This article is being republished, as an earlier version contained a factual error regarding the fine amount.
Alongside other EU competition authorities, the Office for the Protection of Economic Competition recently reviewed vertical aspects of online platforms and distribution channels, ultimately fining online booking platform Booking.com Kc8.3 million (approximately €0.33 million) for using most-favoured-nation (MFN) clauses in its contracts with hotels.(1)
In its first-instance decision, the office concluded that Booking.com BV had acted in breach of competition law by including MFN clauses in contracts with short-term accommodation providers (hotels). According to the office, the decision followed an in-depth investigation, during which hundreds of hotels were approached.
Booking.com allegedly entered into vertical agreements with hotels in the Czech Republic between 1 May 2009 and 30 June 2015, which distorted competition in the Czech online booking platform market for hotels and potentially other EU countries.
The restrictive MFN clauses required Booking.com's contractual partners to offer the platform the same or better conditions as regards the price of accommodation and availability of rooms than those available on the hotel's website or on any other online or offline distribution channel used by the hotel. In effect, according to the office, these clauses:
- restricted competition among existing online websites, as they dissuaded them from offering lower prices or room availability; and
- prevented new booking platforms from entering the market.
When calculating the fine, the office considered, among other things, the severity of the infringement, its duration and the fact that Booking.com had ended its restrictive practices prior to the beginning of administrative proceedings.
The decision has not yet been published. However, it is hoped to be instructive in terms of how the office examines the conditions under which MFN clauses may be considered as a restriction to competition (and whether the office will follow other EU competition authorities in considering such MFN clauses a hardcore restriction on account of its subject matter and anti-competitive effects).
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
(1) The decision has not been published yet. The office only issued a respective press release, available at www.uohs.cz/cs/hospodarska-soutez/aktuality-z-hospodarske-souteze/2529-urad-po-rozsahlem-vysetrovani-pokutoval-bookingcom-za-protisoutezni-dohody.html (in Czech). The Booking.com decision is not yet in force and may be appealed.