EUROPEAN COMMISSION C(2017) 3630 final

To the notifying parties:

Subject:Case M.8408 - CINVEN / CPPIB / TRAVEL HOLDINGS PARENT CORPORATION

Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004 and Article 57 of the Agreement on the European Economic Area Dear Sir or Madam, (1)On 10 April 2017, the Commission received notification of a proposed concentration pursuant to Article 4 of the Merger Regulation by which the undertakings Fifth Cinven Fund, managed by Cinven Capital Management (V) General Partner Limited ("Cinven", United Kingdom) and the Canada Pension Plan Investment Board ("CPPIB", Canada) intend to acquire within the meaning of Article 3(1)(b) of the Merger Regulation joint control over of the Travel Holdings Parent Corporation and its subsidiaries ("the Target" or "Tourico"). The Target will subsequently be merged with Hotelbeds Travel Company, Inc., a wholly owned subsidiary of Hotelbeds US Holdco, Inc., which is jointly controlled by Cinven and CPPIB (the "Transaction"). Cinven, CPPIB and the Target are designated hereinafter as the 'Parties'. 1.THE PARTIES (2)Cinven is part of the Cinven Group, a private equity business engaged in the provision of investment management and investment advisory services to a number of investment funds. (3)CPPIB is an investment management organization created by an Act of Parliament to invest the funds of the Canada Pension Plan. (4)Cinven and CPPIB jointly control Hotelbeds Group SLU ("HBG"), a travel related service provider headquarted in Palma de Mallorca, Spain. HBG's key areas of activities include business-to-business ("B2B") intermediation in travel services, notably intermediation in hotel accommodation including bedbanks and the provision of destination management services ("DMS") on the ground (e.g. safaris, guided tours, etc.). Its main customers include travel agencies ("TAs"), tour operators ("TOs") and government agencies ("GAs"). (5)The Target is a travel-related brokerage company, headquartered in Orlando, Florida, the United States The Target's key areas of activities include B2B intermediation in travel services, notably intermediation in hotel accommodation services through bedbanks as wholesalers of hotel room inventory. It operates a number of different brands such as Tourico Holidays and OneMinuteBooking.com in B2B services and LastMinuteTravel.com, LMTClub.com, Easy Click Travel and LastMinuteCruises.com in business-to-customers ("B2C") services. Additionally, the Target also provides B2B intermediation of DMS. 2.THE CONCENTRATION (6)The concentration will be implemented by way of Hotelbeds US Holdco, Inc - a wholly owned non-full-functioning subsidiary of HNVR Holdco Ltd. (United Kingdom) jointly controlled by Cinven and CPPIB through their investment in the ultimate holding company, HBG Limited, - acquiring the underlying shares of the Target and the latter subsequently being merged with its sister company Hotelbeds Travel Company Inc., a wholly owned subsidiary of Hotelbeds US Holdco Inc. (7)Following completion of the Transaction, Cinven and CPPIB will through Hotelbeds US Holdco, Inc. and pursuant to the Draft Investment and Shareholders’ Agreement relating to HBG Limited ("the Shareholders’ Agreement") between Cinven, CPPIB and Target’s and HBG’s management (the "Management") to be signed on closing, jointly control the Target. The Target will ultimately be integrated within HBG (the "Combined Entity"). (8)In particular, Cinven and CPPIB will together ultimately hold, either directly or indirectly, the majority of the shares in the Combined Entity [more than 80%], but [details of Cinven and CPPIB’s percentage ownership], with the remainder being held by the Management. Cinven and CPPIB will each have the power to unilaterally block actions which determine the strategic commercial behaviour of the Combined Entity, [details of internal decision making]. The Management's voting rights are limited to veto rights protecting its investment and other non-controlling voting rights, therefore not granting control over the Target. (9)Finally, a deadlock resolution mechanism is set up in the Shareholders Agreement, [details of internal decision making]. This confirms negative control of each of Cinven and CPPIB.

