CELEX: 32018M9005
Language: en
Date: 2018-10-23 00:00:00
Title: Commission Decision of 23/10/2018 declaring a concentration to be compatible with the common market (Case No COMP/M.9005 - Booking Holdings Inc. / HotelsCombined Pty Ltd) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                               Brussels, 23.10.2018
                                                               C(2018) 7144 final
In the published version of this decision, some
information has been omitted pursuant to Article                       PUBLIC VERSION
17(2) of Council Regulation (EC) No 139/2004
concerning non-disclosure of business secrets and
other confidential information. The omissions are
shown thus […]. Where possible the information                 To the notifying party:
omitted has been replaced by ranges of figures or a
general description.
Subject:            Case M.9005 - BOOKING HOLDINGS / HOTELSCOMBINED
                    Commission decision pursuant to Article 6(1)(b) of Council
                    Regulation No 139/20041 and Article 57 of the Agreement on the
                    European Economic Area2
Dear Sir or Madam,
(1)       On 13.07.2018 the European Commission received, by means of a reasoned
          submission, a referral request pursuant to Article 4(5) of the EU Merger
          Regulation ("EUMR") with respect to the acquisition ("the proposed
          Transaction") by Booking Holdings Inc. USA., (“Booking Holdings”) of sole
          control over HotelsCombined Pty Ltd, Australia (“HotelsCombined”) (together
          with Booking Holdings, the “Parties”).
(2)       The proposed Transaction did not have an EU dimension within the meaning of
          Article 1(2) of the EUMR, because HotelsCombined's aggregate EU-wide
          turnover does not reach EUR 250 million. In addition, the proposed Transaction
          did not have an EU dimension within the meaning of Article 1(3) of the EUMR,
          since HotelsCombined does not achieve a turnover of more than EUR 25 million
          in at least three Member States. The proposed Transaction would have been
          capable of being reviewed under the national merger control laws of three
          Member States, namely Austria, Cyprus and the United Kingdom. As a
1    OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation'). With effect from 1 December 2009, the Treaty on
     the Functioning of the European Union ('TFEU') has introduced certain changes, such as the
     replacement of 'Community' by 'Union' and 'common market' by 'internal market'. The terminology of
     the TFEU will be used throughout this decision.
2    OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement').
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak---         consequence, a copy of this submission was promptly transmitted to the Member
        States on 13.07.2018.
(3)     On the basis of the Reasoned Submission submitted by the Parties pursuant to
        Article 4(5) of the Merger Regulation, in its Note to the Member States, the
        Commission took the view that the submission fulfilled the two conditions set out
        in Article 4(5) of the EUMR in that (i) the proposed Transaction is a
        concentration within the meaning of Article 3 of the EUMR, and (ii) it has to be
        notified in at least three Member States. The Commission considered that if the
        referral request was granted, the costs and burdens linked with making filings in
        three Member States would be avoided and the Parties would benefit from the
        one-stop-shop principle. In addition, the Commission took the view that the
        proposed Transaction fulfilled a number of further criteria set out in the
        Commission’s Notice on Case Referral.3
(4)     First, the proposed Transaction would have affected trade in a large number of
        EEA countries, as both parties are active in each of the 31 Member States of the
        EEA. Secondly, since the Commission had already dealt with these sectors and
        markets, for example in Case M.8416 – Priceline/Momondo, it is best-placed to
        carry out the investigation.
(5)     The above-mentioned Member States competent to review the concentration
        under their national competition law did not express their disagreement to the
        referral request within the 15 working day deadline.
(6)     As a consequence, the proposed Transaction was deemed to have an EU
        dimension and on 18.09.2018, the European Commission received the notification
        of the proposed Transaction pursuant to Article 3(1)(b) of the EUMR.4
1.      THE PARTIES
(7)     Booking Holdings provides metasearch services for travel ("MSS"), allowing
        consumers to search for and compare prices in particular for flights but also for
        hotel rooms (including other types of holiday accommodation), rental cars and
        package holidays, across online travel agents ("OTAs") and other travel service
        providers ("TSPs") under the brands KAYAK, Swoodoo, Checkfelix,
        Cheapflights and Momondo. Booking Holdings also operates OTA brands
        offering hotel and rental car reservations, such as Booking.com and
        Rentalcars.com.
(8)     HotelsCombined provides MSS which allow consumers to search for and
        compare prices for hotel rooms and other types of holiday accommodation across
        OTAs and other TSPs. Its MSS do not allow consumers to search for other travel
        products.
3   Commission Notice on Case Referral in respect of concentrations, OJ C 56, 05.03.2005, p.2,
    paragraphs 25 to 32.
4   OJ L 24, 29.1.2004, p. 1 (the "EUMR").
                                                 2
 ---pagebreak--- (9)       The Parties provide commercial affiliate programmes, which are services
          provided to third party websites (e.g. other MSS providers or OTAs) that wish to
          offer comparison services to their visitors or to combine different travel services.
(10)      Neither of the Parties is active at TSP level.5
2.        THE OPERATION AND THE CONCENTRATION
(11)      The proposed Transaction concerns the acquisition of sole control over
          HotelsCombined by Booking Holdings. Pursuant to a share and purchase
          agreement, which was concluded on 9.07.2018, Booking Holdings will acquire
          100% of the issued share capital in HotelsCombined through a private acquisition.
3.        EU DIMENSION
(12)      For the reasons outlined above, the proposed Transaction has an EU dimension
          within the meaning of Article 4(5) EUMR and was therefore notified to the
          Commission in accordance with Articles 4(1) and 4(2) of the EUMR.
4.        MARKET DEFINITION
  4.1. The Parties' activities
4.1.1. HotelsCombined
4.1.1.1. MSS
(13)      HotelsCombined, which does not offer any display advertising on its websites,
          operates a hotel MSS which allows consumers to search for and compare the
          prices of hotel rooms and other types of accommodation, such as hostels and
          holiday rentals6, for particular dates, across OTAs (such as Booking.com and
          Expedia) and TSPs. Its MSS does not enable consumers to search for other travel
          services (such as flights, car rentals or package holiday deals).
(14)      HotelsCombined provides services through desktop websites, mobile optimised
          websites7 and apps. In the EEA, HotelsCombined is active in 26 Member States.8
5    Parties' reply to QP 1 dated 5 September 2018.
6    Section A.1 of the Form CO: […], any reference to "hotels" includes hostels and other types of
     accommodation such as holiday rentals, unless stated otherwise.
7    These are a visually simplified version of the desktop website to provide a user experience that is
     better tailored to mobile devices with a smaller screen than a desktop device.
8    HotelsCombined has a country-specific domain in each of the following EEA countries: Austria,
     Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland,
     Italy, Latvia, Lithuania, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain,
     Sweden, and the UK. It also offers services in Croatian / Croatian Kuna, and Icelandic / Icelandic
     Krona.
                                                           3
 ---pagebreak--- (15)     Almost all of HotelsCombined's revenues are generated by fees paid by OTAs or
         hotels for website referrals. These fees are either charged on a
         (i) commission/cost per acquisition basis ("CPA")9 or (ii) pay-per-click/cost-per-
         click ("PPC"/"CPC") basis10.
(16)     HotelsCombined is also active as a supplier of hotel MSS commercial affiliate
         programmes. Customers (typically other MSS providers, OTAs or travel blog
         websites) which enter into commercial affiliate agreements with HotelsCombined
         can offer visitors to their sites HotelsCombined's MSS product to enable them
         search for and compare the prices of hotel rooms. EUR […] million11 or [the
         majority] of HotelsCombined’s EEA revenues are generated via this channel.
(17)     The Parties submit that it does not cost anything to become a HotelsCombined
         affiliate. As remuneration, the affiliate is paid a share of the revenue earned by
         HotelsCombined from OTAs and hotels for bookings generated via the affiliate's
         site. […]. This is a revenue-sharing partnership, as the affiliate has the benefit of
         monetising its website by relying on HotelsCombined's offering, whilst
         HotelsCombined benefits from broader exposure to the affiliate site's consumer
         visits.
4.1.2. Booking Holdings
(18)     Booking Holdings is active globally and has a material presence in the EEA with
         the following brands: (i) KAYAK, Momondo, Cheapflights, Swoodoo and
         Checkfelix, which are travel MSS brands operated as a single business division
         ("the KAYAK Group") and (ii) Booking.com, agoda.com and Rentalcars.com,
         which are OTA brands offering hotel and rental car reservations, respectively.
4.1.2.1. MSS
(19)     With the exception of the Momondo brand,12 the KAYAK Group offers
         consumers the opportunity to complete their booking using booking functionality
         embedded within the website of the relevant MSS brand, powered by the OTA or
         TSP with which the booking is actually made. Given that the booking is actually
         made with the OTA or TSP, the consumer’s contract is with the OTA or TSP, and
         the OTA or TSP provides the booking confirmation and is responsible for
         subsequent customer service.
(20)     Most of the KAYAK Group's revenues are generated from referrals to TSPs and
         OTAs. These are charged for on either a CPC/PPC or on a CPA basis ([…]).
