Why The Booking And Etraveli Ruling Matters For Digital Acquisitions

A digital acquisition can face serious competition concerns even where the buyer and target are not close rivals. A target may give an already powerful platform another way to reach customers and make it harder for competitors to challenge its position.

Plans for cross-selling, customer retention, data use and access to distribution can be central to the commercial case and relevant to competition review.

Why a flight business mattered to hotel bookings

Etraveli’s flight-booking business offered a route to customers who might also book hotels. The concern was that the acquisition would strengthen Booking’s existing dominance in hotel online travel agencies.

The Court accepted that the Commission could examine this form of “reverse leveraging”. Put simply, strength in an adjacent business could reinforce dominance elsewhere. The 2008 guidelines on non-horizontal mergers did not prevent the Commission from addressing newer forms of digital-market harm. [1]

The Court did identify errors in parts of the Commission’s calculations. It nevertheless accepted the overall conclusion about the deal’s effect on competition, including network effects and access to customers. Strengthening dominance alone was not an automatic reason to block the deal; the significant effect on competition still needed to be established. The claimed efficiencies were insufficient to offset the expected harm. ¹

Look at how the combined business would win customers

For deal teams, the practical lesson is to examine the commercial reason for the acquisition early. Does the target offer a new source of customers? Would combining the services make it much harder for rivals to offer an alternative? Would the transaction strengthen an advantage that is already difficult to challenge?

These questions are particularly relevant where a platform benefits as more users join it. A service can become more attractive because it has more customers, suppliers or both. The competitive effect may not be captured by simply adding together the parties’ current market shares.

That does not mean an acquisition of a complementary service is unlawful. It means the analysis should explain the market conditions and evidence, rather than relying on the absence of a large overlap.

Test the deal case before signing

The investment paper should help the legal team understand why the target is valuable. Plans for cross-selling, customer retention, data use and access to distribution can be central to the commercial case and relevant to competition review.

Those plans should be described accurately and consistently. The answer is not to remove difficult language from internal documents. It is to test the underlying assumptions and understand how they may be assessed.

Benefits to customers also need support. A claim that the combined service will be more convenient should be developed into a clear explanation of the benefit, who receives it and why the transaction is needed to deliver it.

Reflect the risk in the acquisition agreement

Where competition approval could affect the outcome, the parties should agree who will lead the process, how they will cooperate and what remedies the buyer must consider. The long-stop date—the final date for completing the deal—should reflect a realistic review timetable.

Cyprus acquisition or holding companies do not remove a transaction from EU merger analysis. The relevant businesses, jurisdictional rules and market effects still need to be assessed. For international groups and private-equity buyers, early coordination between the corporate and competition teams can prevent an approval issue from becoming a late commercial surprise.

Footnote

1. General Court official summary of Booking Holdings v Commission.