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Same rules but different outcome – price parity clauses under EU competition law

The Swedish Competition Authority ("SCA") has under the coordination of the Commission, and in cooperation with other national Competition Authorities within the EU, among others the Italian Autorità Garante della Concorrenza e del Mercato, the French Autorité de la concurrence and the German Bundeskartellamt, investigated antitrust issues in the European online hotel booking sector.

Europe's largest hotel reservation site, Booking.com, owned by U.S-based Priceline Group, has been under scrutiny by the SCA since 2013. Booking.com has in its contracts with hotels required the hotels to always offer Booking.com the same or lower rates than offered through other sales channels. The SCA had concerns that these so-called "parity clauses" in contracts between Booking.com and the hotels may have anti-competitive effects and could potentially lead to a restriction of competition as it e.g. could prevent other hotel reservation companies from entering and expanding on the market, all in breach of EU- and national antitrust rules.

Booking.com initially offered commitments which did not fully alleviate these competition concerns. However, in April 2015, Booking.com settled the antitrust case in Sweden as well as in Italy and France, by agreeing to allow hotels to offer lower room rates via Booking.com's competitors, hence restoring competition between online travel agencies. In addition, Booking.com will in the future also allow hotels to offer lower room rates via offline channels, provided that these rates are not published or marketed online. It was also agreed that Booking.com would not restrict the non-public room rates that hotels offer, as long as they are not marketed online. Interestingly, it was accepted by all three Competition Authorities that Booking.com may still require hotels to offer the company the same room price as hotels do on their own site, or better.

The SCA's decision to accept commitments where Booking.com may still require hotels to offer it the same room price as hotels do on their own site, or better, were justified by the "free rider" problem. A company that has invested time and money in a product or service should be allowed to bear the fruits of its investments. If Booking.com was prohibited from demanding the same or lower prices, sales could potentially be taken away from the company, as customers could first visit Booking.com and later on book the same hotel at a cheaper price from another online site.

The SCA accepted Booking.com's pledge which will be enforceable with the potential of fines of up to around EUR 3,85 million.

Conversely, the German Bundeskartellamt did not come to the same conclusion as the rest of the national Competition Authorities, and decided not to accept the commitments; instead Bundeskartellamt filed formal antitrust charges against Booking.com prohibiting the continued use of "best price" clauses.

Although some might find that there is a lack of consistency in approach between the national Competition Authorities, one thing has been made clear; parity clauses have the potential to restrict competition. Neither of the national Competition Authorities have accepted such clauses, the difference in approach lies in how far to go in the restriction of such.