A bid by US giant Booking Holdings to take over Swedish OTA Etraveli Group for €1.63 billion has been blocked by Brussels on competition grounds.
Booking Holdings and Etraveli intend to appeal against the decision.
The European Commission said concerns were raised during an in-depth investigation that the transaction would strengthen Booking’s dominant position on the market for hotel OTAs in the European Economic Area (EEA), reduce competition and increase prices for hotels and consumers.
“The remedies offered by Booking did not adequately address the Commission’s competition concerns so that it could be concluded that competition would be preserved on a lasting basis,” it ruled.
“The Commission found that the remedies offered by Booking were not sufficient to address the competition concerns and to prevent the transaction’s detrimental effect on competition. As a result, the Commission has decided toblock the proposed transaction.”
Booking Holdings is mainly active in providing of hotel OTA services in Europe under the Booking.com brand and the limited provision of flight OTA services, which it sources from Etraveli. OTAs handle transactions worth more than €100 billion a year in the EEA.
The bid for Etraveli was announced in November 2021 in conjunction with private equity group CVC Capital Partners.
Booking operates OTA brands such as Booking.com, Rentalcars, Priceline and Agoda.
Commenting on the decision to block the deal, justice commissioner Didier Reynders said: “Europe is a world-leading tourism destination attracting millions of travellers every year. The travel industry plays a vital role for the local economy of many regions, cities, and rural areas.
“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.
“Our decision to block the merger means that European hotels and travellers will not be further limited in the options available to offer their services and book their trips.
“This also means that the drive for competitive prices and innovation will be preserved in this important part of the travel industry.”
Booking Holdings argued that the acquisition would have combined two complementary businesses operating within separate, highly competitive industries.
The deal would have delivered “tremendous benefits” for consumers and partners by bringing more options and competitive pricing.
Booking Holdings chief executive Glenn Fogel said: “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.
“We are proud of the progress we are making in providing a high quality flights product through our existing commercial partnership with Etraveli Group.
“Today we are pleased to announce an extension of that partnership through 2028, and as we go forward together, our focus will continue to be on advancing the creation of a better, more flexible consumer travel experience that provides more value to customers and partners.”
Etraveli chief executive Mathias Hedlund voiced his disappointment, saying: “It is only natural that we will support an appeal of what we believe is a wrongful decision from the EC based on a novel interpretation of the European legal framework.
“However, such an appeal process will take years and during this time we will continue to bring our experience and flight-focused technology to bear in enhancing the flight-booking experience for customers all over the world in our very successful partnership with Booking.com.”
He added: “This decision means that Etraveli Group will continue to thrive as an independent and fast-growing company.
“In doing so, we will further develop our existing partnership with Booking.com through our long-term agreement, which was recently extended until the end of 2028.
“The Booking.com flight product, powered by Etraveli Group, has been rapidly gaining popularity and is already favoured by European consumers for its user-friendliness.
“This proposed merger was a natural step forward in promoting healthy competition, hence we’re very disappointed with the European Commission’s decision to block the Etraveli Group acquisition by Booking Holdings.
“For Etraveli Group to come together with Booking.com beyond the existing commercial partnership would have further benefited European consumers by reducing prices and enhancing competition in the flight sector while undoubtedly having negligible effects in the hotel OTA sector.”
Ryanair welcomed the Commission’s decision to block the acquisition of Etraveli.