European Commission Prohibits Proposed Acquisition of eTraveli by Booking

By decision of 25 September 2023, the European Commission (EU Commission) has prohibited the proposed acquisition of Flugo Group Holdings AB (eTraveli) by Booking Holdings (Booking) for EUR 1.63 billion. The decision follows an in-depth investigation based on the European Merger Regulation (EUMR), which the EU Commission had already opened in November 2022. In the USA and UK, on the other hand, the proposed transaction was cleared without conditions or obligations.

Booking and eTraveli are both leading providers of online travel agency services (OTA services). Booking is leading in the hotel accommodation sector, while eTraveli is primarily active in the online flight agency sector. Booking also provides metasearch services (MSS) for accommodation, car rentals and flights, mainly through its price comparison platform KAYAK.

The EU Commission found that Booking holds a dominantposition with a market share of over 60% in the market for online hotel booking in the EEA. The acquisition of eTraveli would therefore have allowed Booking to further strengthen its dominant position in the market for hotel portals. Among other things, this would have enabled Booking to expand the customer acquisition channel of online flight bookings, which is central to its core business, and to become the most important player in Europe also in this area. The acquisition would have subsequently enabled Booking to expand its digital travel services ecosystem. This, combined with customer inertia and network effects, would have made Booking’s dominant position in the market for hotel portals less contestable, with prognostically higher costs for hotels and consumers.

Booking offered the remedy to display a selectionscreen on the check-out page of the flight agency with offers from competing hotel portals. However, this measure was unable to address the EU Commission’s competition concerns.

The EU Commission’s decision is remarkable as it deals with the creation or strengthening of a digital ecosystem as central theoryofharm. It could indicate that the EU Commission may take a tougher stance on transactions in the digital sector. However, the decision could be objected to by the fact that smaller, independent hotels without booking platforms as multipliers are regularly unable to reach sufficient range and (potential) guests. Also, from a customer’s point of view, it does not seem unreasonable to favour providers that offer an entire range of tourism services integrated on one portal («One stop shop«). Booking has already announced that it will appeal against the decision of the EU Commission. It is therefore now up to the courts to assess the prohibition.

The press release of the EU Commission can be found under the link here.