CJEU States Price Curbs On Hotels By Booking.com May Hinder Competition

CJEU States Price Curbs On Hotels By Booking.com May Hinder Competition

States they were not anti-competitive under the European Union law

The Court of Justice of the European Union (CJEU) has ruled that restrictions by Booking.com against hotels offering lower rates on their websites or rival sites are unnecessary and could reduce competition.

The case involved New York-listed Booking Holdings’ unit after the company applied for a declaration on whether parity clauses were valid. It led a Dutch court to seek guidance from the CJEU.

Targeting a widely used practice in the industry, the court stated that they were not anti-competitive under the European Union (EU) law.

Known as parity clauses and inserted into contracts between online booking sites and hotels, the practice has triggered complaints by competitors and scrutiny from regulators across Europe.

Meanwhile, Germany's antitrust watchdog has banned such clauses whether they apply to hotels' websites or rival accommodation sites while regulators for the EU allow the curbs only for hotel sites.

The Digital Markets Act, effective in 2023, bans large online platforms (including Booking.com), from using wide or narrow retail parity clauses or equivalent commercial measures.

The judges at the Luxembourg-based court held, "It has not been established that price parity clauses, whether wide or narrow, are objectively necessary for the implementation of that operation and, are proportionate to the objective pursued by it.”

The bench stated that the restrictions could reduce competition between various hotel reservation platforms, and force out small platforms and new entrants. These are not necessary to ensure the economic viability of Booking.com.

The EU top court added, "Price parity clauses cannot, in principle, be classified as 'ancillary restraints' for the purpose of EU competition law.”