In a ruling issued on September 19, 2024, the Court of Justice of the European Union (CJEU) formally prohibited all price parity clauses, whether broad or narrow. Marc Barennes, a lawyer admitted to the Paris and New York bars and a partner at Geradin Partners, explains the consequences of this ruling.
The Hotel and Restaurant Industry The CJEU issued a landmark ruling on September 19th concerning price parity clauses included by hotel booking platforms, particularly Booking.com, in their contracts with hotels. Could you summarize its significance for us?
Attorney Marc Barennes This ruling by the Court is of considerable importance for hoteliers. Indeed, the CJEU, the highest court in the European Union, has ruled that clauses by which online booking platforms prohibit hotels from offering prices lower than their own on their websites or on competing booking platforms are, in principle, prohibited throughout Europe.
This declaration of the principle of illegality of rate parity clauses applies not only to so-called "extended" clauses, prohibiting a hotel from offering better rates on its own sales channels and those of competing platforms, but also to so-called "restricted" clauses, that is to say those prohibiting a hotel from offering better rates only on its own site.
In fact, with regard to Booking in particular, given its dominant position in the online booking platform market in the vast majority of European Union countries, such as France, it is impossible for its price parity clauses to be considered anything other than anti-competitive.
What are the consequences of this ruling for hoteliers using Booking, in Europe and, more specifically, in France?
The price parity clauses imposed by Booking are null and void and become unenforceable against hoteliers.
Throughout the European Union, Booking can no longer demand price parity from hoteliers on their own sales channels or those of other online booking platforms. This ruling by the CJEU is consistent with those adopted by the Spanish Competition Authority, which this summer fined Booking over €400 million for its anti-competitive behavior in the Spanish market, and with the Italian Competition Authority currently considering adopting a similar approach for the Italian market. For example, in its decision, in addition to the price parity clauses, the Spanish Competition Authority did not hesitate to condemn Booking, notably for its lack of transparency in the implementation of its preferential programs and its default hotel ranking system on its platform.
In France, rate parity clauses, both broad and narrow, have been prohibited since the adoption of the Macron Law in 2015. However, Booking continues to use what could be described as "disguised" rate parity clauses through its preferential programs, which are essential for hoteliers as they provide them with greater visibility on the Booking platform. The only problem is that to access some of these programs, hoteliers are required to offer rate parity. These "disguised" rate parity clauses are therefore, in our opinion, also anti-competitive.
What can hoteliers do if they feel wronged by Booking's practices?
In the event that Booking does not comply with the ban on imposing price parity clauses, hoteliers could appeal to the Competition Authority or the courts to ensure that their rights are respected.
Furthermore, given the considerable losses they have suffered due to the implementation not only of these price parity clauses, but also of other Booking practices, such as those already sanctioned by the Spanish competition authority, hoteliers have a clear interest in asserting their rights to compensation. They can take action either through individual compensation claims or through class action lawsuits, such as those we routinely conduct throughout Europe with the support of litigation funding companies, so that hoteliers do not have to pay any upfront costs.
With kind permission from the Journal de l'Hôtellerie