Today the Bundeskartellamt prohibited Booking (Booking.com Deutschland GmbH, Berlin, and Booking.com B.V., Amsterdam) from continuing to apply its 'best price' clauses and ordered the hotel booking portal to completely delete the clauses from its contracts and general terms and conditions by 31 January 2016 as far as they affect hotels in Germany.
Under the clauses the hotels were obliged to always offer the hotel booking portal their lowest room prices, maximum room capacity and most favourable booking and cancellation conditions available on all online and offline booking channels (wide best price clause). During the proceedings the company had offered to introduce a modified 'best price' clause. Under this clause Booking allows the hotels to offer their rooms cheaper on other hotel booking portals but still prescribes that the prices which they display on their own websites may not be lower than on Booking's hotel portal (narrow best price clause). Booking implemented this amended form of 'best price' clauses in Germany in July 2015.
Andreas Mundt, President of the Bundeskartellamt: ""These so-called narrow best price clauses also restrict both competition between the existing portals and competition between the hotels themselves. Firstly they infringe the hotels' freedom to set prices on their own online sales channels. There is little incentive for a hotel to reduce its prices on a hotel booking portal if at the same time it has to display higher prices for its own online sales. Secondly, it still makes the market entry of new platform providers considerably difficult. The 'best price' clauses barely provide an incentive for the hotels to offer their rooms on a new portal cheaper if they cannot implement these price reductions on their own websites as well. There is no apparent benefit for the consumer.""
Booking can appeal against the Bundeskartellamt's decision to the Düsseldorf Higher Regional Court and apply for interim relief against the immediate enforceability of the order.
The authority remains in close contact with the European competition authorities also conducting proceedings in this context and the European Commission and will participate in the coming year in an evaluation of different measures which the competition authorities have undertaken on the European hotel portal markets.
Booking.com has already announced that it would appeal the Bundeskartellamt Ruling and issued a press release.
The national competition authorities (NCAs) in France, Italy, Sweden, Ireland, the UK, Poland, Greece, Denmark, Hungary, the Netherlands and Switzerland have all publicly stated that the changes that Booking.com made to its agreements with hotels in July 2015 to remove its 'wide price parity' and availability parity clauses satisfied their competition concerns. These changes were made pursuant to the narrow MFN commitments accepted by the French, Italian and Swedish competition authorities in April 2015 which were found to promote a more competitive environment for online travel companies to the benefit of hotels and consumers.
There are no material characteristics of the German market that distinguish it from the online travel company markets in France, Italy and Sweden that justify the BKartA taking a different approach from the NCAs in those countries and others across Europe.
"We believe this decision is flawed because it does not recognize the immense benefits that online travel brands like Booking.com bring to both consumers and accommodations," said Gillian Tans, President of Booking.com. "Companies like ours bring transparency, choice and value to global travellers by aggregating information for hundreds of thousands of properties. We do not only save consumers time and money, we serve as a highly cost-efficient marketing channel for most hotels that could not otherwise afford to market their brand to domestic and international consumers. Narrow parity was put in place to ensure that consumers don't have to check hundreds of hotel websites in order to get the best price, allowing sites like Booking.com and others to achieve advertising efficiencies on behalf of hotels."
Booking.com strongly believes it can continue to add value to its hotel partners and offer customers the best booking experience. Booking.com will continue to work with hotel partners to offer their rooms at highly competitive prices. Booking.com has full confidence that hotels will reward Booking.com with the best rates, conditions and availability in return for the variety of customers it can deliver. By being able to offer highly competitive rates, consumers can conveniently and efficiently make a booking through Booking.com with a hotel of their choice. The diversity and quality of hotels available on Booking.com mean that a customer can always find a hotel which meets their needs, for the right price. To show our confidence in being able to offer the best price, Booking.com guarantees that it will match the price difference under its Best Price Guarantee.
The reasoning and key conclusions in the BKartA's decision are not only in direct conflict with the findings of the French, Italian and Swedish NCAs (as supported or endorsed by a majority of the NCAs in Europe). Booking.com believes that the BKartA has failed to conduct a proper investigation of the competitive effects of the narrow MFN. The BKartA decision to prohibit the narrow MFN is heavily reliant on the conclusions in the HRS case - which was in relation to wide MFNs. The BKartA has simply ignored, without any justification, the substantial body of evidence submitted by Booking.com which shows that the narrow MFN does not restrict competition and is actually pro-competitive by bringing about substantial efficiency benefits for hotels and consumers. Moreover, BKartA has failed to coordinate with other NCAs and failed to ensure uniform application of competition law across the EU.
Booking.com will, however, co-operate with the BKartA's order to remove narrow MFNs from its contracts with German accommodations, pending the outcome of Booking.com's appeal of the BKartA's decision. Booking.com will waive enforcement of its existing narrow parity provisions with German accommodations with immediate effect and will amend its standard terms and other agreements with German accommodations ultimately by 31 January 2016. Booking.com will nonetheless work hard with all hotels to ensure the best customer experience on Booking.com.
Elsewhere in Europe, Booking.com continues to retain its narrow MFN for prices and booking conditions - meaning that hotels must offer the same rates and booking conditions on Booking.com as they do on their own direct online channels or as marketed by the hotel online (e.g., hotel's own websites or meta search engine).