         Under the CPA model, the OTA or TSP pays a flat amount or a percentage of the
9   This is where a customer (i.e. an OTA or a hotel) pays a proportion of the revenue it generates in a
    given month from consumers who complete a booking with the OTA/TSP, having clicked through to
    that OTA/TSP service from HotelsCombined’s MSS search.
10  This is where a customer pays a flat amount every time a HotelsCombined visitor clicks on a link to its
    website, regardless of whether a booking is made.
11  These revenues are net of payments to commercial affiliates.
12  […].
                                                        4
 ---pagebreak---         revenue generated every time a visitor clicks on a link to its website and makes a
        booking.
(21)    The KAYAK Group offers a MSS commercial affiliate programme covering
        flights, hotels, car rentals and package holidays. However, flights are the core of
        KAYAK’s commercial affiliate programme in the EEA – […]. In addition, the
        KAYAK Group, through the Momondo brand, offers a MSS commercial affiliate
        programme for flights. The Swoodoo, Checkfelix and Cheapflights brands do not
        offer commercial affiliate programmes. The KAYAK group turns EUR […]
        million, equivalent to […] % of its total MSS revenues in the EEA, with these
        programmes.
(22)    The KAYAK Group’s affiliate programme operates a similar revenue-sharing
        model to HotelsCombined. Affiliate customers are paid a proportion of the
        advertising revenues derived by the relevant KAYAK Group brand from the
        OTAs/TSPs to whom users click through from the affiliate site. KAYAK also
        powers the flights offering on the websites of Booking.com and agoda.com
        (Booking Holdings' OTAs) on a white label commercial affiliate basis. Revenues
        from clicks through to OTAs/TSPs from such users are paid to the KAYAK
        Group (which pays a portion of such revenues to Booking.com or agoda.com as
        appropriate), and the relevant OTA/TSP does not have any resulting relationship
        with Booking.com/agoda.com.
4.1.2.2. OTAs
(23)    With regard to Booking.com, Booking.com is an OTA that primarily allows
        consumers to search for and book hotel rooms (and other types of
        accommodation). Booking.com is available in all major European languages and
        makes its services available to consumers in all EEA member states.
        Booking.com derives its revenues primarily from commissions paid by hotels on
        bookings made by consumers on the site. Booking.com also offers OTA
        commercial affiliate services for hotels.
(24)    Booking.com’s commercial affiliate programme offers a number of
        implementation methods including white label, API and links. It does not cost
        anything to become a Booking.com affiliate. Booking.com pays affiliate partners
        a proportion of the commission revenue generated from stayed bookings, i.e. from
        bookings that are non-cancelled/fulfilled, made through the affiliate’s site. The
        proportion of the commission paid by Booking.com to affiliate partners ranges
        from […]. This is a revenue-sharing partnership – the affiliate has the benefit of
        monetising its website by relying on Booking.com’s offering, while Booking.com
        benefits from broader exposure through the affiliate site’s consumer visits.
(25)    Booking Holdings' brand agoda.com is an OTA that primarily allows consumers
        to search for and book hotel rooms (and other types of accommodation).
        Agoda.com offers commercial affiliate services for hotels. Similarly to
        Booking.com’s commercial affiliate programme, agoda.com offers a number of
        implementation methods and operates a similar revenue-sharing model.
                                                  5
 ---pagebreak--- (26)    With regard to Booking Holdings' brand rentalcars.com,13 it is an OTA that
        allows consumers to search for and book rental cars. The majority of
        Rentalcars.com’s revenues are derived from margins made on car rental
        reservations and ancillary products such as insurance and the hire of child seats.
        Similarly to Booking.com’s commercial affiliate programme, Rentalcars.com
        offers a number of implementation methods and operates a similar revenue-
        sharing model.
(27)    Booking Holdings also operates two further OTAs: priceline.com and
        Rocketmiles, neither of which has a material presence in Europe.
 4.2. Relevant product markets
4.2.1. Online travel intermediation services
(28)    In a prior decision, the Commission considered whether online travel markets
        form part of a broader market comprising the services provided by all suppliers in
        the travel industry's value chain, i.e. suppliers of different kinds of travel services,
        tour operators, brick-and-mortar, and OTAs and other intermediaries.14 Although
        the Commission found evidence pointing towards the existence of a separate
        market for the online intermediation of travel services, the Commission left open
        whether there is a distinct market for the online intermediation of travel
        services.15
(29)    As neither of the Parties is active in brick and mortar, it can be left open also in
        the present case whether the online intermediation of travel services constitutes a
        separate product market. The Commission will therefore look at the online travel
        sector only, as the proposed Transaction would not lead to serious doubts as to its
        compatibility with the internal market under the narrower of the two market
        delineations.
(30)    The online travel sector is characterised by a multitude of players at various levels
        of the value chain, such as (i) TSPs, (ii) OTAs and (iii) MSS providers.16 Among
        the main ones are:
       TSPs, such as airlines, hotel operators, car rental companies or other transport
        service suppliers;
       OTAs, namely online retailers which sell one or more types of travel service,
        supplied by a range of TSPs, such as flights, hotel and other travel
        accommodation and car rental. OTAs provide, on the one hand, search, compare
        and booking services to consumers and, on the other hand, marketing services and
        booking functionality to TSPs.
13  Rentalcars.com primarily offers its services in the EEA through TravelJigsaw Limited, a company
    incorporated in England and Wales.
14  M. 8416 – Priceline/Momondo, paragraph 16.
15  M. 8416 – Priceline/Momondo, paragraph 19.
16  M. 8416 – Priceline/Momondo, paragraph 17.
                                                       6
 ---pagebreak---         MSS, namely websites which aggregate information relating to one or more types
         of travel service. MSS provide, on the one hand, search and comparison services
         to consumers and allow them to compare offers for the same travel product made
         by the TSP and/or by one or more OTAs. On the other hand, MSS provide lead
         generation services to TSPs and OTAs.17
(31)     As neither of the Parties is active at TSP level, the Commission will assess the
         impact of the proposed Transaction on MSS and on MSS and OTAs combined.
4.2.2. Distinction between general and specialised search engines
(32)     In its prior decision practice, the Commission has concluded that internet general
         search should be distinguished from specialised search, with focuses on specific
         segments of online content, such as, for example, travel search engines.18 In line
         with the Commission's precedents, the Parties have therefore excluded general
         search engines from the scope of the relevant market.19
(33)     As a consequence, the impact of the proposed Transaction will be assessed on
         markets for specialised search engines.
4.2.3. Distinction between MSS and OTAs
4.2.3.1. Commission and NCAs' practice
(34)     In a prior decision, the Commission considered whether MSS and OTA services
         are two distinct markets.20 MSS were considered in a previous decision in which
         the Commission pointed out that MSS providers aggregate and compare fares, but
         do not offer booking capabilities, instead channelling consumers to TSPs or travel
         agents offering the best fares. However, the Commission did not define the
         market on which MSS providers operate.21
(35)     National competition authorities have also looked into the online travel sector.
         The UK national competition authority has looked into MSS markets in its
         assessment of the acquisition of KAYAK by Priceline, assessing the impact of the
         merger on the supply of online travel search services to UK consumers and the
         supply of online lead generation services to TSPs, without ultimately defining
         MSS markets.
(36)     In its assessment, the UK national competition authority considered that MSS
         providers and OTAs are both in a vertical relationship and compete with each
17  MSS generally re-direct users to a TSP or OTA website in order to complete their booking, however
    some MSS have recently begun to offer a direct booking function, allowing the user to complete the
    transaction without leaving the MSS website.
18  M. 8416 – Priceline/Momondo, paragraph 21.
19  Form CO, paragraph 6.66.
20  M. 8416 – Priceline/Momondo, paragraphs 24-39.
21  M. 8416 – Priceline/Momondo, paragraph 24. See also M.4523 – Travelport/Worldspan, paragraphs
    31-33.
                                                     7
 ---pagebreak---          other, as they both seek to obtain traffic by providing online travel search services
         to consumers and online lead generation services to TSPs. However, in that
         decision, the OFT did not conclude on the precise market definition and analysed
         competition between OTAs and MSS only “on a cautious basis”, finding that,
         even in a potential market including both OTAs and MSS, an OTA and a MSS
         provider “are not in fact close competitors”.22
(37)     Conversely, in their antitrust decisions assessing most-favoured nation clauses in
         contracts for the online distribution of hotel accommodation, the German, French,
         Italian, Swedish and Swiss competition authorities and the Düsseldorf appeal
         court in Germany treated OTAs specialising in the distribution of hotel
         accommodation as belonging to a distinct market, implicitly or explicitly
         excluding MSS.23
(38)     However, in Case M. 8416 – Priceline/Momondo, the Commission ultimately left
         open whether there are distinct markets for MSS and OTAs.24
4.2.3.2. Parties' views
(39)     The Parties submit that OTAs and MSS should not be included in the same
         market.25 On the consumer side of the market, MSS and OTAs offer
         fundamentally different services, as OTAs enable consumers to book travel
         services, whilst MSS are a price comparison tool which enables consumers to
         search for the booking platform that gives them the best deal. The Parties refer to
         those respondents to the market investigation carried out by the Commission in
         Case M. 8416 – Priceline/Momondo that considered that MSS and OTAs should
         be considered as two separate markets, in particular to the argument according to
         which MSS would offer a much broader comparison, displaying offers from
         multiple distribution channels and enabling consumers to compare prices for the
         same travel product, whereas OTAs only enable consumers to compare different
         travel products.26
(40)     In addition, the Parties submit that support and after-sale service offered to
         consumers by OTAs are far more comprehensive than those offered by MSS
         providers. The Parties refer to those respondents to the market investigation
         carried out by the Commission in Case M. 8416 – Priceline/Momondo who
         considered that MSS and OTAs should be considered as two separate markets, in
22  M. 8416 – Priceline/Momondo, paragraph 26. OFT decision of 14 May 2013 (ME/5882-12) on the
    anticipated acquisition by Priceline.com of Kayak Software Corporation, paragraph 14 and following.
