If the European Commission's decision isn't overturned, one implication may be that Booking.com would be precluded in practice from making major acquisitions. Period.
The European Commission is set to block Booking Holdings’ $1.8 billion deal to acquire Sweden’s eTraveli Group, a critically important transaction that’s been in limbo for nearly two years.
The official decision may not come down until the end of the month. Booking Holdings will likely appeal it, according to a source close to the situation, and Booking.com would then announce an extension of its existing partnership with eTraveli Group through 2028.
The Financial Times first reported the news Friday morning and called it a “rare” decision by the European Commission, “which clears most deals.”
Booking is mostly interested in eTraveli’s flight technology to build Amsterdam-based Booking.com’s fledgling flights business. eTraveli Group, which is owned by private equity firm CVC, has a number of consumer brands, including FlightNetwork, GoToGate, MyTrip, and SuperSaver.
“Given the strategic importance of flights to our connected trip offering, we believe it is critical to bring Etraveli’s flight expertise and technology in-house while also unlocking some of the limitations that exist in our current commercial agreement,” Booking Holdings CEO Glenn Fogel said last year before the regulatory headwinds were apparent.
It’s ironic then that the European Commissions concern about the acquisition seem to mostly revolve around competition in online hotel sales, where Booking.com is already the leader and poised for designation as a European “gatekeeper” by the end of this year. It is too soon to say what the financial implications of the gatekeeper label would be for Booking and another member of that club, Google.
In the commission’s view, the eTraveli deal would make Booking.com even stronger in hotel sales because an increasing number of flyers would be offered hotel deals when they buy airline tickets. Booking.com has offered concessions, such as using its Kayak brand to show Booking.com customers hotel deals from competitors.
But that has apparently been unconvincing to the European Commission.
The decision isn’t surprising; there have been a series of signals leading up to this since last October, when regulators opted to take a harder look at the deal.
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Photo credit: The Radisson Blu Scandinavia in Gothenburg, Sweden. Source: Wikimedia Commons https://commons.wikimedia.org/wiki/File:Hotel_in_Gothenburg_(Radisson_BLU).jpg Wikimedia Commons