FOR THE PURPOSES OF COMPETITION LAW, IN PRINCIPLE, PRICE PARITY CLAUSES CANNOT BE CLASSIFIED AS 'ANCILLARY RESTRAINTS'

#129For the purposes of competition law, in principle, price parity clauses cannot be classified as 'ancillary restraints'

The District Court of Amsterdam has referred questions to the Court of Justice of the EU for a preliminary ruling on the validity of price parity clauses in the light of EU competition rules.

Booking.com is a company that provides global online intermediary services for accommodation bookings, charging hotel establishments a commission for each booking made through its platform.

However, although hotels can also use other sales channels, they are prohibited from offering lower prices than those listed on the Booking.com. This prohibition originally applied to all sales channels, including those operated by the hotel itself, but since 2015 it has only applied to the hotel's own channels (the so-called 'narrow parity').

German courts, like the German Federal Cartel Office, have decided, without questioning the Court of Justice, that these price parity clauses are contrary to EU competition law.

In a litigation before the Amsterdam District Court, which initiated a Booking.com to confirm the validity of such clauses, that court decided to refer a question to the Court of Justice of the EU for a preliminary ruling on the subject matter of the litigation.

In its ruling, the court emphasized that online reservation services provided by companies such as Booking.com have a neutral to positive impact on competition, as they provide consumers with wider possibilities to compare offers and accommodation providers with greater visibility.

However, it has not been proven that price parity clauses are objectively necessary for the implementation of the main activity or proportionate to the objectives they pursue. In that regard, it should be noted that, as regards broad parity clauses, they are not only liable to restrict competition between different booking platforms, but also to crowd out smaller platforms and new market players. The same applies to narrow parity clauses. Although they are, prima facie, less restrictive of competition and aimed at addressing the risk of free-riding, they do not appear to be necessary to ensure the economic sustainability of hotel booking platforms.