23  M. 8416 – Priceline/Momondo, paragraph 27. German national competition authority's decisions of 20
    December 2013 and 23 December 2015 addressed to HRS and Booking.com respectively; French,
    Italian and Swedish national competition authorities' decisions of 15-21 April 2015 addressed to
    Booking.com; Swiss national competition authority's decision of 19 October 2015 addressed to
    Booking.com, Expedia, Inc and HRS; judgment of Düsseldorf Higher Regional Court of 9 January
    2015, HRS vs Bundeskartellamt.
24  M. 8416 – Priceline/Momondo, paragraph 40.
25  Form CO, paragraphs 6.74 and following.
26  M. 8416 – Priceline/Momondo, paragraph 36. Form CO, paragraph 6.76.
                                                       8
 ---pagebreak---         particular to the argument according to which OTAs have a more direct
        relationship with consumers, providing additional services, such as call centres
        and after-sale support and that those MSS providers which responded to the
        market investigation in Case M. 8416 – Priceline/Momondo stated that, for an
        MSS to start offering services similar to an OTA, significant time and investment
        would be required.27
(41)    With regard to the advertiser side of the market, the Parties submit that MSS and
        OTAs offer fundamentally different services to advertisers for the following
        reasons28: (i) the primary function of MSS is an advertising channel for OTAs,
        whilst all of an OTA's revenues are derived from TSPs, (ii) MSS do not have a
        direct relationship with many TSPs, such as hotels, whilst OTAs have contractual
        relationships with all TSPs whose travel services are offered on their site, (iii)
        MSS and OTAs often adopt fundamentally different payment models, (iv) in the
        hotel booking sector, OTAs offer booking functionality, whilst MSS redirect
        consumers to an OTA or a TSP to complete the booking, (v) for small and
        medium sized hotels a MSS is not an alternative to an OTA, (vi) MSS that have
        sought to introduce booking functions have faced major obstacles, (vii) TSPs rely
        on OTAs to provide support and after-sale services.
(42)    In addition, the Parties submit that the type of platform (e.g. desktop, apps) or
        whether the service is addressed to leisure/business travellers or used for
        foreign/domestic destinations, or for short-haul/long-haul travel do not constitute
        an essential characteristic of the market.29 With regard to the type of platform, the
        Parties clarify that (i) most major MSS providers are active across all platforms
        and as mobile websites improve, the distinction between apps and websites is
        increasingly disappearing, (ii) consumer experience is largely the same across
        platforms, (iii) consumers are increasingly beginning their travel research on one
        platform and continuing it on another one. With regard to whether the service is
        addressed to leisure/business travellers or used for foreign/domestic destinations,
        or for short-haul/long-haul, the Parties submit that all major MSS compare travel
        options on their sites with no distinction being made generally between leisure
        and business travellers. All major MSS compare prices for travel to foreign and
        domestic destinations and travel to short-haul and long-haul destinations.
4.2.3.3. Commission's assessment
(43)    The Commission considers that even though MSS providers and OTAs are both
        active in the intermediation of travel services online and both aim to attract
        consumers interested in organising their travel, they seem to offer different
        services and generally operate on the basis of different business models.
(44)    The Commission agrees with the Parties that the type of platform does not seem
        to represent an important characteristic of the market, given that (i) with regard to
        the type of platform, most major MSS providers are active across all platforms
        and as mobile websites improve, the distinction between apps and websites is
27  M. 8416 – Priceline/Momondo, paragraph 37. Form CO, paragraph 6.80.
28  Form CO, paragraph 6.81.
29  Form CO, paragraphs 6.86 to 6.91.
                                                    9
 ---pagebreak---          increasingly disappearing and consumers are increasingly beginning their travel
         research on one platform and continuing it on another one. With regard to (ii)
         whether the services are addressed to leisure/business travellers or used for
         foreign or domestic destinations, or for short-haul/long-haul, the Commission
         agrees with the Parties that these aspects do not seem to constitute an important
         characteristic of the market.
(45)     However, as the proposed Transaction would not raise serious doubts, either on
         the basis of distinct markets for MSS or on the basis of a broader market
         comprising both MSS and OTAs, the exact scope of the product market may be
         left open for the purposes of this decision.
4.2.3.4. Conclusion
(46)     Therefore, for the purposes of this Decision, the Commission concludes that it
         may be left open whether there are distinct markets for MSS and OTAs. The
         Commission will therefore assess the impact of the Transaction both on markets
         for MSS only and on broader markets comprising both MSS and OTAs.
4.2.4. Distinction by type of travel service
4.2.4.1. Commission and NCAs' practice
(47)     In its prior decision practice, the Commission considered that the online
         distribution of travel services could be further segmented by type of travel
         products, between flights, hotels, package holidays, etc., though ultimately the
         exact definition of the product market was left open.30
(48)     National competition authorities have also distinguished between hotels, flights
         and car rentals, considering that these are not interchangeable from the
         consumer's point of view and observing that MSS and OTAs often specialise in
         one type of travel services, even if there is some complementarity between the
         different types of travel services from the supply side, as consumers may prefer to
         organise their entire journey or holiday in a "one-stop" shop.31
4.2.4.2. Parties' view
(49)     The Parties, which do not overlap in OTAs but do overlap in a broad market for
         all travel MSS and, to the extent that the MSS market is segmented by type of
         travel, in a narrower market for hotels MSS only, submit that it is not necessary to
         sub-segment the MSS market by type of travel.32
30  M. 8416 – Priceline/Momondo, paragraphs41-51. Cases M.8046 – TUI/Transat France, paragraph
    101; M.6163 - AXA/ PERMIRA/ OPODO/ GO VOYAGES/EDREAMS, paragraph 18 and following.
31  Illustratively, OFT decision of 14 May 2013 (ME/5882-12) on the anticipated acquisition by
    Priceline.Com of Kayak Software Corporation, para.31; German national competition authority's
    decisions of 20 December 2013 and 23 December 2015 addressed to HRS and Booking.com
    respectively.
32  Form CO, paragraph 6.72.
                                                  10
 ---pagebreak--- (50)    The Parties refer to certain responses received during the market investigation
        conducted by the Commission in Case M. 8416 – Priceline/Momondo according
        to which the markets for online travel intermediation should not be further
        segmented by type of travel services, as MSS and OTAs specialising in only one
        type of travel service would be in competition with respectively those MSS or
        OTAs that offer a broader range of travel services; that the business model and
        technology required to offer online intermediation services for different types of
        travel services is comparable, and that even if not identical, different types of
        travel services are complementary and thus likely to be sourced together by
        consumers.33
(51)    In addition, the Parties submit that over the past years there has been significant
        and increasing convergence in the sector and that there are few significant MSS
        that continue to offer comparisons for a single type of travel service only.34
4.2.4.3. Commission's assessment
(52)    The Commission considers that segmenting MSS and OTAs markets by different
        types of travel service should be considered. However, as the proposed
        Transaction would not raise serious doubts, irrespective of whether broader
        markets comprising all travel MSS or the narrower segment of MSS for hotels are
        taken into account, the exact delineation of the relevant product market may be
        left open.
4.2.4.4. Conclusion
(53)    As a consequence, for the purpose of the decision, the Commission concludes that
        it may be left open whether MSS and OTAs should be further segmented based
        on the type of travel service they intermediate. The Commission will therefore
        assess the impact of the proposed Transaction on markets for hotels MSS and a
        broader market for all travel MSS.
4.2.5. Commercial affiliate programmes
(54)    The MSS and OTAs markets could be segmented into (i) MSS and/or OTAs
        excluding commercial affiliate programmes, i.e. business-to-consumer (B2C), and
        (ii) commercial affiliate programmes, i.e. business-to-business (B2B).
4.2.5.1. Commission's practice
(55)    Commercial affiliate programmes are services provided by MSS and/or OTAs to
        third party websites that wish to generate revenue by driving traffic to the
        affiliated MSS or OTA and therefore offer comparison services to their visitors
        and/or to combine different travel services.
