In 2015, major changes occurred in France in the online hotel booking platforms sector. The French Competition Authority ("FCA"), the Commercial Court of Paris, and the legislator examined the relationships between hotels and online travel agencies ("OTAs"), also under the scrutiny of the European Commission and other European competition authorities and jurisdictions.
On April 21, 2015, the FCA accepted commitments made by the company Booking.com, putting an end to proceedings initiated in 2013 against the platform, following complaints filed by several hotel unions and the Accor group.
The main commitments made by Booking.com consisted in the removal of price parity clauses, preventing hotels to offer on other OTAs or via their direct offline channels lower tariffs than those displayed on Booking.com; along with the removal of clauses imposing parity obligations regarding the availability of rooms and commercial conditions.
According to the FCA, these commitments made for a 5-year-period, are intended to strengthen competition between OTAs, thus favouring a decrease of the commissions applied to the hotels, and improving hotels trade and pricing freedom, while preserving the OTAs' economic model. The FCA will carry out an assessment of the commitments effectiveness at the beginning of 2017. On this occasion, hotel unions at the origin of the complaint and the Accor group will have the opportunity to submit their observations to the FCA.
The FCA, which also continues to investigate the HRS and Expedia platforms, further indicated having worked in close coordination with the European Commission and both the Swedish and Italian authorities, in order to obtain consistent commitments within these countries and more widely within the European Union.
However, a few months later, the French legislator decided to go beyond the commitments accepted by the FCA. Indeed, the "Macron" law, issued on August 6, 2015, introduced a new article L311-5-1 in the French Code of tourism, now requiring that contracts concluded between hotels and OTAs take the form of a mandate contract, and prohibiting any price parity clause. A fine of € 150,000 shall apply to legal persons not complying with these new and immediately applicable provisions. The legislator also chose to give a broad reach to these provisions, stating that they apply "whenever the booking is made for the benefit of a hotel established in France" (Article L311-5-4 of the aforementioned Code).
These new provisions - and specifically the requirement to sign a mandate contract - have sparked heated debates in the sector. While many hotel unions welcomed this reform, OTAs representatives have expressed their dissatisfaction. A complaint appears to have been filed before the European Commission by the European Technology and Travel Services Association (ETTSA).
The impact of these provisions should be toned down. While there is no denying the innovative nature of the obligation to enter into a mandate contract, Article L.442-6 of the French Commercial Code already allowed to punish parity obligations imposed by the OTAs on hotels. The Commercial Court of Paris had already sanctioned Booking.com and Expedia in March and May 2015 on such basis.
By imposing a single model contract, the French legislator has gone far beyond the commitments accepted by the FCA. It remains to be seen what practical effects these provisions will have on the French tourism sector. We are clearly not done hearing about the OTAs.