Australia's consumer watchdog fears Expedia's planned takeover of Wotif.com could hurt competition in the online travel market and result in higher fees.
The Australian Competition and Consumer Commission says the $700 million takeover could see hotels and accommodation providers charged higher fees for listing with online booking sites.
Chairman Rod Sims said the takeover would remove one of the three largest online booking groups from the market place, allowing Expedia and fellow US travel giant Priceline Group, which owns Booking.com and Agoda, to lift their fees.
"Commission rates charged by Expedia and Booking.com in Australia are lower than the rates charged by those companies in other parts of the world. The presence of Wotif may be a contributing factor to this difference," he said.
"Market participants have expressed concern that the removal of Wotif as an independent competitor will allow Expedia to increase its commission rate."
The ACCC said it did not believe the presence of bricks and mortar travel agents would be sufficient to constrain the online players and high advertising costs provided a barrier to others entering the internet-booking market.
It said a key factor in its decision on whether to block the takeover would be the potential for new business models to emerge within the industry and keep the market competitive.
The ACCC has called for further submissions from players in the travel industry and expects to make a final decision by October 2.
In a statement, Wotif said it would work with the ACCC to resolve any issues raised by its inquiries.
The company's board has recommended shareholders accept Expedia's $3.30-a-share takeover offer, with co-founders Graeme Wood and Andrew Bice agreeing to sell their holdings.