(56)    In a prior decision, the Commission assessed commercial affiliate programmes in
        the travel sector.35 The Commission left open whether commercial affiliate
33  Form CO, paragraph 6.69.
34  Form CO, paragraphs 6.71-6.72.
35  M. 8416 – Priceline/Momondo, paragraphs 52-58.
                                                   11
 ---pagebreak---         programmes constitute a distinct market or are part of broader markets for the
        operation of MSS and OTAs. Similarly, the Commission left open whether
        potential markets for commercial affiliate programmes should be further
        segmented, based on whether these are offered by MSS or OTAs, or by type of
        travel services.36
4.2.5.2. The Parties' view
(57)    On the one hand, the Parties submit that MSS and OTAs should not be further
        segmented between (i) MSS and OTAs excluding commercial affiliate
        programmes (B2C) and (ii) commercial affiliate programmes (B2B), as
        commercial affiliate programmes are simply an add-on used to generate
        incremental revenue and increase traffic to MSS and OTAs.37 In this context, the
        Parties raise similar arguments for OTAs38 and refer to the market investigation
        carried out in M.8416 – Priceline/Momondo, in which the majority of respondents
        considered that the provision of commercial affiliate programmes by MSS
        providers is part of the overall market for the operation of MSS, notably as they
        viewed these programmes as an additional means for MSS to increase traffic to
        their websites.39
(58)    On the other hand, the Parties submit that any market for commercial affiliate
        programmes must be segmented between OTA and MSS commercial affiliate
        programmes, respectively.40 The Parties refer to the market investigation carried
        out in M.8416 – Priceline/Momondo, in which respondents were split as to
        whether commercial affiliate programmes offered by MSS are interchangeable
        with commercial affiliate programmes offered by OTAs.41 Indeed, some
        respondents pointed out the differences in the type of services offered by MSS
        providers and OTAs, whereas others indicate that they considered both OTAs and
        MSS when selecting the commercial affiliate programme they entered into, or that
        they have entered into affiliate programmes offered by both MSS providers and
        OTAs.42 The Parties refer also to the OFT's decision regarding Booking Holdings'
        acquisition of the KAYAK Group in 2013, in which the OFT, while recognising
        that there was a technical overlap between KAYAK's (MSS) and Booking
        Holdings' (OTA) affiliate programmes, it did not consider that they overlapped to
36  M. 8416 – Priceline/Momondo, paragraph 57.
37  Form CO, paragraph 6.102.
38  Form CO, paragraph 6.108.
39  M. 8416 – Priceline/Momondo, paragraph 54.
40  Form CO, paragraphs 6.111 and following.
41  Form CO, paragraph 6.112.
42  M. 8416 – Priceline/Momondo, paragraph 55.
                                                12
 ---pagebreak---        a material degree and did not consider the overlap in the competitive
       assessment.43
(59)   In conclusion, the Parties submit that OTAs and MSS do not act as a material
       competitive constraint on each other in the supply of commercial affiliate
       programmes because they have fundamentally different business models and
       therefore offer fundamentally different products to consumers, advertisers and
       affiliate partners.44
(60)   With regard to a possible segmentation by type of travel, the Parties submit that it
       would not be appropriate to sub-segment any hypothetical market for commercial
       affiliate programmes by hotels, etc.45 The Parties refer to the market investigation
       carried out in M.8416 - Priceline/Momondo, in which respondents were split as to
       whether commercial affiliate programmes should be further segmented on the
       basis of the type of travel.46 In this context, the Parties submit that many of the
       major MSS providers and OTAs that offer commercial affiliate programmes do so
       across multiple types of travel.47 In addition, many commercial affiliate
       customers use the same MSS or OTA across all types of travel.48
(61)   In addition, the Parties submit that the services provided by Google through its
       AdSense product have some significant similarities to commercial affiliate
       services and could form part of the market for commercial affiliate services.
       However, the Parties state that they adopted a conservative approach and
       excluded Google AdSense from the relevant commercial affiliate programmes
       market and instead analysed Google AdSense as an out-of-market constraint.49
(62)   In addition, the Parties submit that, should the Commission identify a market for
       commercial affiliate programmes segmented by type of travel (i.e. hotels), the
       commercial affiliate programmes of Airbnb should be included in the product
       market, given that (i) most major OTAs that offer commercial affiliate
       programmes list a range of accommodation on their site and offer these listings as
       part of their respective commercial affiliate programmes, (ii) a number of MSS
       also include holiday rentals in their offering, (iii) Airbnb's affiliate programme is
       substitutable with the commercial affiliate programmes of OTAs offering hotel
       room reservations.50
43 Form CO, paragraph 6.113. See also KAYAK, Decision ME/5882-12, Office of Fair Trading, 14 May
   2013 at paragraphs 48 to 50.
44 Form CO, paragraph 6.114.
45 Form CO, paragraph 6.125 and following.
46 M. 8416 – Priceline/Momondo, paragraph 56.
47 Form CO, paragraphs 6.126 – 6.127.
48 Form CO, paragraph 6.129.
49 Form CO, paragraphs 6.137 and following.
50 Form CO, paragraph 6.143 and following.
                                                13
 ---pagebreak--- (63)     Finally, the Parties submit that neither the implementation method nor the service
         type constitute important characteristics of the market. 51 Commercial affiliate
         programmes encompass a range of implementation methods which enable an
         affiliate customer to partner with an MSS provider or OTA. Each of these
         methods involves a revenue-sharing model. The implementation methods consist
         of (i) white label52, (ii) API data feed53, (iii) links54.
(64)     The Parties submit that, from the perspective of the commercial affiliate
         customer, each implementation method forms part of a continuum of alternative
         solutions which allow them to achieve the following goals: (i) partner with a
         MSS/OTA to achieve a share of revenue derived by that MSS/OTA from visitors
         originating on their site and (ii) offer relevant travel search and/or booking
         functionality to their visitors (either on their site itself or via an easily accessible
         widget or link on their site). The Parties submit that (i) each solution involves
         revenue sharing and access to a travel search product and forms part of a
         continuum of solutions offered to customers to achieve the same aim, (ii) most
         MSS offer a range of different types of commercial affiliate solutions, (iii) each of
         the Parties typically offers affiliate services based on the same standard contract
         whatever implementation solution is chosen by the customer (iv) affiliate
         customers do switch between different implementation models and/or use various
         implementation models concurrently.
4.2.5.3. The Commission's assessment
(65)     The Commission considers that the AdSense product can hardly be considered as
         part of the same market. It is also rather doubtful whether it could be seen as an
         out-of-market constraint to the market for commercial affiliate programmes
         because, unlike commercial affiliate programmes, the AdSense product matches
         text and display advertisements to a website, based on the website's content,
         visitors and their searches. Therefore, for the purpose of this case, the
         Commission does not consider AdSense as part of the same market or as an out-
         of-market constraint.
(66)     The Commission considers that the commercial affiliate programmes of Airbnb
         exert some constraint due to the fact that (i) most major OTAs that offer
51  Form CO, paragraphs 6.131-6.136.
52  The affiliate customer is given access to a reproduction of the MSS/OTA site which can be customised
    with the brand of the affiliate customer (e.g. HotelsCombined’s arrangement with the […], or Kayak’s
    agreement with […]).
53  A “back-end” live information feed including, for example, hotel room availability and prices. This
    can be used to provide a full MSS solution or by an existing MSS to “plug” gaps in its existing
    inventory coverage. This solution allows a much higher level of customisation of the consumer
    interface, the look and feel of the website and the presentation/comparison of listings – it is also as a
    result the most complex to implement and therefore only suitable for affiliates with sophisticated IT
    resources.
54  This implementation method involves providing a link (/referral) to the MSS/OTA site. Clicking on
    the link takes the consumer directly to the MSS/OTA site front page. The affiliate gets a revenue share
    if the user then goes on to click-out (to a TSP/OTA in the case of a MSS) or book (on the OTA in the
    case of an OTA) within a specified time period.
                                                         14
 ---pagebreak---          commercial affiliate programmes list a range of accommodation on their site and
         offer these listings as part of their respective commercial affiliate programmes,
         (ii) a number of MSS also include holiday rentals in their offering, (iii) Airbnb's
         programme is substitutable with the commercial affiliate programmes of OTAs
         offering hotel room reservations. In any event the question whether the
         commercial affiliate programmes of Airbnb are part of the commercial affiliate
         programmes product market can be left open for the purpose of this Decision
         since the proposed Transaction would not lead to serious doubts as to its
         compatibility with the internal market whether or not the programmes of Airbnb
         are included. Therefore, for the purpose of this Decision, the commercial affiliate
         programmes of Airbnb are included in the relevant market.
(67)     The Commission agrees with the Parties that neither the implementation method
         nor the service type seem to constitute important characteristics of the market, for
         the following reasons: (i) each solution involves revenue sharing and access to a
         travel search product and forms part of a continuum of solutions offered to
         customers to achieve the same aim, (ii) most MSS offer a range of different types
         of commercial affiliate solutions, (iii) each of the Parties typically offers affiliate
         services based on the same standard contract whatever implementation solution is
         chosen by the customer and (iv) affiliate customers do switch between different
         implementation models and/or use various implementation models concurrently.
(68)     The Commission considers that it may be left open whether commercial affiliate
         programmes constitute a distinct market or are part of broader markets for the
         operation of MSS and OTAs. Similarly, the Commission considers that it may be
         left open whether potential markets for commercial affiliate programmes should
         be further segmented, based on whether these are offered by MSS or OTAs, or by
         type of travel services.
