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The head of Booking Holdings has rounded on EU competition regulators for blocking the online travel group’s €1.6bn purchase of a smaller flights-only business, saying the move will hamper investment in Europe.
Glenn Fogel, who runs the US global group as well as its biggest subsidiary Amsterdam-based Booking.com, said that regulators should think twice before stopping deals that would make “the European tech ecosystem much less competitive than the United States or other parts of the world”.
The European Commission, the EU executive body, last month blocked Booking’s acquisition of Sweden’s Etraveli, which runs brands such as Gotogate and Mytrip and is owned by private equity giant CVC.
Regulators said they were concerned that Booking would be able to “expand its travel services ecosystem” and that “flights have the highest chance of leading to the cross-selling of accommodation”. Booking is appealing against the decision.
Fogel hit back in an interview with the Financial Times, arguing Brussels has sent the message that “if you are a big company you can’t improve your services by acquiring a smaller company”. He added that such a move “may put a dampening on the amount of investment into small companies in the European region”.
“If Booking cannot buy a tiny flights business that doesn’t have any kind of dominant position, what does it mean for other types of acquisitions?”
Tech companies have been trying to straddle regulatory regimes from around the world that are at times at odds with each other. The US, EU and UK competition authorities have scrutinised deals but have often reached different conclusions.
While the EU has blocked the Etraveli deal, the UK’s Competition and Markets Authority approved the takeover a year ago.
Meanwhile, Microsoft has faced months of wrangling from the UK’s CMA and the US Federal Trade Commission over its $75bn deal to buy Activision Blizzard while other regulators, including the EU, have cleared the transaction.
Fogel, who is a trained lawyer, rejected the EU’s arguments for blocking Booking’s proposed transaction, saying the bloc’s decision contrasts with the way European regulators have scrutinised other tech deals and increases uncertainty for businesses.
“We shouldn’t have individuals coming up with their own theories without having the benefit of our elected officials debating and changing those laws if they need to be changed,” he said of the EU regulators. “I don’t have a problem with arguing facts and laws so long as the laws are clear and well understood.”
Fogel warned against antitrust authorities trying to overcompensate for years of lax enforcement when they allowed large online platforms, such as Facebook, to buy rivals Instagram and WhatsApp in deals that were waived through relatively easily.
Regulators in the past have, with little scrutiny, cleared a number of digital mergers and acquisitions, such as Google buying YouTube. However, time has shown how much a large tech company’s purchase of a complementary business can significantly boost its market power.
Regulators should be aware of the consequences of their actions for dealmaking, Fogel said. “People should think about [ . . .] what are the second, third or fourth derivatives of these kinds of regulatory decisions.”
But EU regulators have said the tie-up would have allowed Booking “to benefit from existing customer inertia because a significant share of these additional consumers would have stayed on Booking’s platforms”, the commission said. “Therefore, the transaction would have made it more difficult for competitors to contest Booking’s position.”
Fogel dismissed regulators’ concerns that Booking’s acquisition of Etraveli would lead to higher prices for consumers and would hurt rivals.
“They are making a big mistake in terms of what will provide the best for the future,” he said. “It’s detrimental for society as a whole.”
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