On-line travel agencies Booking.com, Decolar.com and Expedia reached settlement agreements with the Brazilian Administrative Council of Economic Defense (“CADE”) to suspend an investigation on the use of parity clauses in contracts with hotel chains for the use of their on-line sales platform.
CADE opened the investigation in 2016, after a complaint was filed by the Fórum de Operadores Hoteleiros do Brasil (“FOHB”). At the time, FOHB accused Booking, Decolar and Expedia of illegally block hotels from offering better prices or conditions than those they offered in their websites (either through offers in the sales channels of their own hotels or in platforms of competing companies).
CADE considered that the imposition of broad parity clauses by Booking, Decolar and Expedia would limit the competition among travel agencies, regulating the final prices offered to consumers. These clauses would also prevent the entrance of new competitors into the market, since strategies focused on efficiency gains and reduction of costs would not result in lower prices and increase in market share.
Pursuant to the terms of the settlement agreements, Booking, Decolar and Expedia agreed to exclude broad parity clauses in contracts with hotels. These companies will no longer have the right to prohibit these establishments from offering better conditions on their own off-line sales channels (by telephone and in the hotel counter). They will also not be able to demand parity in relation to the prices charged by other on-line travel agencies.
However, CADE considered that demanding parity in the hotel’s own websites is reasonable to reduce the so-called “free-rider effect” in the market for on-line hotel bookings (when hotel and guests are connected by the agencies’ platform, but the negotiation takes place elsewhere). The adoption of these parity clauses, considered narrow in their scope, would represent a balance between the contractual parties’ interests.
With this decision permitting the use of a narrow parity clause and denying its broad use, CADE followed the positions reached, on similar cases, by antitrust authorities in Italy, France and Sweden, in cooperation with the European Commission.