4.2.5.4. Conclusion
(69)     The Commission concludes that, for the purpose of this Decision, whether there
         are distinct markets for the provision of commercial affiliate programmes by MSS
         providers and OTAs and the exact delineation thereof can be left open, as the
         proposed Transaction does not raise serious doubts under any such plausible
         product market definition.
4.3.     Relevant geographic markets
4.3.1. MSS and OTAs
4.3.1.1. Commission and NCAs' decision practice
(70)     In its prior decisions, the Commission considered that, notably due to language
         barriers, markets for the distribution of various types of travel services are likely
         to be national.55
(71)     National competition authorities in the EEA have also assessed markets for MSS
         and OTAs on a national basis.56
55  M. 8416 – Priceline/Momondo, paragraph 59. See also M.8046 – TUI/Transat, paragraph 104 and
    following. M.6163 – AXA/Permira/OPODO/Go Voyages/Edreams, paragraph 29 and following.
                                                   15
 ---pagebreak--- (72)     However, in M.8416 – Priceline/Momondo, the Commission concluded that the
         exact geographic scope of MSS and OTA markets may be left open and, as a
         consequence, assessed the impact of the Transaction at global, EEA-wide and
         national level.57
4.3.1.2. Parties' view
(73)     The Parties submit that most major MSS and OTAs are active on a pan-European
         or global basis. Other national or regional players have also sought to expand into
         new markets, such as EasyVoyage, which intends to expand into Northern Europe
         from its well-established position in Southern Europe.58
4.3.1.3. Commission's assessment
(74)     As the proposed Transaction would not raise serious doubts, irrespective of
         whether global, EEA-wide or national markets are taken into account, the exact
         delineation of the geographic markets may be left open.
4.3.1.4. Conclusion
(75)     For the purpose of this Decision, the Commission concludes that the exact
         geographic scope of MSS and OTA markets may be left open. The Commission
         will assess the impact of the proposed Transaction at global, EEA-wide and
         national level.
4.3.2. Commercial affiliate programmes
4.3.2.1. Commission's decision practice
(76)     In a prior decision, the Commission considered that the geographic scope of any
         potential market for commercial affiliate programmes would be likely to be
         global. However, as the Transaction did not give rise to serious doubts under any
         plausible geographic market definition, the exact geographic delineation was left
         open.59
4.3.2.2. Parties' view
(77)     The Parties submit that the geographic scope of any possible market for the
         supply of commercial affiliate programmes would be at least EEA-wide, for the
         following reasons: (i) competition between suppliers of commercial affiliate
         programmes takes place on at least an EEA-wide basis, (ii) many of the Parties'
         competitors in both MSS and OTAs are active on a pan-EEA – if not global –
56  M. 8416 – Priceline/Momondo, paragraph 60. German national competition authority's decisions of 20
    December 2013 and 23 December 2015 addressed to HRS and Booking.com respectively; French,
    Italian and Swedish national competition authorities' decisions of 15-21 April 2015 addressed to
    Booking.com.
57  M. 8416 – Priceline/Momondo, paragraph 69.
58  Form CO, paragraphs 6.154-6.155.
59  M. 8416 – Priceline/Momondo, paragraph 72.
                                                    16
 ---pagebreak---         basis and (iii) many affiliate customers have agreements covering multiple
        country domains, covering Europe as whole or even globally.60
4.3.2.3. Commission's assessment
(78)    The Commission considers that the geographic scope of any potential market for
        commercial affiliate programmes would be likely to be global. However, as the
        Transaction would not give rise to serious doubts under any plausible geographic
        market definition, the exact geographic delineation may be left open.
4.3.2.4. Conclusion
(79)    For the purpose of this Decision, the Commission concludes that the exact
        geographic scope of the markets for commercial affiliate programmes may be left
        open. The Commission will assess the impact of the proposed Transaction at
        global, EEA-wide and national level.
5.      COMPETITIVE ASSESSMENT
5.1.    Overview of affected markets
(80)    The proposed Transaction gives rise to the following horizontally affected
        potential markets, namely those for (i) MSS including commercial affiliate
        programmes (B2C+B2B) in Denmark and Sweden, (ii) MSS excluding
        commercial affiliate programmes (B2C) in Denmark and Sweden for hotels, in
        Austria, Denmark and Sweden for all travel services; (iii) MSS commercial
        affiliate services (B2B) at global, EEA level and in each EEA Member State, (iv)
        MSS and OTAs combined, excluding commercial affiliate services (B2C), at
        global, EEA level and in each EEA Member State, (v) MSS and OTA combined –
        commercial affiliate programmes (B2B) at worldwide, EEA and in each EEA
        Member State, (vi) MSS and OTA combined including commercial affiliate
        programmes (B2C+B2B) at worldwide, EEA and in each EEA Member State;
(81)    The proposed Transaction also gives rise to three groups of vertically affected
        potential markets, namely (i) MSS excluding commercial affiliate services –
        OTAs excluding commercial affiliate services; (ii) MSS commercial affiliate
        programmes – MSS excluding commercial affiliate programmes; and (iii) MSS
        and OTA commercial affiliate services – MSS and OTA excluding commercial
        affiliate services. Group (i) is vertically affected in all EEA member states, while
        groups (ii) and (iii) are affected in the EEA-wide market upstream and in each
        EEA member state downstream.
 5.2. Sectoral overview
(82)    In 2017, the MSS market in the EEA had an estimated value of around EUR […]
        billion.
(83)    Booking Holdings has a relatively strong footprint in the EEA, where it achieves
        […] of its turnover of more than EUR 11 billion. Its total revenues in MSS (both
60  Form CO, paragraph 6.159.
                                                   17
 ---pagebreak---          B2C and B2B) are around EUR […] million and therefore more than […] times
         larger than the revenues of HotelsCombined.
(84)     HotelsCombined's home region is the Asia-Pacific region. It is small in the EEA,
         with revenues of around EUR […] million for MSS excluding commercial
         affiliate programmes (i.e., MSS services to travellers, B2C) and another EUR […]
         million for MSS commercial affiliate programmes (B2B). HotelsCombined
         largest customer for affiliate programmes was […]which accounted for […] of
         HotelsCombined revenues in 2017 when the contract was terminated […].
         Moreover, HotelsCombined only offers MSS services for hotels, while Booking
         Holdings in 2017 earned [the majority] of its MSS revenues with flights and only
         […]% with hotels.
(85)     In addition to the Parties, other MSS providers active in the EEA include large
         global players, such as Google,61 Trivago, Skyscanner and TripAdvisor, which
         are all larger than the merged entity at the EEA level for MSS services, as well as
         a number of well-established national players.
 5.3. Horizontal effects
5.3.1. MSS
5.3.1.1. MSS - including commercial affiliate programmes
(86)     For all MSS, i.e. including commercial affiliate programmes (B2B+B2C), at
         national level, the Parties submit that estimating market shares is challenging. 62
         However, on a theoretical and conservative basis, the Parties submit that the
         Parties' combined market share is less than 20% in all EEA Member States except
         Denmark ([30-40]% with an increment of                           [5-10]% brought about by
         HotelsCombined) and Sweden ([20-30]%, with an increment of [5-10]% brought
         about by HotelsCombined) in the hotels segment. However, by taking into
         account the termination of HotelsCombined's contract with […], the Parties'
         combined market share will be less than [30-40]% in Denmark and less than [20-
61  Only in respect of MSS excluding commercial affiliate programmes (B2C).
62  The Parties submit that the estimation of market shares from the supply of MSSs commercial affiliate
    programmes is challenging given that (i) the Parties are not aware of any reliable and comprehensive
    source of market share data and (ii) it is not possible to identify with accuracy the number and identity
    of competitors' customers of commercial affiliate programmes. The Parties prepared estimates of
    market shares from the supply of commercial affiliate services as follows: (a) the estimates used the
    KAYAK Group’s and HotelsCombined’s actual revenues as an input. These revenues were allocated
    to the country in which the domain of the commercial affiliate customer is located or, in the case of a
    ‘.com’ domain, the location of the consumer ‘click’ or booking. These revenues were net of payments
    to affiliates. (ii) KAYAK Group used these actual revenues to estimate the revenues generated by its
    key competitors in the supply of MSSs affiliate services, taking into account any material customers
    known of, the likely number of ‘long-tail’ links customers, the level of commission charged (where
    publicly available) and, where appropriate, the extent to which an affiliate provider may benefit from
    having a well-known MSS excluding commercial affiliate programmes presence in a given market,
    (iii) These estimates were adjusted to take into account feedback from the business team in
    HotelsCombined. The market investigation confirmed that precise market share data is not readily
    available and the Parties' competitors do not tend to have a good market overview either. However, the
    market investigation confirmed the relative position of the merging parties and their main competitors
    based on turnover data. (Form CO, Annex 3)
                                                          18
 ---pagebreak---         30]% in Sweden. As outlined above, the market shares are driven by the
        comparative size of the B2C segment and including the B2B segment does not
        have any material impact on the market shares.
