Antitrust

On September 9, 2026, the General Court delivered a landmark ruling in Booking Holdings v Commission (Case T-1139/23), rejecting Booking’s challenge to the European Commission’s (“EC”) 2023 decision to prohibit its acquisition of eTraveli.

The Court ruled that the EC had correctly blocked the deal on the basis of its so-called ‘ecosystem’ or ‘entrenchment’ theory of harm, centred on concerns that the acquisition would have allowed Booking to strengthen a dominant position on the market for hotel online travel agencies (“OTAs”) by acquiring an important customer acquisition channel. 

In this blog post, we assess the key takeaways from the judgment, which comes ahead of the EC’s formal adoption of new Merger Guidelines and – subject to any appeal – offers significant support for its efforts to expand its merger assessment toolkit beyond traditional theories of harm.  In particular, the judgment sets a low threshold for intervention by the EC in any merger involving an undertaking holding a dominant position which may be “consolidated and perpetuated” by the acquisition. 

Background

On November 23, 2021, Booking announced it had agreed to acquire the global flight booking provider eTraveli from CVC Capital Partners for approximately €1.63 billion.  The transaction was notified to the EC in October 2022, and following an in-depth investigation, the EC issued a Statement of Objections in June 2023.  The EC prohibited the transaction on September 25, 2023, having rejected remedies put forward by Booking.

Other regulators took a different view: the CMA cleared the deal unconditionally at Phase 1 in September 2022, having considered similar ecosystem concerns to those raised by the EC, and the FTC also cleared it around the same time.

The EC’s decision

The EC found that Booking held a dominant position in the market for hotel (or accommodation) OTA services in the EEA, with a share close to 70%, and that the market was characterized by high barriers to entry.

eTraveli was the second-largest provider of flight OTA services in the EEA.  Flight OTA services are the second-largest OTA market after accommodation and provide a customer acquisition channel for Booking’s core business.  The EC concluded that acquiring that channel would funnel traffic into Booking’s platforms, reinforce network effects, raise barriers to entry and expansion for rival hotel OTAs, and so strengthen Booking’s dominance on the hotel OTA market.

The EC’s decision represented the first time it had blocked a deal purely on the basis of so-called ‘ecosystem’ concerns and became an important test case for the EC’s approach to digital mergers.  

Booking’s appeal

Booking immediately signaled its intention to appeal the EC’s decision and lodged its challenge with the General Court in December 2023, with a two-day hearing subsequently taking place in July 2026.  Booking brought forward several grounds of appeal attacking both the legal basis for the EC’s decision and its substantive assessment of the evidence.  Key issues included:

• The EC’s application of the Non-Horizontal Merger Guidelines (the “NHMG“) in assessing the merger.  In particular, Booking argued the EC had unjustifiably departed from the framework laid down in the NHMG, which focuses on assessing whether the merged entity would have the ability and incentive to foreclose rivals (typically through tying, bundling or withholding an input).
• The legal standard applied by the EC in determining that the merger would give rise to a significant impediment to effective competition (“SIEC”) in the context of an ecosystem theory of harm, in circumstances where the alleged increment to Booking’s position in accommodation OTA services was limited.   
• The EC’s assessment of Booking’s claims that the merger would have resulted in pro-competitive advantages for flight OTA and hotel OTA customers. 

The General Court’s judgment

On September 9, 2026, the General Court dismissed Booking’s appeal, upholding the EC’s prohibition of the transaction (the “Judgment”).

Application of the Non-Horizontal Merger Guidelines

The Court rejected Booking’s argument that the EC had departed from the NHMG.  In particular, the Court dismissed the notion that in assessing a conglomerate merger the EC was bound to follow the ability and incentive to foreclose framework set out in the NHMG.  Rather, it was open to the EC to exercise its discretion in assessing the factors set out in the guidance, and to conduct an “overall assessment of the foreseeable impact of the merger”. 

The Court specifically noted that digital markets have specific characteristics and may therefore give rise to competition concerns that had not been sufficiently taken into account when the NHMG were adopted in 2008.  In this context, it was permissible for the EC to base its theory of harm on a ‘reverse leveraging’ concern (i.e. whereby the merged entity would use its position on a market in which it does not have market power (the flight OTA market) to strengthen its allegedly dominant position on the hotel OTA market) despite this not being explicitly contemplated in the NHMG. 

The legal standard applied by the EC in determining an SIEC

Booking argued the EC had applied an incorrect legal standard in concluding that the merger would give rise to an SIEC.  The EC’s position was, in essence, that irrespective of the precise increment in Booking’s share of the hotel OTA market, an SIEC would arise by virtue of even a marginal strengthening (or ‘entrenchment’) of its existing dominant position on that market.  

Notably, in this context the General Court accepted several of Booking’s criticisms of the EC’s evidential assessment.  In particular, it found that the EC’s calculation of the potential increment in Booking’s share in hotel OTA services was vitiated by errors.  As opposed to an increment of 3-4% reportedly found in the EC’s decision, the Court concluded the increment “would be limited to a few tenths of a per cent”.

Nevertheless, the Court found that the evidence was sufficient to establish an SIEC, stating that:

• Even in the absence of clear quantitative evidence of anti-competitive effects, the EC may rely on a body of qualitative evidence. 
• The EC is not required to establish that a merger would necessarily reduce an already low level of competition existing on a relevant market.  Rather, it may be sufficient to show that the merger would sustain that low level of competition, enabling it to become “consolidated and perpetuated” (or ‘entrenched’). 
• In a market characterized by strong network effects and a significant gap between the dominant leader and its main competitors, even a relatively small increase in the market share of the dominant undertaking could be capable of strengthening the existing network effects and thereby prevent competitors from expanding.
• By acquiring an important customer acquisition channel, Booking would have created a travel ‘ecosystem’ which would be difficult for rivals to replicate, having a negative impact on dynamic competition. 

