Ecosystem Theories of Harm in Merger Enforcement: Current Direction and Open Questions
19 Pages Posted: 19 Mar 2024
Date Written: February 29, 2024
Abstract
• The European Commission’s decision blocking Booking’s acquisition of eTraveli is believed to be the first merger prohibition on the grounds of an ‘ecosystem theory of harm’ in the digital space.
• Regulators in Europe have been questioning whether economic relationships across the different products or services supplied by large platforms – referred to as ‘digital ecosystems’ – could result in the entrenchment of any pre-existing market dominance or the creation of barriers to entry in one or more of the markets comprising the ecosystem.
• Although little guidance has been provided to date on how European regulators may articulate their thinking on digital ecosystems in merger control, clues can be found in the EC’s press release announcing the Booking/eTraveli decision, as well as in several previous investigations by the EC and recent policy papers and statements.
• Regulators, firms, and practitioners will need a better understanding of the factors that turn demand- and supply-side linkages across products or services in a digital ecosystem into a competitive concern after an acquisition, as well as guidance on the appropriate treatment of efficiencies and remedies.
Keywords: Digital ecosystems, digital platforms, mergers, digital regulation, competition policy, demand-side complementarities, ecosystem theories of harm, merger enforcement, supply-side linkages, demand-side linkages
Suggested Citation: Suggested Citation