(87)    At EEA level, according to the Parties' best estimates, the Parties' combined
        market share is [5-10]% (with an increment of [0-5]% brought about by
        HotelsCombined) in the hotels segment. The Parties submit that the estimated
        EEA-wide B2C market size is EUR […] million, whilst the B2B segment is only
        EUR […] million, i.e. [0-5]% of the size of the B2C segment. Market shares are
        driven by the B2C position and including B2B revenues does not have any
        material impact on market shares, given the comparatively non-significant size of
        the B2B segment.
(88)    According to the Parties' best estimates, the Parties' combined market share at
        worldwide level is [5-10]% (with an increment of [0-5]% brought about by
        HotelsCombined) in all travel. In the hotels segment, according to the Parties' best
        estimates, the Parties' combined market share at worldwide level is [0-5]% (with
        an increment of [0-5]% brought about by HotelsCombined). Market shares are
        driven by the B2C position. The Parties submit that commercial affiliate
        programme revenues in the hotels segment are only EUR […] million in a
        combined worldwide B2C and B2B market of EUR […] billion. In conclusion,
        including B2B revenues does not have any material impact on market shares
        given the comparatively non-significant size of the B2B market.
(89)    There are several reasons why the proposed Transaction will not lead to any
        serious doubts in this potential market, other than the small to modest combined
        market shares. First, the Parties are not close competitors, as HotelsCombined is
        only active in hotel MSS while Booking Holdings mostly provides flights MSS.
        Therefore, prior to the proposed Transaction, the constraint imposed on Booking
        Holdings by HotelsCombined is negligible. Second, as confirmed by the market
        investigation, the merged entity will continue to be constrained by important
        competitors, such as TripAdvisor, Trivago and Skyscanner.
(90)    Moreover, the majority (two-thirds) of the respondents to the market investigation
        expressed an intention to enter or expand their services in MSS excluding
        commercial affiliate services in the next 3 years. And the majority (more than
        three-quarters) of respondents to the market investigation expressed an intention
        to enter or expand their services in MSS commercial affiliate programmes in the
        next 3 years. Of those respondents who expressed an intention to enter or expand,
        more than 70% stated this would apply to both hotels and flights; and more than
        70% stated this would include all or part of the EEA. This indicates that barriers
        to entry and expansion are low. The investment costs for entering the market are
        limited and MSS providers do not need a physical presence to be able to operate
        in a given EEA Member State. Many incumbents seem to be well placed to
        expand their market presence.
5.3.1.2. MSS excluding commercial affiliate programmes
(91)    For all travel MSS excluding commercial affiliate programmes, according to the
        Parties' best estimates, the Parties' combined market shares are [20-30]%, [50-
        60]% and [20-30]% in Austria, Denmark and Sweden respectively, but the
                                                19
 ---pagebreak---        increment brought about by HotelsCombined is de minimis (below [0-5]%) in
       each of these countries.63 Moreover, the Parties are not close competitors, as
       HotelsCombined is only active in hotel MSS while Booking Holdings mostly
       provides flight MSS. Therefore, prior to the proposed Transaction, the constraint
       imposed on Booking Holdings by HotelsCombined is negligible. In addition, the
       merged entity will continue to be constrained by important competitors:
       (a)       In Austria, by Trivago, TripAdvisor and Google64 (among others), with
                 market shares of [20-30]%, [10-20]% and [10-20]% respectively.
       (b)       In Denmark, by Google with a market share of [10-20]% (and growing),
                 as well as smaller but well-established players such as TravelSupermarket,
                 Skyscanner, TripAdvisor and Trivago, each with market shares of [5-10]%
                 to [5-10]%.
       (c)       In Sweden, by Flygresor, Google and Skyscanner, with market shares of
                 [20-30]%, [10-20]% and [10-20]% respectively.
(92)   For hotels MSS, according to the Parties' best estimates, the Parties' combined
       market share is [30-40]% in Denmark and [20-30]% in Sweden, with an
       increment of [0-5]% in each country, while Austria is not an affected market. As
       with all travel MSS, the merged entity will be constrained by strong competitors:
       (a)       In Denmark, by Trivago with a market share of [20-30]% and Google with
                 a market share of [10-20]%, as well as by Skyscanner, TripAdvisor and
                 TravelSupermarket, each with market shares of [10-20]% to [10-20]%.
       (b)       In Sweden, by Trivago, Flygresor and Google, with market shares of [20-
                 30]%, [20-30]% and [10-20]% respectively.
(93)   For the EEA as a whole, according to the Parties' best estimates, the combined
       market share is [10-20]% for all travel and [0-5]% for hotels, whilst at worldwide
       level it is [5-10]% for all travel and [0-5]% for hotels.
(94)   Moreover, the majority (two-thirds) of the respondents to the market investigation
       expressed an intention to enter or expand their services in MSS excluding
       commercial affiliate services in the next 3 years. This indicates that barriers to
       entry and expansion are low. The investment costs for entering the market are
       limited and MSS providers do not need a physical presence to be able to operate
       in a given EEA Member State. Many incumbents seem to be well placed to
       expand their market presence.65
(95)   The majority of the respondents who expressed such an intention included both
       hotels and flights in their entry or expansion plans, the segments in which the
       Parties are strongest. Furthermore, the majority of the respondents who expressed
63 See footnote 62 above on the methodology for the calculation of market shares.
64 For flights and hotels (B2C, excluding commercial affiliate programmes).
65 Form CO, paragraph 6.221. See also M. 8416 – Priceline/Momondo, paragraph 107.
                                                     20
 ---pagebreak---          such an intention included all or part of the EEA in the geographic scope of their
         expansion plans.
5.3.1.3. MSS commercial affiliate programmes66
(96)     At a worldwide level, according to the Parties' best estimates, the Parties'
         combined market share in MSS commercial affiliate programmes would be [20-
         30]% with an increment of [5-10]% brought about by the Kayak Group.
(97)     In the EEA, according to the Parties' best estimates, the Parties' combined market
         share would be [30-40]% for 2017, (HotelsCombined [10-20]%, Kayak Group
         [10-20]%). HotelsCombined's market share is, however, overstated because
         approximately […]% of its EEA turnover in 2017 is attributable to two contracts
         (with […]) in respect of which, the Parties submit that notice to terminate was
         served prior and independently to the proposed Transaction.67 As a consequence,
         the Parties' combined market share would drop to around [20-30]% (with an
         increment of [10-20]%).
(98)     At national level, given that there is no reliable data, the Parties submit that they
         believe that HotelsCombined's market share will be higher in the Nordic countries
         than elsewhere in the EEA. However, […]. Given that the contract with […]was
         terminated, HotelsCombined's 2018 revenues and market shares in the Nordic
         countries will be significantly lower than in 2017.
(99)     The Parties will continue to be constrained by large competitors such as
         Skyscanner, Trivago and TripAdvisor among others, with market shares of [20-
         30]%, [10-20]% and [10-20]% respectively.
(100) The Parties are not close competitors, as HotelsCombined is only active in hotels
         while [the majority] of Booking Holdings' MSS commercial affiliate programme
         revenues are accounted for by flights.
(101) Focussing on the hotels segment, according to the Parties' best estimates, the
         Parties' combined market share at worldwide level would be [30-40]% with an
         increment of [0-5]% brought about by the Kayak Group. According to the Parties'
         best estimates, the Parties' combined market share would be [40-50]% in the
         EEA, with an increment of only [0-5]% brought about by the Kayak Group.
(102) There are several strong competitors such as Trivago and TripAdvisor with EEA
         market shares of [20-30% and [20-30]% respectively. The market investigation,
         on the basis of turnover data, confirmed the relative position of the Parties and
         their main competitors in the markets considered.
(103) At national level,68 given that there are is no reliable data, the Parties submit that
         they expect that in all the EEA Member States other than the Nordic countries (in
66  See footnote 62 above on the methodology for the calculation of market shares.
67  Contracts won recently are included.
68  Booking Holdings notes that KAYAK Group’s hotels MSS B2B revenues across the EEA as a whole
    are just €[…]. HotelsCombined’s revenues are […] times larger at €[…] million.
                                                      21
 ---pagebreak---         which market shares are expected to be higher), the Parties' combined hotels MSS
        commercial affiliate programmes market share would be less than [30-40]% (with
        an increment brought about by KAYAK Group of [10-20]% or less in all such
        Member States and be [5-10]% or less in most such Member States). In the
        Nordic countries, KAYAK Group is only active in Denmark and Sweden,
        generating just EUR […] of revenue. The increment brought about by KAYAK in
        each of these Member States would be significantly less than [0-5]%.
(104) The Parties are not close competitors due to their complementary product
        offerings. HotelsCombined focusses exclusively on the hotels segment, while the
        Kayak Group has a focus on flights.
(105) Moreover, the majority (more than three-quarters) of respondents to the market
        investigation expressed an intention to enter or expand their services in MSS
        commercial affiliate programmes in the next 3 years. Of those respondents who
        expressed an intention to enter or expand, more than 70% stated this would apply
        to both hotels and flights; and more than 70% stated this would include all or part
        of the EEA.
(106) This indicates that there are low barriers to entry and expansion for an existing
        MSS provider seeking to provide commercial affiliate services in a sector in
        which it is active as a B2C MSS provider. Once a consumer-facing MSS provider
        has the OTA/TSP inventory and the technology to provide a search and
        comparison functionality it can begin providing commercial affiliate services
        relatively quickly and at a low cost.
