Facing pressure from certain hotel owners and consumers, France has taken action in response to certain marketing policies and practices that on-line travel agencies (OTAs) are imposing.
Last week, the French Minister of Economy Arnaud de Montebourg, revealed that a lawsuit has been filed in February 2014 before the Paris Commercial Court against the OTA Booking.com for alleged abusive clauses in its standard contracts with hotels. The main clause in contention was the parity clause whereby the hotel undertakes to provide the OTA with prices equal or better than any prices charged directly by the hotel to consumers or to other OTAs. The Booking case, based largely on investigations carried out by the consumer frauds authority (DGCCRF), follows a similar action against Expedia, which was sued by the French Government in November 2013. Both the Booking.com and Expedia cases follow an earlier action when the Paris Commercial Court in 2011 ordered Expedia, Tripadvisor and Hotels.com to pay several thousands of euros in damages to the Union of Hotel Professionals (Syndicat National des Hôteliers, Restaurateurs, Cafetiers et Traiteurs) for deceptive and misleading commercial practices (leading consumers to believe that no room were available at hotels which refused to contract with these OTAs).
The French Competition Authority (FCA) is closely looking at these practices as well.
In July 2013, the Confederation of Independent Hotel Professionals (Confédération des professionnels indépendants de l’hôtellerie or CPIH) and the Hotel industry professionals union (Union des Métiers et des Industries de l’Hôtellerie or UMIH) complained to the FCA about the parity clause and other allegedly restrictive practices (including extremely large commissions) implemented by Booking.com, Expedia and HRS. They claimed that the latter appear to have violated:
- Articles L. 420-1 of the French Commercial Code and Article 101.1 of the Treaty on the functioning of the European Union (TFEU) (the prohibition of anti-competitive agreements) by imposing parity clauses; and
- Articles L. 420-2 of the French Commercial Code and Article 102 of the TFEU (the prohibition against abuse of a dominant position) by abusing their collective dominant position to impose unfair conditions on the hotels with which they contract.
On 16 September 2013, the French Commercial Practices Commission (Commission d’examen des pratiques commerciales or “CEPC”) published an advisory opinion to the effect that parity clauses imposing an automatic alignment of the conditions offered to competitors were against the law and should be considered null and void.
It remains to be seen what the actual decision of the FCA will be. The FCA decision is expected by the end of 2014.
This French case follows similar regulatory concerns and actions across the EU including the UK, as reported here: http://www.eu-competitionlaw.com/on-line-hotel-bookings-commitments-offered/