The competition authorities of Sweden, Italy and France have accepted commitments offered by Booking.com, Europe's largest online travel agent (OTA), concerning its use of so-called parity (or “most favoured nation”) clauses in agreements with hotels. The parity clauses oblige hotels to offer Booking.com the same or lower room prices as the hotel makes available on all other online and offline distribution channels. This settlement with these competition authorities provides a model for the use of similar clauses in this and other sectors EU-wide and should be carefully studied.
Booking.com has agreed, amongst other things, to allow hotels to offer lower room prices on other online hotel booking websites. Booking.com will still be able to apply parity clauses in relation to hotels’ own publicly available online room prices (but not hotels’ offline or online loyalty sites).
The particular concern was that the parity clauses eliminated competition among OTAs. The intention is that the changes will put pressure on OTA commission rates and the quality of service of OTAs, leading ultimately to lower room prices and better services for consumers. The commitments are also intended to make it easier for new OTAs to enter the market, and for innovative OTAs to expand. The “exemption” for price parity clauses relating to hotels’ own public websites is considered justified to prevent “free-riding” on Booking.com’s investments, thus ensuring the continued offering of user-friendly search and comparison services free of charge.