European watchdogs have given green signal for the Office of Fair Trading to appraise Thomas Cook's planned agreement to combine its travel retail trade with the Co-operative Group.

The travel operator had declared in October that the mutual group will consist of 1,200 retail shops, with Thomas Cook possessing 2/3 of the body, the Co- operative 30 % and the rest is going to Midlands Co-operative.

The contract between the 2nd and 3rd major high street operators along with the partners' overseas exchange and sail business, with synergies of £35m ($54m) per year probably, plus £10m in main Thomas Cook function.

However the OFT during December expressed the planned merger endangered competition. Tui Travel is Thomas Cook's chief competitor owning around 900 shops. At the same time the combined unit would have 34 % of the total retail market.

The Office of Fair Trading has inquired the European Commission for consent to inspect the union more on the basis that the unification affected only UK Companies. The matter is whether the controller considers the huge tour market, which comprises of the online airline reservation and direct sales.