Booking/eTraveli: EU Court Upholds 'Ecosystem' Merger Block
An EU court has for the first time upheld the European Commission's prohibition of a merger based on a pure "ecosystem" theory of harm, affirming the regulator's power to challenge acquisitions that entrench a dominant position.
The EU General Court upheld the European Commission’s 2023 decision to block Booking's acquisition of eTraveli, marking the first time a merger has been prohibited based on a pure “ecosystem” theory of harm. The Commission argued the deal would entrench Booking's dominant position in hotel online travel agencies (OTAs) by leveraging eTraveli's flight OTA business to create a hard-to-replicate travel ecosystem, a novel theory of "reverse leveraging."
This ruling is significant because it provides judicial backing for the Commission's expansive approach to merger control in digital markets, including theories introduced in its recent Draft Merger Guidelines. Although the court noted analytical errors in the Commission's assessment, it ultimately found them non-decisive, deferring to qualitative evidence of network effects and the unassailability of the resulting ecosystem. This lowers the evidentiary bar for the Commission in future cases. The decision can still be appealed. Meanwhile, firms planning acquisitions of complementary services face a heightened risk of regulatory challenge and must prepare robust evidence of pro-competitive efficiencies that directly benefit consumers in the affected market.