5.3.2. MSS and OTAs
5.3.2.1. MSS and OTAs combined, excluding commercial affiliate programmes
(107) The Parties submit that accurate data on total market volumes and consequently
        Booking Holdings' share of the hotels OTA segment is not available. This
        statement was confirmed by the market investigation. As a consequence, the
        Parties have adopted a conservative approach and assumed that the market for
        MSS and OTAs combined, excluding commercial affiliate services, for all travel
        and hotels is affected at global, EEA and national level.69
(108) At worldwide level, according to the Parties' best estimates, the Parties' combined
        market share for all travel MSS and OTAs combined, excluding commercial
        affiliate programmes is [20-30]%, with an increment brought about by
        HotelsCombined of less than [0-5]% for all travel. For hotels MSS and OTAs
        combined, excluding commercial affiliate programmes, at worldwide level,
        according to the parties' best estimates, the Parties' combined market share is [20-
        30]%, with an increment of less than [0-5]%.
(109) At EEA level, according to the Parties' best estimates, the market for MSS and
        OTAs for hotels excluding commercial affiliate programmes is affected. […].70
69  Form CO, paragraphs 6.271 and ff.
70  Form CO, paragraph 6.274: […].
                                                 22
 ---pagebreak---         The Parties submit that […], the increment brought about by HotelsCombined
        would be less than [0-5]%.71
(110) At national level, the Parties estimate the increment at Member State level to be
        below [0-5]% for each Member State and below [0-5]% in the majority of
        Member States. Even under the most conservative estimate, the increment is
        below [0-5]% in all Member States.
(111) In a market for MSS and OTA for all travel services, the increment would be
        smaller still, as HotelsCombined is only active in hotels.
(112) The market investigation, on the basis of turnover data, confirmed the relative
        position of the Parties in the markets considered. The Parties will continue to be
        constrained by competitors active in the MSS segment (such as Google, Trivago,
        TripAdvisor and Skyscanner), as well as OTAs (such as Expedia, Airbnb and
        HRS).
(113) The entry plans mentioned in the section on MSS directly above also apply to a
        broader market encompassing both MSS and OTA. This indicates that barriers to
        entry and expansion are low. The investment costs for entering the market are
        limited. Many incumbents seem to be well placed to expand their market
        presence.
5.3.2.2. MSS and OTA combined - commercial affiliate programmes72
(114) According to the Parties' best estimates, the Parties' combined market share in a
        broad market encompassing OTA and MSS commercial affiliate programmes for
        all types of travel is [30-40]% at worldwide level with an increment brought
        about by HotelsCombined of [0-5]%. In the EEA, according to the Parties' best
        estimates, the Parties' combined market share is [30-40]% with an increment
        brought about by HotelsCombined of only [0-5]%. The Parties will continue to be
        constrained by large competitors such as Expedia, CarTrawler and Hotelbeds
        among others, with market shares of [20-30]%, [10-20]% and [10-20]%
        respectively.
(115) At national level, given that reliable data is not available, the Parties submit that
        they expect the increment to be moderate in all EEA Member States except
        possibly the Nordic countries. However, the Parties highlight that due to the fact
        that HotelsCombined's contract with […], was terminated in 2017,
        HotelsCombined's revenues in the Nordic countries and the relevant increment
        will have reduced.
(116) Focussing on the hotels segment in a market combining MSS and OTA,
        commercial affiliate programmes, according to the Parties' best estimates, the
        combined market share at worldwide level would be [40-50]% with an increment
        brought about by HotelsCombined of [0-5]%. At EEA level, according to the
71  The Parties submit that they do not have reliable information on the market size and thus on their own
    market shares, let alone competitors' market shares. The increment analysis is based on a comparison
    between the two Parties' revenues.
72  See footnote 62 above on the methodology for the calculation of market shares.
                                                        23
 ---pagebreak---         Parties' best estimates, the combined market share would be [40-50]% with an
        increment of [0-5]% brought about by HotelsCombined. The Parties will continue
        to be constrained by large competitors such as Expedia and Hotelbeds among
        others, with market shares of [20-30]% and [10-20]% respectively.
(117) At national level, given that reliable data is not available, the Parties submit that
        they expect the increment to be significantly less than [5-10]% in all EEA
        Member States except possibly the Nordic countries. However, the Parties
        highlight that due to the fact that HotelsCombined's contract with […], was
        terminated in 2017, HotelsCombined's revenues in the Nordics and the relevant
        increment will have reduced.
(118) The Parties are not close competitors in a potential market for MSS and OTA
        commercial affiliate programmes, as the vast majority of Booking Holdings
        turnover is derived from the OTA segment in which HotelsCombined is not
        active. The entry plans mentioned in the section on MSS commercial affiliate
        programmes directly above also apply to a broader market encompassing both
        MSS and OTA commercial affiliate programmes. Commercial affiliate
        programmes are characterised by low barriers to entry and expansion. While
        barriers to entry in respect of consumer-facing OTA services are generally higher
        than consumer-facing MSS, the same does not hold in respect of OTA and MSS
        commercial affiliate programmes as, in both cases, commercial affiliate
        programmes are simply an add-on to the consumer-facing site and require little
        promotional investment.
5.3.2.3. Conclusion on MSS and OTAs
(119) The Commission considers that it is not necessary to assess the impact of the
        proposed Transaction on a broader possible affected market for MSS and OTA
        combined including commercial affiliate programmes73 for the following reasons:
        (i) the Parties do not overlap in the OTA segment, (ii) the market position will be
        driven by the B2C segment, (iii) according to the Parties' best estimates, the
        combined market share at worldwide level is [20-30]% (with an increment of less
        than [0-5]% ) for each of all travel and hotels, (iv) the relevant increment at EEA
        level for hotels would be less than [0-5]%,74 (v) at national level,75 the Parties
        expect that the increment for the hotels segment in the Nordic countries and
        Ireland will be [0-5]% or less and considerably below [0-5]% in all other Member
        States.
73  There is no reliable data for the OTA and for the commercial affiliate segments.
74  Booking Holdings’ hotels OTA revenues (B2C and B2B) were around €[…]bn in the EEA in 2017.
    HotelsCombined’s hotels MSS revenues (B2C and B2B) were €[…]m in the EEA.
75  The Parties submit that across the EEA as a whole, Booking Holdings’ OTA B2C+B2B revenues were
    around €[…]bn in the hotels segment in 2017. HotelsCombined only had revenues of €[…]m in the
    EEA as a whole. Booking.com’s hotels OTA B2C+B2B revenues are at least […] larger than
    HotelsCombined’s MSS B2C+B2B revenues in all member states (indeed, they are […] larger in all
    Member States outside the Nordic countries and Ireland).
                                                        24
 ---pagebreak--- 5.3.3. General view of market participants
(120) The majority of the respondents to the market investigation (two-thirds) did not
       raise any concerns about the competitive effects of the proposed Transaction.
       One-third of the competitors who responded to the market investigation expressed
       the general concern that, due to the fact that post-Transaction there will be one
       less independent MSS provider in the market, the proposed Transaction would
       lead to increased concentration or increase the market power of Booking
       Holdings. None of the respondents who raised such concerns provided any
       evidence for the strength of the competitive constraint imposed by
       HotelsCombined or the closeness of competition between the Parties to counter
       the small increment and the complementarity of the Parties in terms of type of
       travel service mentioned above.
5.3.4. Summary and conclusion on horizontal effects
(121) Irrespective of the precise market definition, in all horizontally affected markets,
       the increment brought about by HotelsCombined (or KAYAK Group) is small or
       even negligible, with the exception of MSS commercial affiliate programmes for
       all travel services provided by MSS, where however the combined market share is
       moderate; the Parties are not close competitors as HotelsCombined is only active
       in hotels while Booking Holdings is much stronger in flights; the merged entity
       will continue to be constrained by large and well-known competitors and there is
       evidence for entry or expansion plans including for flights and hotels in the EEA.
(122) Therefore, the Commission concludes that the proposed Transaction does not
       raise serious doubts as to its compatibility with the internal market as regards the
       Parties' horizontal overlaps.
 5.4. Vertical effects
(123) The proposed Transaction also gives rise to three groups of vertically affected
       potential markets, namely (i) MSS in the hotels segment (excluding commercial
       affiliate services) – OTAs in the hotels segment (excluding commercial affiliate
       services); (ii) MSS commercial affiliate programmes in the hotels segment – MSS
       excluding commercial affiliate programmes in the hotels segment; and (iii)
       combined MSS and OTA commercial affiliate services in the hotels segment –
       MSS in the hotels segment (excluding commercial affiliate services).
