On 15 December 2015, the EU Commission announced that it had launched market tests regarding price parity clauses in online hotel booking in France, Sweden and Italy. The EU Commission is market testing the effectiveness of commitments offered by Booking.com to alleviate concerns that their contractual terms could inadvertently be having an anti-competitive effect. The Commission will co-ordinate and consult with the three national regulators who were carrying out their own domestic investigations to determine whether the commitments offered do have effect.
The Commission’s involvement in co-ordinating the different EU Member States, helps ensure that wildly different analysis and rules are not instigated throughout the EU and also leaves the option open for the Commission to take control on a EU wide basis and carry out its own full investigation.
Price parity clauses are agreements whereby one party promises another to always offer its best rates or terms for a product or service. The fear over these obligations is that although they seem favourable to consumers, the effect in practice is for this fixed lowest price to become a minimum and exclusive price granted to one website. Other websites are unable to match, or better it and the consumer is worse off as a result.
We have reported on the growing regulatory concern over price parity or most favoured nation clauses over the last year. Given the popularity of online hotel booking through particular websites such as Expedia and Booking.com, the Commission and European regulators have taken interest in ensuring that effective price competition exists in the market, to the benefit of consumers.
We reported in October how these clauses and efforts to tackle them were also under the focus of the UK Competition and Markets Authority. It remains to be seen in early 2015 whether the Commission will take the reigns and consider the matter of EU-wide importance with the potential opening of its own investigation.