Booking.com victorious in Swedish appeals case over MFN clauses
Booking.com has won an appeals case in the Swedish Patent and Market Court of Appeal over the use of narrow price clauses (the so-called "Most Favoured Nation" or "MFN" clauses). The win comes after the Patent and Market Court as the court of 1st instance had ordered the removal of these clauses from contracts with Swedish hotels.
Judgment of 9 May 2019 by the Swedish Patent and Market Court of Appeal
By assistant attorney Simon Christensen
The case in brief
As described in our previous news article
, the hotel booking platform Booking.com had included, in its contracts with Swedish hotels, narrow MFN clauses preventing the hotels from offering lower prices on their own websites than could be achieved via the booking platform.
MFN clauses are contractual clauses which, for example, guarantee a buyer the same best price as is offered to other customers. The Swedish Patent and Market Court ordered Booking.com to take out those clauses not later than three months after the passing of the order on 20 July 2018 because they were, in the Court’s opinion, anti-competitive. If Booking.com did not comply, its parent company and Swedish subsidiary would face fines of SEK 35 million in aggregate.
That judgment has now been rescinded because the Court of Appeal was not satisfied that the anti-competitive effects of Booking.com’s MFN clauses on the market had been proven. The charge against Booking.com was therefore dismissed, and the judgment is unappealable. Importantly, though, the Court of Appeal found that while MFN clauses do not pursue an "anti-competitive object" and do not qualify as "serious restrictions of competition", their potentially anti-competitive effect should be assessed.
Read the press release by the Swedish Patent and Market Court of Appeal
Massive attention on the use of MFN clauses by booking platforms
The appeal decision comes as the latest in a series of international decisions on booking platforms’ use of MFN clauses. There has been, since 2015, much focus on booking platforms’ use of MFN clauses and on the potentially anti-competitive effects of such clauses.
In 2015, both Booking.com and Expedia (which owns Hotels.com and Trivago) narrowed their MFN clauses so that hotels were free to offer varying prices on different sales channels, but not on their own websites. They did so because competition authorities in several European countries had expressed concern that the clauses could (theoretically) serve to harmonise pricing across booking platforms. The decision by the Court of Appeal is a potent signal that authorities wishing to argue that there is an anti-competitive effect of such MFN clauses have a considerable burden of proof to discharge.
Read our news article about the Danish Competition and Consumer Authority’s view on the use of MFN clauses in the hotel booking industry: New analysis of the use of price clauses for booking platforms