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The Antitrust Authority in cooperation with the Exemptions and Mergers Advisory Committee approved the merger of the Fattal Hotel chain and Azorim Hotels Management. The commissioner: “The merged company is not expected to have a dominant position in the market and therefore there is no risk in changing the operations and market forces in relation to travel agents.

At the end of last week, the Antitrust Authority verified the purchase of the share capital of Azorim Hotels Management by the Fattal Hotel chain in exchange for 970 million shekels and published the conclusions of the tests of the economic department, that showed that the regional hotel market is composed of a number of regional geographical markets with the geographical overlap and merger taking place in three regions: Tiberias, Eilat and the Dead Sea.

According to tests carried out by the Antitrust Authorities, the combined market share of the two companies in the Tiberias region is low, despite the fact that near to Tiberias there are additional holiday centres in the Galil, the Golan and in the northern valleys.  As far as Eilat is concerned, the test results found that because it is in a geographically isolated location with unique climatic and resort characteristics, with competition from the hotels of Sinai and Jordan, the market share for the merged parties will reach about 30 percent.

Further examination of price behavior over a period of time in relation to room occupancy in Eilat shows that the merger is not expected to bring about to a significant advantage as far as market share is concerned for the merged party.  “The format of the market and the variety of players active in Eilat and the differentiation that exists between the hotels does not raise the fear of coordinated behavior,” concluded the authority.

In relation to the hotel market at the Dead Sea, it was found that the demand for hotels in this area have unique characteristics, for example peak demand and the lowest demand fall during different seasons compared to other parts of the country, and the customer characteristics are also different. In light of this it was found that the aggregate market share for the parties in the Dead Sea region would reach about 38 percent.

 “This is not negligible market share that we are discussing, so in light of this we conducted tests in order to check the possibility of operating market forces unilaterally,” reported the authority.  But these tests did not raise any reasonable doubt over the operation of a one sided market forces. “Because the merged company is not expected to be a dominant player in the relevant market and of course not at national level, so there is no fear of activating market forces against travel agents.”