Ecosystem Theories of Harm in Merger Enforcement: Current Direction and Open Questions

Journal of European Competition Law & Practice, 2024

In September 2023, the European Commission (EC) blocked Booking Holding’s acquisition of the Swedish travel agency firm eTraveli, a decision which is believed to be the first merger prohibition on the grounds of an ‘ecosystem theory of harm’ in the digital space. Drawing on the Booking/eTraveli decision, Analysis Group Vice President Devin Reilly and Manager Olga Kozlova Guglielmi have coauthored an article that explores the ways in which European regulators are articulating their thinking on digital ecosystems in merger control.

Digital ecosystems – i.e., large platforms (such as Booking.com) that provide multiple products and services (such as travel services) that may exhibit supply- and demand-side linkages among them – can create benefits for users. However, regulators may have concerns that a platform may generate a competitive advantage solely through the joint supply of products. Regulators, including in this decision, appear to be assessing how a merger might lead to market entrenchment or the creation of barriers to entry under novel ecosystem theories.

In their article, the authors trace the evolution of the concept of digital ecosystems in antitrust policy discourse, including a review of related regulator theories of potential competitive harm. They also discuss the role of such theories in merger reviews, with a particular focus on the EC’s Booking/eTraveli decision. The authors conclude with the potential risks of overenforcement in the presence of unresolved questions surrounding the evolving ecosystem framework.

The article, “Ecosystem Theories of Harm in Merger Enforcement: Current Direction and Open Questions,” was published in the Journal of European Competition Law & Practice.

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Authors

Garces E, Kozlova Guglielmi O, Reilly D