This is the first time a court has endorsed the EC’s use of an “ecosystem” theory of harm in merger control. The ruling will have significant implications for dominant firms pursuing acquisitions and confirms the EC’s approach in its draft revised merger assessment guidelines, the final version of which is due imminently.
Elements of the GC’s findings are remarkable. Booking has indicated that it may appeal the judgment to the European Court of Justice. Ultimately, the GC’s position may not be the final word but, for now, businesses must take note.
The prohibition
In September 2023, the EC blocked the acquisition of Etraveli by Booking, finding that the deal would harm competition by significantly strengthening and further entrenching Booking’s already dominant position and market power on the hotel OTA market in the European Economic Area (EEA).
In the EC’s view, acquiring a leading flight OTA would allow Booking to build an integrated travel ecosystem that rivals could not replicate, strengthening barriers to entry and expansion for competing hotel OTAs.
Booking offered remedies, but the EC concluded that these did not adequately address its concerns.
A landmark validation of “reverse leveraging”
Under the EC’s current guidelines on the assessment of non-horizontal mergers, a conglomerate merger (i.e., between businesses operating in distinct but related markets) could give rise to competition concerns if the merged entity has the ability and incentive to leverage a strong market position from one market to another.
The EC’s Booking decision was rather unusual as it effectively reversed that logic. According to the EC, post-transaction, Booking could have used its position on the flight OTA market—where it did not hold significant market power or dominance—to strengthen its existing dominance in the hotel OTA market.
The GC accepted this “reverse leveraging” theory of harm, holding that leveraging is a “generic term,” the competitive impact of which is “essentially the same, irrespective of the direction of the leveraging effect.” Restricting the EC to the traditional direction would, in the GC’s view, “be liable to undermine the effectiveness of merger control.”
The GC also held that the EC’s approach was compatible with the current guidelines. It noted that these guidelines reserve the right for the EC to rely on new theories of harm not expressly set out, and that the concept of foreclosure described is broad enough to encompass the approach taken by the EC.
Entrenching weak competition may create concerns
The GC was clear that creating or strengthening a dominant position is not in itself enough to block a deal. But it noted that, in this case, the EC identified specific circumstances that demonstrated that the strengthening of Booking’s dominant position was capable of significantly impeding effective competition on the hotel OTA market (and could therefore meet the legal test for prohibition).
The GC’s most striking finding is that a deal need not significantly reduce competitive pressure to be blocked—it is enough that a transaction consolidates and perpetuates an already weak competitive landscape.
According to the GC, where strong network effects and a wide gap between a dominant leader and rivals exist, even a “relatively small increase, in quantitative terms” in market share can have a “chilling effect” on competitive dynamics.
The GC was careful to tie this conclusion to the specific characteristics of the hotel OTA market: Booking’s position, significant network effects, and the fact that the acquisition targeted one of the few remaining customer acquisition channels that Booking does not dominate, namely flights. In this regard, the court noted that the transaction formed part of Booking’s “connected trip” strategy and that an increment in Booking’s market share would be achieved by gaining the flights channel as an “entry point” for attracting new hotel customers.
That said, the GC also found several errors in the EC’s economic analysis, including the actual market share increment, which the court said may have been as low as “a few tenths of a per cent.”
These errors were not sufficient to vitiate the EC’s decision: the GC found that, in the context of strong network effects, customer inertia, and the creation of an ecosystem that rivals could not match, even a de minimis market share increment could contribute to the entrenchment of Booking’s dominant position and justify prohibition. Although these errors did not undermine the decision in this case, they underline the need for the EC to support future ecosystem-based theories of harm with a robust and internally consistent economic analysis.
Digital markets and entrenchment in the frame
The judgment dovetails with the EC’s draft revised merger assessment guidelines, published in May 2026, which for the first time codify “entrenchment” as a standalone theory of harm.
The GC explicitly recognized that digital markets have “certain specific characteristics” that give rise to concerns “not sufficiently taken into account” when the current guidelines were adopted in 2008 and endorsed the view that creating an ecosystem “difficult for other OTAs to replicate” can entrench dominance.
This ruling is likely to give the EC significant tailwind as it moves to finalize the draft guidelines which are, in part, aimed at consolidating the EC’s decisional practice. The final revised guidelines are expected to be published imminently.
Key takeaways for dealmakers
Ecosystem deals are in focus
Dominant firms acquiring assets in adjacent (especially digital) markets now face a risk of prohibition on entrenchment grounds even where the target operates in a market where the acquirer is not dominant.
Novel theories of harm are now judicially endorsed
Reverse leveraging and consolidation of a low level of competition are validated tools in the EC’s arsenal. The EC’s draft revised merger assessment guidelines codify these theories. Critically, the guidelines are not limited to digital platforms and could apply to any market exhibiting similar characteristics to those at issue in Booking/Etraveli, including strong network effects, dominant incumbents and ecosystem dynamics. Businesses should already be taking this into account.
Even small increments can matter in concentrated markets
A transaction may attract intervention even where the expected market share increment is de minimis, if it strengthens the mechanisms sustaining an existing dominant position, such as network effects, customer inertia, or access to an important customer acquisition channel.
Front-loading efficiencies claims is key
All efficiency arguments raised by the parties were rejected—some because they were not properly raised during the EC’s review, others because benefits on one market could not offset harm on another. The draft guidelines also set a high bar for efficiency claims but indicate that the EC will be willing to consider them from the outset of a review as part of the overall assessment of a deal. Businesses should consider and document theories of benefits (efficiencies) early in the deal process, not as an afterthought.
