Online hotel booking platforms will be subject to continued strict monitoring
The European Competition Network has investigated competition in the online hotel booking market and has assessed that - despite pro-competitive measures - there is still a need for monitoring of the market.
By assistant attorney Daniel Heidemann Lykke Hansen
The European Competition Network ("ECN") consists of representatives from ten national competition authorities as well as the European Commission. Most member states have already implemented pro-competitive measures generally prohibiting the use of so-called MFN clauses (Most Favoured Nation), with the exemption of narrow MFN clauses, which are allowed.
An MFN clause used in connection with online hotel booking secures the largest booking platforms the lowest prices in the market, because the clause prohibits the hotels from offering their rooms at lower prices on other booking platforms.
A so-called "narrow" MFN clause allows a hotel to offer its rooms at different prices on different booking platforms. However, the narrow MFN clause prevents the hotel from offering its rooms on its own website at prices that are lower than those quoted on the booking platform.
In the opinion of the ECN, these initiatives have the right pro-competitive effect, but the sector should be subject to continued monitoring, and it may be necessary to introduce additional pro-competitive measures in the market.
In most EU member states, investigations made by the competition authorities have induced the online booking platforms to change their contractual terms to no longer include ordinary MFN clauses, but only narrow MFN clauses.
However, the German Bundeskartellamt has chosen another path; immediately before Christmas 2015, in a case concerning Booking.com, they decided to prohibit the use of both ordinary and narrow MFN clauses, because in their opinion both types of clauses would impede effective competition in the market.
The ECN will soon publish a report on the situation. In Denmark, the Danish Competition and Consumer Authority is expected to determine whether there is any need for action in the Danish market.