of competition.”
There is also concern that Thomas Cook’s “significant market presence” as a tour operator will damage the independent tour operators that currently sell though Co-op travel agents.
The additional probe means completion of the deal could be delayed until the end of August because the CC has six months to look at the tie-up.
The merger is necessary, Thomas Cook has argued, because of the pressure that the economic downturn, fuel prices and last year’s volcano in Iceland has put on the travel industry.
Both travel brands will retain their branding but 70 outlets of Going Places, Thomas Cook’s subsidiary brand, will be rebranded under the Co-operative Travel brand.