5.4.1. Market for the supply of MSS in the hotels segment (excluding commercial
       affiliate programmes) to OTAs in the hotels segment (excluding commercial
       affiliate services)
(124) Both Parties are active in the upstream market for MSS for hotels (excluding
       commercial affiliate programmes). HotelsCombined is only active in the hotels
       segment. The Commission therefore considers that any foreclosure of lead
       generation services by MSS or OTAs resulting from the proposed Transaction
       derive from the Parties' position in hotels MSS, since this is the only market
       segment in which the merged entity would have a stronger position post-
       Transaction. Consequently, even on a broader market for all travel OTAs, what
       would be impacted by such input foreclosure strategy would be traffic directed to
                                               25
 ---pagebreak---         hotels OTAs. Therefore, the input foreclosure analysis focussed on the
        relationships between hotel MSS and hotels OTAs.76
5.4.1.1. MSS excluding commercial affiliate programmes in the hotels segment
        (upstream)
(125) According to the Parties' best estimates, the Parties' combined market share in the
        upstream market for MSS for hotels excluding commercial affiliate services is [0-
        5]% at worldwide level, [0-5]% at EEA level and less than 30% in all EEA
        Member States (with the only exception of Denmark, in which it will be [30-
        40]%).
5.4.1.2. OTAs excluding commercial affiliate programmes (downstream)
(126) There is no overlap between the Parties at OTA level as HotelsCombined is only
        active at MSS level. In addition, the Parties submit that Booking Holdings does
        not have accurate data on its share of the hotels OTA segment.
5.4.1.3. Input foreclosure
(127) With regard to ability, the Parties will have no ability to foreclose rival OTAs,
        given that, according to the Parties' best estimates, the Parties' combined market
        share in the upstream market for MSS for hotels excluding commercial affiliate
        programmes is only [0-5]% at global and at EEA level and below 30% in all the
        EEA Member States with the only exception of Denmark.
(128) With regard to incentive, the Parties submit that vertical integration is already
        commonplace in the industry, yet this has not led to input foreclosure. In addition,
        any hypothetical strategy by the Parties to delist rival OTAs would likely drive
        consumers to bigger rivals. Moreover, vertically integrated rivals could retaliate,
        thereby further reducing the incentives to engage in input foreclosure.
5.4.1.4. Customer foreclosure
(129) With regard to ability to foreclose, in the present case it is difficult to assess
        whether the Parties will have the ability to foreclose rival hotels MSS by only
        listing Booking Holdings' hotels OTAs on the Parties' MSS post-Transaction,
        since there are no accurate data available on Booking Holdings' share of the
        hotels OTA segment.
(130) However, the Parties will have no incentive to engage in customer foreclosure, by
        refusing to list their OTAs on rivals' MSS platforms, since Booking.com
        generates approximately […]-times the revenues generated by the Parties'
        combined MSS excluding commercial affiliate programmes. In addition,
        Booking.com receives less than […]% of its MSS traffic from the Parties' MSS.
76  M. 8416 – Priceline/Momondo, paragraph 165 in which the relevant market segment was flights.
                                                   26
 ---pagebreak--- 5.4.2. Market for the supply of MSS commercial affiliate programmes in the hotels
        segment – to MSS excluding commercial affiliate services in the hotels segment
(131) HotelsCombined is only active in the hotels segment, whilst Booking Holdings is
        active in relation to travel services more broadly. As a result, equivalent markets
        for the supply of travel services would also be technically vertically affected.
        However, the Commission considers that, given that there would only be an
        overlap in the hotels segment, any input foreclosure strategy would only impact
        the operation of hotels MSS and any customer foreclosure strategy would only
        affect the operation of hotels commercial affiliate programmes. As a
        consequence, it is only necessary to examine relationships between the provision
        of hotels commercial affiliate programmes and the operation of MSS and OTAs
        for hotels.77
5.4.2.1. MSS commercial affiliate programmes in the hotels segment (upstream)
(132) According to the Parties' best estimates, the Parties' combined market share is
        [30-40]% at worldwide level and [40-50]% at EEA level, and there will also be
        affected markets at national level. However, the above-mentioned market shares
        are overstated. Once adjusted to take into account HotelsCombined's loss of the
        […] contracts (and even if updated to reflect anticipated revenues from new
        customers) market shares will be lower.
5.4.2.2. MSS excluding commercial affiliate programmes in the hotels segment
        (downstream)
(133) According to the Parties' best estimates, the Parties' combined market share in the
        downstream market for MSS excluding commercial affiliate services in the hotels
        segment is [0-5]% at worldwide level, [0-5]% at EEA level and less than 30% in
        all EEA Member States (with the only exception of Denmark, in which it will be
        [30-40]%).
5.4.2.3. Input foreclosure
(134) With regard to ability to foreclose, the Parties will have no ability to foreclose
        rival MSS providers in the hotels segment. The Parties' combined market share is
        overstated as it should be adjusted to take into account the loss of the […]
        contracts (and even if updated to reflect anticipated revenues from new
        customers) the Parties' combined share would be lower. In addition, the merged
        entity will continue to be constrained by major MSS competitors such as Trivago,
        TripAdvisor and Skyscanner.
(135) With regard to incentive to foreclose, the Parties will have no incentive to refuse
        to supply hotels MSS commercial affiliate programmes to rival MSS providers or
        to raise their costs. Indeed, […]. An input foreclosure strategy would put at risk
        HotelsCombined's commercial affiliate revenues, which account for [the
        majority] of its EEA revenues, without a clear benefit for the Parties.
(136) In addition, any plausible input foreclosure strategy would only benefit Booking
        Holdings' MSS if it had a strong presence in the downstream MSS market in the
77  M. 8416 – Priceline/Momondo, footnote 97 to paragraph 193.
                                                     27
 ---pagebreak---          hotels segment. Even if an input foreclosure were pursued, it is unlikely that
         consumers would switch to one of the Parties' brands in sufficient numbers to
         compensate for the loss of the upstream revenues. Furthermore, existing vertical
         integration in the sector has not led to foreclosure.
5.4.2.4. Customer foreclosure
(137) The merged entity will have neither the ability nor the incentive to engage in
         customer foreclosure, i.e. to raise the price of (or refuse access to) MSS services
         excluding commercial affiliate services (i.e., B2C), since the Parties' combined
         market share in the downstream market is limited and the Parties are not
         customers of MSS commercial affiliate services, with the only exceptions of (i)
         […] and (ii) […].
5.4.3. Market for the supply of both MSS and OTA commercial affiliate programmes in
         the hotels segment – to both MSS and OTA in the hotels segment (excluding
         commercial affiliate services)
5.4.3.1. MSS and OTA commercial affiliate programmes in the hotels segment
         (upstream)
(138) According to the Parties' best estimates, the Parties' combined market share is
         [40-50]% at worldwide level (with an increment of [0-5]%) and EEA level (with
         an increment of [0-5]%), and there will also be affected markets at national level.
5.4.3.2. MSS and OTAs in the hotels segment (excluding commercial affiliate services)
         (downstream)
(139) At worldwide level, according to the Parties' best estimates, the Parties' combined
         market share is [20-30]%, with an increment lower than [0-5]%. At EEA level,
         according to the Parties' best estimates, the combined share is affected. The
         Parties provided […].78 The Parties submit that […], the increment would be less
         than [0-5]%.79 At national level, the Parties estimate the increment at Member
         State level to be below [0-5]% for each Member State and below [0-5]% in the
         majority of Member States. Even under the most conservative estimate, the
         increment is below [0-5]% in all Member States.
5.4.3.3. Input foreclosure
(140) With regard to ability to foreclose, the Parties will have no ability to foreclose
         rival MSS and OTAs as a number of major MSS will continue to provide
         commercial affiliate programmes in the hotels segment. In addition, the increment
         brought about by the proposed Transaction is limited. However, even assuming
         that the Parties will have ability to foreclose, they will have no incentive.
78  Form CO, paragraph 6.274: the Parties have conducted the assessment […].
79  The Parties submit that they do not have reliable information on the size of the market and thus on
    their own market shares, let alone competitors' market shares. The increment analysis is based on a
    comparison between the two Parties' revenues.
                                                      28
 ---pagebreak--- (141) With regard to incentive to foreclose, the Parties will have no incentive to refuse
        to supply MSS or OTA commercial affiliate programmes for hotels to rival MSS
        or OTAs. […]. Thus, any input foreclosure is unlikely to benefit the Parties. In
        addition, the Parties submit that vertical integration by their competitors has not
        led to foreclosure.
5.4.3.4. Customer foreclosure
(142) With regard to ability and incentive to foreclose, the proposed Transaction cannot
        give rise to a risk that rival providers of MSS and OTA commercial affiliate
        programmes for hotels will be foreclosed as the Parties are not customers of
        hotels OTA commercial affiliate programmes.
5.4.4. Summary and conclusion on vertical effects
(143) For the reasons set out above, irrespective of the precise market definition, in all
        vertically affected markets, the merged entity will not have the ability and
        incentive to engage in customer or input foreclosure. Therefore, the Commission
        concludes that the proposed Transaction does not raise serious doubts as to its
        compatibility with the internal market as regards the Parties' vertical links.
6.      CONCLUSION
(144) For the above reasons, the European Commission has decided not to oppose the
        notified operation and to declare it compatible with the internal market and with
        the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of
        the Merger Regulation and Article 57 of the EEA Agreement.
                                                       For the Commission
                                                       (Signed)
                                                       Margrethe VESTAGER
                                                       Member of the Commission
                                                29