In September 2023, the European Commission (EC) blocked Booking Holding’s acquisition of the Swedish travel agency firm eTraveli, a decision which is believed to be the first merger prohibition on the grounds of an ‘ecosystem theory of harm’ in the digital space. Drawing on the Booking/eTraveli decision, Analysis Group Vice President Devin Reilly and Manager Olga Kozlova Guglielmi have coauthored an article that explores the ways in which European regulators are articulating their thinking on digital ecosystems in merger control.
Digital ecosystems – i.e., large platforms (such as Booking.com) that provide multiple products and services (such as travel services) that may exhibit supply- and demand-side linkages among them – can create benefits for users. However, regulators may have concerns that a platform may generate a competitive advantage solely through the joint supply of products. Regulators, including in this decision, appear to be assessing how a merger might lead to market entrenchment or the creation of barriers to entry under novel ecosystem theories.
In their article, the authors trace the evolution of the concept of digital ecosystems in antitrust policy discourse, including a review of related regulator theories of potential competitive harm. They also discuss the role of such theories in merger reviews, with a particular focus on the EC’s Booking/eTraveli decision. The authors conclude with the potential risks of overenforcement in the presence of unresolved questions surrounding the evolving ecosystem framework.
The article, “Ecosystem Theories of Harm in Merger Enforcement: Current Direction and Open Questions,” was published in the Journal of European Competition Law & Practice.
Associated People
Devin Reilly
Dr. Reilly specializes in the application of economic and financial analysis to litigation, regulatory investigations, and consulting efforts in a range of areas, including antitrust and competition, finance and securities, class certification, and intellectual property (IP). He has conducted economic analyses and led case teams in support of academic and industry experts. Dr. Reilly’s antitrust and competition case work includes analyzing market definition and competitive effects, two-sided markets, damages, and class certification, as well as supporting parties’ compliance with merger and investigative requests. His experience also includes analyzing lost profits, reasonable royalties, and commercial success in IP cases; evaluating materiality of disclosures in securities litigations; supporting industry experts in financial services matters; and analyzing class certification in technology, finance, and other industries. Dr. Reilly has worked on behalf of both the US government and prominent firms in industries such as technology, telecommunications, e-commerce, financial services, pharmaceuticals and medical devices, and manufacturing. His research on corporate governance, innovation and entrepreneurship, and public economics has been published in The Review of Financial Studies, among other publications. He currently serves as the Young Economist Representative for the American Bar Association’s Antitrust Magazine. Dr. Reilly received the Joel Popkin Graduate Student Teaching Prize in Economics and the Lawrence Robbins Prize in Economics, both from the University of Pennsylvania.