European Commission blocks €1.6 billion Booking.com takeover of Etraveli
The European Commission blocked Booking.com’s attempted acquisition of Etraveli. The Commission announced on Monday that the 1.6 billion euro deal would have allowed Booking to become too dominant on the market. The company said it intends to appeal this decision.
The decision follows an investigation by the Commission into the transaction between Booking.com and Etraveli, two dominant providers of online travel agencies (‘OTA’).
Booking is headquartered in Amsterdam and is the leading hotel online travel agency with a market share of over 60 percent in the European Economic Area (EEA). Etraveli is headquartered in Sweden and is one of the main providers of flight online travel agency services in the EEA.
The Commission found that the takeover would have posed competition problems. “Booking’s acquisition of Etraveli would strengthen Booking’s dominant position in the online travel agencies market and likely lead to higher costs for hotels and, possibly, consumers,” Commissioner for Justice Didier Reynders said.
According to the Commission, the acquisition would have likely increased traffic to Booking's platform, enhancing its network effects and making market entry more challenging for competitors. The increased dominance of Booking could have increased its bargaining power with hotels, potentially leading to higher prices for consumers.
To address the Commission's competition concerns, Booking proposed to display a choice screen after flight ticket purchases, which would showcase hotel offers from competing hotel OTAs. Customers could then click on an offer and be redirected to the respective hotel OTA's website.
However, the Commission indicated the proposed remedies “were not sufficiently comprehensive and effective and did not eliminate entirely the identified competition concerns.” This was notably due to a lack of transparency in the algorithm.
This decision “means that European hotels and travellers will not be further limited in the options available to offer their services and book their trips,” Reynders said.” This also means that the drive for competitive prices and innovation will be preserved in this important part of the travel industry,” he added.
Booking announced on Monday in a press release its intention to appeal this decision. “The European Commission’s decision not only departs from settled law and precedent but it deprives consumers of travel options that they are entitled to have,” said Booking Holdings CEO Glenn Fogel. The company added that Booking and Etraveli already work closely together and will continue to do so despite the Commission's decision to block the deal.