As such, despite the EC’s errors in evaluating certain evidence, the Court concluded that an overall assessment of the evidence supported the EC’s SIEC finding.  Taking into account the pre-existing commercial agreement between Booking and eTraveli did not change this assessment.

Efficiency claims

The General Court rejected Booking’s claims that the merger would have given rise to pro-competitive advantages for customers.  As regards alleged benefits for hotel OTA customers and hotels themselves, the Court found that Booking’s arguments were inadmissible as they were not properly raised or substantiated during the EC’s administrative proceedings.  The Court therefore declined to engage with evidence put forward by Booking which post-dated the EC’s decision.  

In relation to claimed efficiency gains in the flight OTA market, the Court found that Booking had failed to establish that it would pass on claimed cost savings to customers.  In any event, it sided with the EC that harm to hotels and to hotel customers could not be offset by benefits to flight customers, given the limited commonality of hotel OTA and flight OTA end-users.  In this regard, the Court expressly cited paragraph 79 of the Horizontal Merger Guidelines, which provides that claimed efficiencies must benefit consumers in the market where the competition concern arises.

Key takeaways

The Judgment landed two years to the day since the Draghi report called on Europe to scale up, and midway through the EC’s rewrite of the Merger Guidelines.  Three takeaways stand out:

(1) A judicial seal of approval for the draft Merger Guidelines

As we discussed in our previous post, “Scale on up!”, the draft Merger Guidelines propose to codify entrenchment as a standalone theory of harm (paragraphs 252 onwards), building on the Commission’s decision in Booking.com/eTraveli.  This was likely in an effort by the EC to protect the theory of harm in case the General Court ruled against it.  

It needn’t have worried.  The Judgment validates the draft Merger Guidelines’ proposal wholesale:  entrenchment as an SIEC even for purely complementary deals where a party holds significant market power (paragraph 17); network effects, customer inertia and ecosystems as barriers to entry that “smaller rivals cannot replicate” (paragraphs 76(c) and 79(b)-(c)); and market power inferred from the gap between the leader and its rivals (paragraph 61).  Consultation arguments that entrenchment exceeds the SIEC test are now, subject to any appeal to the Court of Justice, dead on arrival.   

The fight over the final text of the Merger Guidelines is now likely to shift to a discussion over limiting principles.  The market features that the Judgment focuses on – powerful network effects, wide gaps between market leaders and rivals, and scarce acquisition channels – should be framed in the final Merger Guidelines as cumulative preconditions to an entrenchment theory of harm, not mere illustrations.

Moreover, now that the legal principles have been confirmed, the focus for deals raising similar issues is likely to shift to key factual questions that will need to be assessed in each case.  For example, when will complementary products or services be considered an ‘ecosystem’? When will network effects be sufficiently strong to support an entrenchment theory of harm? When will a customer acquisition channel be considered “important”? In what circumstances (if any) will a lack of quantitative evidence demonstrating competitive harm be significant enough for a successful defence?

We are likely to see significant debate on these points going forward, and the answers could change the scope of the theory of harm for future cases.  The practical implication for merging parties is to build the record early.  Evidence on the substitutability of the channel being acquired, on the true strength of network effects, and on the boundaries of the alleged ecosystem needs to be evaluated early and presented to the EC during the administrative phase.

(2) A new species of dynamic SIEC: “consolidation and perpetuation”

Controversially, the Judgment states that the EC need not show that a merger makes competition worse.  It suffices that the deal would lead to “the low level of competition on that market becoming consolidated and perpetuated” (paragraph 468).

Strikingly, the Court accepted that the transaction may have added only a few tenths of a percentage point to Booking’s hotel OTA share, and identified genuine flaws in the EC’s quantitative analysis – yet upheld the prohibition on the strength of the qualitative case. 

Meanwhile, “competition on the merits” was ruled out as a merger control defense.  For any acquirer with a strong market position – especially in markets with strong network effects – the bar to prohibition is now markedly lower: even the smallest bolt-on can be blocked, and market share arithmetic alone will not save it.  Notably, the legal principles set out in the Judgment are not limited to ‘ecosystem’ cases and it remains to be seen whether the EC will seek to apply the entrenchment theory in other market contexts. 

(3) The increasing gulf between doctrine and rhetoric

The draft Guidelines promise that scale and consolidation “can be viewed positively” (paragraph 7), that scale, innovation, investment and resilience deserve “adequate weight” as pro-competitive factors (paragraph 10), and that parties may now plead a formal “theory of benefit” (paragraph 25).  But the draft also concedes that the more dominant the merged entity, the less likely it is that efficiencies can outweigh harm (paragraph 35).  The Judgment shows just how this may work in practice, as well as underlining the importance of bringing efficiency claims forward early in the EC’s administrative process (another point emphasized in the draft Guidelines). 

The Judgment means that any European company with a strong market position seeking to consolidate – precisely those firms that the Draghi report sought to promote and the draft Merger Guidelines credit with being able to strengthen the internal market – now faces a theory under which merely sustaining a market position can be a harm.   This significantly widens the gulf between the EC’s rhetoric and the doctrine merging parties face, and raises important questions as to Europe’s attractiveness as a place to build scale, the very objective of the Draghi report.  It remains to be seen whether the gulf can be effectively bridged in the final Merger Guidelines or in practice.