(10)The Transaction therefore results in the acquisition of joint control within the meaning of Article 3(1)(b) of the Merger Regulation by Cinven and CPPIB over the Target. 3.UNION DIMENSION (11)The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million (Cinven: EUR […] million; CPPIB: EUR […] million, the Target: EUR […] million). Each of at least two of the undertakings concerned has a Union-wide turnover in excess of EUR 250 million (Cinven: EUR […] million, CPPIB: EUR […] million). None of the Parties achieves more than two-thirds of their aggregate Union-wide turnover within one and the same Member State. (12)The Transaction has therefore a Union dimension pursuant to Article 1(2) of the Merger Regulation. 4.MARKET DEFINITION (13)Apart from HBG, no portfolio company controlled by Cinven or CPPIB is active in the business segments of the Target, or in any vertically related markets. (14)Both HBG and the Target are active in the distribution of hotel room nights. The Target and HBG, as well as other companies such as EAN, Travco, Sunhotels or JacTravel are active on the market as bedbanks. Bedbanks are wholesalers of hotel room inventory which typically purchase at a given price or rebate structure without taking financial risk for unsold rooms and then resell the inventory through their booking platforms. Customers connect with a bedbank’s entire online data platform in order to view the room nights available. On the other hand, TOs, airlines or online travel agencies (OTAs) connect with bedbanks usually via an XML-based connection, a technology that collects and makes data (in this case, hotel room inventory) from numerous bedbanks available to customers in real time and allows bookings to be made directly on the platform. Traditional brick and mortar TAs will typically connect with bedbanks through a website (HTML platform) which is usually a password protected part of the bedbank’s website. (15)The Parties' activities mainly overlap in the markets for hotel intermediation (i.e. sourcing and distribution of hotel inventory), and (ii) intermediation in destination management services (e.g. transfers, car rental, excursions etc.). Hotel intermediation (16)The Commission considered the market for hotel intermediation in Case M. 8231 – Kuoni Travel Holding / MTS Globe, but ultimately left the product market definition open. In another prior decision, it has however concluded that the two-sided market for the provision of global distribution systems' services constitutes separate markets. In another previous decision, the Commission also did not exclude the existence of a separate market for online travel agencies. The Commission has not yet considered the plausibility of a separate market for hotel intermediation by bedbanks only. (17)The Parties submit that HBG and the Target, acting as bedbanks source room inventory in competition with all distribution channels including hotels' own direct distribution channels, Global Distribution Systems ("GDS"), consolidators, as well as B2Cs, such as OTAs - for example Expedia and Booking.com - which can also source inventory directly from hotels rather than using B2B intermediaries, and therefore consider that the upstream market for hotel intermediation comprises all distribution channels for hotel inventory. Consequently, according to the Parties, a narrower market sub-segmentation limited to hotel intermediation by bedbanks would not reflect the competitive constraint exercised on the Parties by the other channels. (18)Similarly, on the downstream hotel B2B intermediary market, according to the Parties, there are many different types of distributors supplying hotel inventory to B2C operators (TAs, OTAs and TOs) such as GDSs, bedbanks, destination management companies (DMCs) and consolidators. As for the upstream market, B2B intermediaries are also constrained by the hotels’ own direct distribution channels and OTAs. (19)As regards the potential online and offline segmentation, the Parties consider that the product market should include all distribution platforms. (20)In any event, and for the purpose of this decision, the exact product market definition can be left open, as the Transaction does not raise serious doubts as to its compatibility with internal market under any plausible market definition. (21)As to the geographic scope of this market, the Commission recently concluded that it is world-wide on the upstream side, i.e. the sourcing of booking inventory such as hotels by travel service providers, and at least national on the downstream side, i.e. the supply of services to travel agents, tour operators, etc. (22)The Parties consider that the geographic scope of the upstream and downstream markets for hotel intermediation is world-wide or at least EEA-wide. (23)In any event, and for the purpose of this decision, the Commission considers that the precise scope of the relevant product and geographic markets can be left open, as the Transaction does not raise serious doubts as to its compatibility with the internal market regardless of whether the market is considered to be worldwide or narrower. Intermediation of destination management services (24)The Commission has not previously assessed a market for the intermediation in DMS. (25)While considering the intermediation of DMS as a separate market, the Parties submit that its geographic scope is similar to that for intermediation in hotel accommodation, namely at least national if not regional or global.