It does reduce the number of companies offering holidays but all the same routes/holidays will be offered so I'm assumming your statement concerns costs (i.e. less competition therefore less competitive prices etc).
I belive this to be a great thing not only for the companies involved but also for the customers. RobT100 - you seem to have looked at it very simply as 'fewer companies therefore less competition therefore higher prices'.
If Thomsonfly (TUI) and FCA remained separate, the giant created by TCX and MYT may have been too much to compete against as individual companies eventually resulting in their downfall or just leaving the 'package holiday' market resulting in the TCX and MYT merger with a virtual monopoly ... at least with this second merger, a true competition exists between two similarly placed companies in the market place.