Mergers: Commission opens in-depth investigation into the proposed acquisition of eTraveli by Booking

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This article is brought to you in association with the European Commission.

The European Commission has opened an in-depth investigation to assess, under the EU Merger Regulation, the proposed acquisition by Booking Holdings (‘Booking’) of Flugo Group Holdings AB, that operates under the trading name ‘eTraveli’. The Commission is concerned that the proposed acquisition would allow Booking to strengthen its position on the market for accommodation online travel agencies (OTAs).

Booking and eTraveli are both active in the provision of OTA services, respectively focusing on accommodation OTA and flight OTA services. Booking is also active in the market of metasearch services (MSS) mainly through its price comparison platform KAYAK.

The Commission’s preliminary competition concerns

The Commission’s preliminary investigation indicates that Booking may have a dominant position on the market for the provision of accommodation OTA services and that the transaction may significantly reduce competition in this market by combining eTraveli’s activities in flight OTA services with Booking’s own suite of services.

At this stage, the Commission is concerned that the transaction may lead to an increase in barriers to entry and expansion for rival OTAs. In particular, the transaction may limit competitors’ ability to acquire new customers. It may also reinforce network effects by strengthening barriers to entry. This, in turn, could reduce competition in the market for the provision of OTA services and lead to higher costs for hotels and other accommodation providers as well as higher prices for end customers.

Moreover, the preliminary investigation suggests that Booking may have the ability, as well as a potential economic incentive, to engage in foreclosure strategies vis-à-vis Booking’s rival flight OTAs, such as degrading their visibility on its price comparison platform KAYAK and preventing these companies from attracting customers to their services. Such foreclosure strategy could reduce competition in the markets for accommodation OTA services as the sale of flight OTA services may be an important channel to acquire customers.

The Commission will now carry out an in-depth investigation into the effects of the transaction to determine whether its initial competition concerns are confirmed.

The proposed transaction was notified to the Commission on 10 October 2022. Booking decided not to submit commitments during the initial investigation to address the Commission’s preliminary concerns. The Commission now has 90 working days, until 31 March 2023, to take a decision. The opening of an in-depth inquiry does not prejudge the outcome of the investigation.

Companies and products

Booking Holdings (‘Booking’) is a publicly listed company incorporated in the US. Booking operates OTA brands such as, Rentalcars, Priceline and Agoda. In the European Economic Area, Booking is mainly active in the provision of accommodation OTA services under the brand. Booking is also active to a limited extent in the provision of flight OTA services which it sources from eTraveli. Moreover, Booking is active in the provision of MSS for accommodation, car rental and flights via its KAYAK business (which includes the brands KAYAK, Momondo, Cheapflights, HotelsCombined, among others). Moreover, Booking provides access to its OTA accommodation functionalities, via commercial affiliated programmes, to certain rival OTAs that do not have the capability to offer such services.

eTraveli is a Sweden-based company that operates an OTA via its brands Gotogate, My Trip, Seat24 and SuperSaver. eTraveli is primarily active as a flight OTA. eTraveli has a flight MSS business operated under the Flygresor brand, which is primarily active in Sweden, which will be retained by the sellers and therefore falls outside the scope of the transaction.

Merger control and procedure

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).

In addition to the current transaction, there are currently five on-going Phase II merger investigations: (i) the proposed acquisition of Pfleiderer Polska by Kronospan; (ii) the proposed acquisition of OMV Slovenija by MOL; (iii) the proposed acquisition of VOO and Brutélé by Orange; (iv) the proposed acquisition of Alumetal by Hydro; and (v) the proposed acquisition of Activision Blizzard by Microsoft.

More information will be available on the Commission’s competition website, in the Commission’s public case register under the case number M.10615.

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