Advocate General Collins’ Opinion on Booking.com Price Parity Clauses
On June 6, 2024, Advocate General (AG) Collins delivered an opinion in Case C-264/23, involving Booking.com and several hotels concerning the legality of price parity clauses under EU competition law. The case, referred by the Rechtbank Amsterdam (District Court, Amsterdam, Netherlands), seeks to clarify the application of Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) to wide and narrow price parity clauses used by online travel agencies (OTAs) like Booking.com.
Background and Context Booking.com operates a global online hotel booking platform, serving as an intermediary between hotels and end customers. Historically, Booking.com included wide price parity clauses in contracts with hotels, which prevented hotels from offering lower prices on their own or competing platforms. Following investigations by various competition authorities, Booking.com replaced wide clauses with narrow ones, restricting hotels from offering lower prices only on their direct sales channels.
Key Issues Addressed
- Ancillary Restraints under Article 101(1) TFEU:
- The AG assessed whether wide and narrow price parity clauses are ancillary restraints, meaning they are necessary and proportionate to the main operation of the OTA.
- AG Collins concluded that neither wide nor narrow price parity clauses could be considered ancillary restraints, as they are not indispensable for the economic viability of OTAs like Booking.com. Alternative, less restrictive means exist to prevent free-riding by hotels.
- Market Definition for OTAs:
- The AG provided guidance on defining the relevant product market in which OTAs operate, crucial for determining the applicability of block exemptions under Regulation (EU) No 330/2010 (old VABER).
- It was emphasized that the relevant market includes online intermediation services provided to hotels, potentially considering substitutability with offline channels and direct hotel sales channels.
Legal and Economic Implications The AG’s opinion highlights the complexity of applying competition law to digital markets, particularly in balancing the need to prevent anti-competitive practices with allowing beneficial market operations. The opinion suggests that OTAs cannot justify restrictive clauses merely to safeguard profitability and must explore less restrictive measures.
Conclusion AG Collins' opinion provides significant insights into the application of competition law in digital markets, specifically addressing the legitimacy of price parity clauses used by OTAs. The Court of Justice of the European Union (CJEU) will consider these findings when delivering its final judgment, potentially setting a precedent for how digital platforms balance competitive practices with market fairness.
This opinion underscores the evolving nature of competition law in the digital age, aiming to foster innovation and fair competition while protecting consumer interests.
