The Court of Justice has ruled in Case C-264/23 | Booking.com and Booking.com (Deutschland) that price parity clauses cannot, in principle, be classified as “ancillary restraints” under EU competition law.
Booking.com is incorporated under Netherlands law with its registered office in Amsterdam. It offers a worldwide online intermediation service to reserve accommodation. Hotels pay commission to Booking.com for reservations made via the platform. Although hotels can use alternative sales channels, they may not offer prices lower than the prices they offer on Booking.com. Initially, that prohibition applied both to offers on hoteliers’ own sales channels and to offers on sales channels operated by third parties (a ‘wide parity’ clause). Since 2015, a limited version of that clause has prohibited only the offer of overnight stays at a lower price through hoteliers’ own sales channels.
The German courts held that the price parity clauses (narrow or wide) used by hotel reservation platforms breached EU competition law. The German Federal Cartel Office agreed. However, the Dutch courts were asked to look at the issue as well and referred the case to the CJEU for guidance on price parity clauses.
The Court says that the online hotel reservation services have had a neutral to positive effect on competition. Those services enable consumers to have access to a wide range of accommodation offers and to compare those offers simply and quickly according to various criteria and they enable accommodation providers to acquire greater visibility.
However, it has not been established that price parity clauses, whether wide or narrow, are objectively necessary or proportionate. It says that wide price parity clauses can reduce competition between the various hotel reservation platforms, and can carry the risk of ousting small platforms and new entrants.
The same is true of narrow parity clauses. They have a less restrictive effect on competition and are intended to address the risk of free-riding, but they do not appear to be objectively necessary to ensure the economic viability of the hotel reservation platform.
