It is well known that online booking platforms often contractually restrict the freedom of accommodation providers to set their own prices for the accommodation offered (so-called “price-fixing clauses”). A newly adopted amendment to the Swiss Act against Unfair Competition (UCA) now limits these as well as other practices of online booking platforms.
- Prohibition of wide price parity clauses since 2015
- Further restrictions of the contractual freedom of online booking platforms
- Next steps
Prohibition of wide price parity clauses since 2015
The general term “price-fixing clause” includes price parity clauses as well as clauses that an accommodation provider undertakes not to undercut a certain lower price specified by the platform operator. In the case of price parity clauses, a distinction must be made between narrow and wide price parity clauses. In the case of narrow price parity clauses, an accommodation provider undertakes vis-à-vis an online booking platform not to demand a lower price on its own website than on the online booking platform. In the case of wide price parity clauses, an accommodation provider undertakes not to offer lower prices on any other sales channel, i.e., not by email or telephone, or on another competing online booking platform.
In 2015, the Swiss Competition Commission prohibited operators of booking platforms from restricting accommodation providers in their offer policy by means of these so-called wide price parity clauses. The investigation focused on contractual clauses imposed by the platforms, according to which accommodation providers were not allowed to set lower prices or offer a larger number of rooms on any other distribution channel. Therefore, accommodation providers could not offer more favorable offers on distribution channels with lower commission rates. In a ruling of 19 October 2015, the Competition Commission considered the use of these contractual clauses to be a violation of the Swiss Cartel Act and hence prohibited them (see here).
Further restrictions of the contractual freedom of online booking platforms
In 2016, a member of the Swiss parliament requested that the Swiss Federal Council also prohibit so-called “narrow price-fixing clauses” in contracts concluded between online booking platforms and accommodation providers (see here). The Federal Council initially did not want to follow suit with this request but the majority of the Swiss parliament ordered the Federal Council to devise a draft of a new provision of the Swiss UCA.
The Federal Council, therefore, drafted a new Article 8a UCA, providing for a prohibition of the use of general terms and conditions by online booking platforms that restrict the pricing of accommodation providers by means of price parity clauses (see here). However, this draft was considered insufficient by parliament, which last week agreed on adding a prohibition of availability and condition parity clauses (see here).
As a consequence, the new Article 8a UCA will prohibit the use of general terms and conditions by online booking platforms, which directly or indirectly restrict the pricing and supply of accommodation providers through parity clauses, namely through price, availability or condition parity clauses. This means that online booking platforms will no longer be allowed to require accommodation providers to provide them with the same or better rates and conditions for the same accommodation with (at least) the same features, as made available by the hotels on their own online channels or any other (online and offline) channel.
While a minority of the Swiss parliament wanted to subject violations of this new Article 8a UCA to criminal sanctions, this was ultimately rejected. The use of parity clauses by online booking platforms is therefore merely subject to civil law sanctions and affects accommodation providers as well as competitors, professional or trade associations, and, if collective interests are at stake, the federal government may file a civil lawsuit against the concerned booking platforms.
Both chambers of the Swiss parliament have approved the text of the new Article 8a UCA on 8 June 2022. It is now up to the Swiss Federal Council to decide the date on which these new restrictions for online booking platforms will enter into force.