BRUSSELS, Sept 19 (Askume) – Europe’s top court on Thursday issued a ruling against widespread industry practices by Booking.com, banning hotels from offering lower prices on its website or those of rivals. The restrictions are unnecessary and could stifle competition.
However, the court also held that they were not anti-competitive under European Union (EU) law.
This clause, known as a parity clause, is included in contracts between online booking sites and hotels. The practice has prompted complaints from competitors and investigations by European regulators concerned about reduced choice for consumers.
Germany’s anti-competition watchdog bans such rules whether they apply to a hotel’s website or to a competitor’s accommodation website, while EU regulators only allow such restrictions to apply to a hotel’s own website.
The landmark rules, known as the Digital Markets Act , which came into force last year, prevent large online platforms, including Booking.com, from using broad or narrow retail parity clauses or equivalent commercial measures.
The Luxembourg-based Court of Justice of the European Union (CJEU) said there was no evidence the action was justified.
The judges stated, “It has not yet been determined whether the price parity clause, whether broadly or narrowly defined, is, first, objectively necessary to the conduct of the core business and, second, proportionate to its objectives.”
He added that these restrictions could reduce competition among different hotel booking platforms, shut out smaller platforms and new entrants, and do not appear to be necessary to ensure Booking.com’s economic viability.
However, the court also held that these provisions could not be considered anti-competitive under EU anti-competition law.
The EU Court of Justice stated that “in principle, price parity clauses cannot be classified as ‘ancillary restrictions’ under EU competition law.”
Booking Holdings expressed disappointment with the decision.
“We believe that the historically existing parity clauses in Germany are necessary and proportionate to the relationship between accommodation partners and Booking.com and that Booking.com operates in a competitive market,” the company said.
The case, which involves a subsidiary of New York-listed Booking Holdings (BKNG.O) that applied for a declaration of the validity of the equivalent clause, came to light after a Dutch court sought guidance from the European Court of Justice.
Case C-264/23 is Booking.com and Booking.com (Germany).
