Expedia fined EUR 1 million for using MFN clauses in relation to a number of hotels
By judgment issued 21 June 2017, the French Cour d’appel de Paris fined Expedia one million Euros for having applied so-called MFN clauses with a number of hotels in France. Under certain circumstances MFN clauses may be unlawful, and we have seen recently an increased focus on precisely this type of clauses in agreements between booking websites and hotels.
By Søren Overgaard Eriksen, Assistant Attorney
On 21 June 2017, the French Cour d’appel de Paris, a court instance akin to a Danish High Court, issued a fine of EUR one million to Expedia for having agreed so-called price parity or MFN (Most Favoured Nation) clauses with a number of French hotels. The clauses prevent hotels from offering prices lower than those advertised on the booking websites.
There has been an increased focus on MFN clauses recently, and we have previously dealt with the issue in articles:
There is a general ban on such clauses, although the so-called “narrow” MFN clauses, allowing hotels to offer accommodation at different prices on different booking portals, will generally be considered consistent with competition law.
In France, however, MFN clauses were prohibited by law, and the French Tourist Act of 2015 entitles hotels to offer their customers whatever discount or price benefit they like, and no clause preventing them from doing so will be allowed to stand.
Expedia has already announced its intention of appealing the judgment to the Cour de cassation, the supreme court of appeal in France, believing that its contracts with the hotels are consistent with applicable French law and that the French court has misconstrued the law.
Also, several other countries have been looking to the French prohibition, and both Austria and Italy are currently working on a ban against MFN clauses in the travel industry.