The issue of rate parity clauses continues to develop across the EU. This year has seen investigations in multiple member states, often with divergent approaches: Germany banning ‘most favoured nation’ clauses (read more here) and France and Italy seeking to legislate on the issue (read more here).
To assess the impact across the EU and perhaps reach a common position, in July 2015 the European Commission and the competition authorities of ten member states have now launched a survey, which closed in August 2016. Osborne Clarke explores the latest developments.
What are “parity clauses”?
Rate parity clauses are often referred to as “most favoured nation” clauses. An absolute (or “wide”) rate parity clause requires the hotelier to offer the online booking platform the best tariffs and conditions granted via any distribution channel, either online or offline, to any customer (including on the hotel’s own website).
Under EU competition law, such clauses could be considered to unduly restrain the hoteliers’ commercial freedom and so it is now relatively well-established that ‘wide’ rate parity clauses are caught by the prohibition on anticompetitive agreements. However, the position on ‘narrow’ rate parity clauses (where the hotel agrees only not to itself undercut the booking platform) is far less clear, with individual member states taking a divergent approach (for more on wide/narrow rate parity clauses, see here).
The pan-European issue
In response to national competition investigations in France, Italy and Sweden, Booking.com offered binding commitments, agreeing to modify wide parity clauses in order to restore much of the hotels’ freedom on pricing. In accepting those commitments, the national competition authorities cooperated with the European Commission; Booking.com then agreed to extend such commitments to the entire European Economic Area.
Proceedings involving other online platforms are on-going across the EU.
The competition authorities of 10 member States (Germany, Belgium, France, Hungary, Ireland, Italy, the Netherlands, Czech Republic, the UK and Sweden) launched, in coordination with the European Commission, a survey among hoteliers to assess the effect of the remedies implemented. The questionnaire was opened for contributions in July 2015 and closed on 8 August 2016.
A release of the results is expected by the end of 2016.
What’s next in France?
The Booking.com commitments undertaken before the French Competition Authority (FCA) are to be re-assessed by the FCA before 1 January 2017.
Although this re-assessment is conducted separately from the pan-European survey, the findings of the survey will be considered while reviewing the Booking.com commitments in France and might inspire other national competition authorities or the European Commission in their assessment of the validity of “parity clauses”.
This parallel timing might thus lead to further changes in the hotel booking platform sector. It is hoped that this pan-European approach might lead to some clarity in the approach of competition authorities to rate parity clauses, particularly the ability of hotels and booking platforms to agree ‘narrow’ clauses.