Introduction

From 1 July 2015, Booking.com, the online hotel room booking portal, will remove a “broad” price parity clause in its agreements with hotels in a settlement reached with competition authorities in France, Sweden and Italy.

This follows a draft settlement agreement reached with these three authorities in December 2014 under an investigation into the way in which hotel room booking platforms set their prices.

The concern of various national competition authorities, as well as the European Commission, has been that travel websites such as Booking.com enter into agreements which prevent hotels from engaging in effective price competition.

The settlement

Under the terms of the settlement, which will be implemented across Europe on 1 July 2015, Booking.com must remove what has been deemed a “broad” price parity clause from its agreements with hotels.

The clause in question ensured that the website received at least the same, if not better, room rates from the relevant hotels; the purpose of the clause was to guarantee that Booking.com got no worse a deal than other available sales channels.

The company has stated that it will apply the terms of the settlement across its EU operations in order that it takes an approach that is consistent and competition law compliant.

This may have been aimed at getting other competition authorities to end their probes into the company. However, the move has not prevented it from receiving formal charges from the Bundeskartellamt in Germany, which rejected Booking.com’s offer of a change in practice to reach settlement.

Comment

On 15 June 2015, Margrethe Vestager, the head of antitrust for the EU, stated that Germany’s pursuit of charges against Booking.com while three other competition agencies settled the case shows that the European Commission should intervene earlier to avoid divergent outcomes.

Recently, the Bundeskartellamt charged HRS, another online hotel booking portal, with using “best-price” clauses which required that hotels must always provide HRS with the lowest rates for rooms, the highest number of available rooms and the most favourable terms for reserving and cancelling rooms on the internet, whether on other booking or reservation platforms or on their own homepages (see our previous briefing on the case here).

The different approaches to these cases taken within the EU demonstrates not only the complexity of competition law issues at play in relation to vertical restrictions and online markets, but also the difficulty for businesses operating under a regime where “decisions are taken using the same rules but with different results.”

It is perhaps time that the European Commission issued clearer guidance on online selling issues such as this. The Commission’s 2010 Guidelines on Vertical Restraints, which at the time provided much needed but less than comprehensive guidance, are now in real need of updating to take account of the rapid development of online sales. It is possible that this will result from the Commission e-commerce inquiry (see further here), though with a final report not expected until 2017, in the meantime it will be vitally important that businesses keep a close eye on developments and regularly assess their practices.