On 6 April 2017 the European Competition Network (ECN) Working Group – made up of the European Commission and 10 national competition authorities (NCAs) – published a report on its monitoring exercise in the online hotel booking sector.
Between 2014 and 2015 several NCAs investigated the use of most favoured nation (MFN), or parity, clauses in agreements between online travel agents (OTAs) and hotels. Despite intensive coordinated investigations which the French, Italian and Swedish NCAs conducted as ‘lead NCAs’ on behalf of the ECN, the investigations resulted in divergent outcomes across Europe.
The divergence arose over the assessment of ‘narrow MFN’ clauses – which require hotels to give OTAs rates that are the same as or better than those published on hotels’ own websites. In July 2015 the three lead NCAs accepted commitments from Booking.com replacing wide with narrow MFN clauses. However, the German NCA took an opposing line and prohibited narrow parity clauses a few months later. The picture was complicated further by the emergence of legislation in France and Austria prohibiting the narrow MFN, lobbied for by powerful hotel associations.
The ECN Working Group was established in December 2015 to monitor the effects of these different outcomes on the market. This involved an extensive twelve-month exercise during which questionnaires were sent to 16,000 hotels, 20 OTAs, 11 metasearch sites and 19 large hotel chains.
The report found no evidence to suggest that narrow parity clauses are anti-competitive. While the ECN indicated that it would keep the online hotel booking sector under review, the UK CMA (one of the participating NCAs) has explicitly stated that it “has decided not to prioritise further investigations” in this sector. The German Bundeskartellamt (BKA), on the other hand, maintained its position in its press statement that narrow MFNs restrict competition, pointing to the need to “take into account the specific circumstances of the national markets”. The BKA’s prohibition decision against Booking.com’s narrow parity clause still stands and is the subject of appeal to the Düsseldorf Court.