A proposed buyout of Etraveli by Booking Holdings, parent company of Booking.com, has just suffered a serious setback in Brussels.
On 9 September, the General Court of the European Union upheld the European Commission's decision to block this €1.63 billion transaction, considering that it could have strengthened Booking Holdings' dominant position in the online hotel booking market by incorporating an aviation component.
The acquisition was intended to allow Booking.com to further integrate flight booking into its ecosystem. While the Swedish company Etraveli is scarcely known to the general public, many travellers on the other hand use the platforms Gotogate and MyTrip to book flights. The company also provides airline content distribution technologies with TripStack.
For the European competition authorities, the issue nevertheless went far beyond the scope of the airline market. Their concern was Booking.com's ability to use Etraveli's flights business to consolidate its power in the hotel industry.
The court effectively validated this analysis. It considers in particular that Booking Holdings could have attracted new customers through flight bookings, and then directed them towards its hotel offers. This mechanism would have reinforced the operator's dominance and created new commercial barriers to the entry and expansion of competing hotel booking platforms.
The European court also upheld the principle of «reverse leveraging». In this scenario, Booking would not have used its dominant position in the hotel sector to enter the flights market, but rather would have acquired a flights business in order to strengthen its initial position in the hotel sector.
In its defence, Booking Holdings had argued that the acquisition offered numerous benefits for travellers by providing a more integrated travel offering, encouraging the simultaneous booking of flights and hotels on a single platform. The argument clearly failed to strike a chord with the judges.
Booking Holdings stated that it was «incredibly disappointed» by this decision, and claims that the European analysis is flawed both in substance and in law. The company is now considering appealing to the court above the General Court of the European Union—specifically the Court of Justice of the European Union, which has jurisdiction to hear potential appeals on points of law. The saga is therefore not over yet…
