Booking.com price curbs on hotels hinder competition: EU high court

BRUSSELS (CN) — Hotel booking platform Booking.com’s restrictions against hotels offering lower rates on their or rival websites may hinder competition, the European Court of Justice ruled Thursday.

The practice is known as price parity clauses, which are inserted into contracts between online booking sites and hotels and have triggered complaints by competitors for years.

Germany’s Federal Cartel Office, the national competition regulatory agency, banned this practice at the end of 2015.

While the decision was later confirmed by the country’s Federal Court of Justice in Karlsruhe, Booking.com in 2020 turned the case to a Dutch court, arguing the best price clauses did not violate EU competition law.

Numerous German hotels and hotel groups filed a counterclaim and demanded compensation from Booking.com for what they believed violated the EU’s Digital Markets Act, the bloc’s landmark legislation to make the markets in the digital sector fairer and more contestable that bans large online platforms from using wide or narrow retail parity clauses or equivalent commercial measures.

The Dutch court suspended the proceedings and referred questions to the EU’s highest court to determine whether the clauses could be permissible as ancillary agreements to prevent so-called ‘free-riding’, in which customers would be looking at accommodation on Booking.com but booking for cheaper on the hotel’s own website.

In the case of Booking.com’s practices, the Luxembourg-based court said there was no evidence to justify the clauses.

“It has not been established that price parity clauses, whether wide or narrow, first, are objectively necessary for the implementation of that main operation and, second, are proportionate to the objective pursued by it,” the court said in the preliminary ruling.

The restrictions may reduce competition between various hotel reservation platforms, force out small platforms and new entrants and do not appear to be necessary to ensure Booking.com’s economic viability, the court found.

“Price parity clauses cannot, in principle, be classified as ‘ancillary restraints’ for the purposes of EU competition law,” the court said, turning the case back to the Dutch court to rule in light of the Court of Justice’s answers.

The ruling should have minimal impact on travellers as the well-known Dutch platform has already removed the best price clauses across the entire bloc this year.