On 13 July 2016, the Competition and Markets Authority (CMA) announced the launch of a project to monitor how changes to room pricing terms, introduced largely as a result of its recent enforcement activity, are affecting the online hotel booking sector. The CMA has sent a questionnaire to a large sample of hotels in the UK as part of a joint project with the European Commission and national competition authorities in Belgium, the Czech Republic, France, Germany, Hungary, Ireland, Italy, the Netherlands and Sweden, who have all issued comparable questionnaires. Hotels in the UK which have not been contacted directly are also invited to provide their views.
The online hotel booking sector has been the subject of investigation in a number of jurisdictions due to allegations that various pricing practices of Online Travel Agents (OTAs) infringe competition law. The principal concern is rate parity provisions, where hotels are forced to maintain the same room rates across different distribution channels, by agreeing not to offer cheaper room rates on competing OTA sites. The main examples of investigations are as follows:
- In September 2015, the CMA announced that it had decided to close its investigation into pricing restrictions imposed by OTAs on the grounds of administrative priority and stated that it would continue monitoring OTA pricing practices. This followed a July 2015 announcement by Expedia and booking.com that they would remove rate parity provisions from their standard terms and conditions.
- In December 2015, the German Federal Cartel Office prohibited the use of “best price” clauses applied by booking.com, following a similar decision in December 2013 against another OTA (HRS) which was subsequently upheld on appeal.
- Several other competition authorities have launched investigations in relation to similar parity restrictions. For instance, in April 2015, the French, Italian and Swedish competition authorities accepted commitments offered by booking.com to amend its price, availability and parity provisions with respect to other OTAs and certain other sales channels.
It is clear that the online hotel booking sector is an enforcement focus for competition authorities across the EU and the CMA’s announcement reiterates its “ongoing commitment to watch this market closely” in the light of concerns expressed by hotels. Hotels generally have until 8 August 2016 to respond to the current questionnaire and consultation exercise. The joint monitoring work, which the CMA anticipates will be completed by the end of 2016, can be expected to lead to a decision by the CMA and/or other competition agencies as to whether further competition law action in this sector is called for.