EU Court Upholds Merger Block on 'Entrenchment' Theory
The General Court affirmed the EU Commission's prohibition of Booking's acquisition of Etraveli, finding that a merger can be blocked for entrenching a dominant position even if it adds only a minuscule market share.
The EU’s General Court has upheld the European Commission’s prohibition of Booking Holdings’ acquisition of flight OTA Etraveli. This landmark judgment is the first time an EU court has fully endorsed a "reverse leveraging" or "entrenchment" theory of harm, signaling a significant development for merger control involving dominant digital platforms. The court affirmed the block despite finding the transaction would increase Booking's dominant hotel OTA market share by only "a few tenths of a per cent" and acknowledging material errors in the Commission's quantitative analysis. Sophisticated counsel should note the court's reliance on qualitative factors, such as the deal giving Booking control over a key customer-acquisition channel and making its ecosystem "stickier," thereby consolidating its dominance and making the market harder for rivals to contest. Dominant platforms must now carefully scrutinize any acquisition, regardless of size, for its potential to entrench a core market position. An appeal to the Court of Justice on points of law is possible.