Booking.com wanted to become a one-stop shop for a traveler’s entire journey. European regulators saw a different itinerary: a one-way trip to deeper dominance.
In a closely watched Sept. 9 judgment, the European Union’s General Court upheld the European Commission’s 2023 decision blocking Booking’s acquisition of Etraveli. The court agreed that adding Etraveli’s flight-booking business to Booking’s dominant hotel-booking platform would strengthen network effects and create a “connected trip” ecosystem that rivals would struggle to replicate. It reached that conclusion despite finding errors in some of the Commission’s market-share calculations.
At the heart of the case lies the business ecosystem—a cluster of interconnected products and services built around a common platform. Once largely a matter of competition-policy theory, ecosystems have now moved squarely into EU merger law.
The ruling matters well beyond online travel. Policymakers have invoked ecosystems to justify new theories of harm, changes to existing competition-law provisions, and entirely new regulatory regimes. Booking/ETraveli—widely regarded as the first merger prohibition based on an ecosystem theory of harm—now gives that campaign judicial backing.
A One-Way Ticket to Dominance?
The Commission’s 2023 decision treated Booking’s services as parts of a multiproduct ecosystem spanning the travel experience. It feared that acquiring Etraveli’s flight business would strengthen Booking’s dominant position in hotel online travel agency (OTA) services, its core market.
The deal formed part of Booking’s “connected trip” strategy: building a single platform where customers could book hotels, flights, taxis, rental cars, and tickets to attractions. Flights played a crucial role in this strategy because they often mark the beginning of a customer’s travel planning.
Adding flights would move Booking closer to becoming a one-stop shop. The Commission argued that Booking could use its powerful brand and customer inertia—the tendency to stick with a familiar service—to sell more hotel rooms. That growth would reinforce Booking’s network effects, through which a platform becomes more attractive as it gains users and suppliers.
Rival hotel OTAs, meanwhile, would lose one of the few remaining ways to attract new customers and steer them toward hotel bookings. That, the Commission contended, would raise barriers to entry and expansion.
The Commission therefore relied on a theory of “reverse leveraging.” Traditional leveraging occurs when a dominant company uses its power in one market to gain ground in another. Here, the Commission argued that Booking would use a nondominant but complementary flight business to reinforce its existing dominance in hotel bookings. The deal would thereby strengthen Booking’s ecosystem, further entrench its position, and make its core market harder to challenge.
It should be noted that the UK Competition and Markets Authority reached the opposite conclusion. It cleared the acquisition after finding that Etraveli was not a particularly important channel for accommodation OTAs to attract or retain customers.
Booking the Next Theory of Harm
The Commission has carried the reasoning in Booking/Etraveli into its recently released draft Merger Guidelines. Drawing explicitly on the case, Section 7 recognizes the entrenchment of a dominant position as a standalone theory of harm. The Guidelines further identify ecosystems and portfolio effects as potential sources of barriers to entry and expansion (para. 79).
Under this theory, harm may arise when a dominant firm acquires assets that reinforce barriers in its core market or closely connected markets (para. 252). Ecosystems of complementary products or services receive particular attention because they can give merging firms structural and technological advantages, including lower costs from operating at greater scale or sharing resources across products.
The Commission will assess whether an ecosystem strengthens the merged firm’s power in its core market, including how important participation in that ecosystem is to competing effectively (para. 253). It may also consider whether the acquired assets are unique, scarce, or otherwise strategically important for competition.
Finally, the Commission may examine whether the acquiring firm could bundle or tie those assets to its existing offerings, thereby creating or expanding an ecosystem. Such combinations could amplify network effects and further entrench the firm’s dominant position (para. 256).
The Ecosystem Theory Survives Check-In
By dismissing Booking’s appeal, the General Court handed the Commission a significant victory—although perhaps a temporary one if Booking appeals. The judgment upheld the Commission’s finding that the acquisition would significantly impede effective competition in hotel OTA services, the EU’s legal standard for blocking a merger.
The court endorsed the ecosystem analysis at the heart of the Commission’s case. It accepted the importance of network effects (paras. 397–399 and 470), the central role of flight services in Booking’s ecosystem strategy (paras. 268, 460, and 471), and Etraveli’s distinctive advantages over competing flight OTAs (see, e.g., paras. 293–295 and 472).
In the court’s view, flight services would help Booking build an integrated travel ecosystem that rivals would struggle to replicate. The transaction would combine Booking’s leadership in hotel OTA services with Etraveli’s leading position in flight OTA services (paras. 439–440 and 471).
The court also accepted the Commission’s theory of reverse leveraging. Leveraging usually means using market power in one area to gain or strengthen a position in another, a concern traditionally associated with mergers between firms selling complementary products (para. 74). Here, the direction ran backward: Booking would use Etraveli’s position in flight services to reinforce its existing dominance in hotel services.
Citing Google Shopping, the court emphasized that leveraging is a broad concept whose competitive impact may be the same “irrespective of the direction of the leveraging effect” (para. 88). It also held that the Guidelines on non-horizontal mergers do not prevent the Commission from pursuing novel theories of harm, particularly in digital markets that may present concerns not fully anticipated when the Guidelines were adopted (para. 77). The Commission was therefore free to develop and rely on a reverse-leveraging theory (para. 90).
Finally, the court rejected Booking’s reliance on “competition on the merits,” a concept developed under EU rules governing anticompetitive agreements and abuses of dominance. That concept, whose boundaries remain unsettled even in those areas, does not play the same role in merger control. A merger is not itself a form of competition on the merits. What matters is how the transaction would alter the structure of competition (paras. 106–107).
A Theory With Baggage
Unless the European Court of Justice reverses General Court’s judgment on appeal, the decision’s implications will reach far beyond this transaction.
The ecosystem theory endorsed in Booking/eTraveli closely resembles the Commission’s established portfolio-effects theory, developed in its 1997 Guinness/Grand Metropolitan decision and applied more recently in Mars/Kellanova. That theory already forms part of the traditional analysis of conglomerate mergers.
The draft Merger Guidelines describe much the same one-stop-shopping mechanism. A merger may significantly impede effective competition when it combines products from different markets into a portfolio sold to the same customers. That may be true even when the products are neither substitutes nor complements and the merger would not foreclose rivals’ access to customers or supplies (para. 287). The Guidelines likewise identify ecosystems and product or service portfolios as potential barriers to entry or expansion that can shape future competition (para. 40, fn. 74, and para. 79).
Seen in that light, Booking/eTraveli does not invent an ecosystem theory from scratch. It adapts the familiar portfolio-effects framework to digital markets.
The more novel development is the broad latitude the judgment gives the Commission to devise new theories of harm in response to digital markets’ supposedly distinctive features. That flexibility could become troubling if it produces a “killing ecosystems” approach—an enforcement bias against firms that create, expand, or strengthen integrated offerings.
There are legitimate reasons to ask whether the Commission gave enough weight to the acquisition’s potential benefits, even though the court attributed its failure to consider some of them to procedural shortcomings (paras. 482–489). As the draft Guidelines themselves emphasize, merger control does not protect competitors from efficient competition. A transaction does not become anticompetitive merely because its efficiencies leave rivals worse off (para. 21, fn. 38).
A “killing ecosystems” approach would also misunderstand how digital competition is evolving. Firms increasingly compete within and among ecosystems, while recent scholarship and antitrust authorities recognize that artificial intelligence is accelerating the shift from standalone products toward integrated services. Treating ecosystem building itself as suspect would risk confusing integration with foreclosure—and harm to rivals with harm to competition.
Merger control should police anticompetitive moats. It should not punish firms for building a better destination.
