European Court issues landmark opinion on Booking pricing row

Booking platforms should not prevent hotel owners from offering rooms at lower prices elsewhere, the European Court of Justice has said in a landmark ruling.

Some users of online accommodation rental giant, Booking.com, may remember when hotels would suggest coming to them directly to book next time, for cheaper offers. But since 2015 the rental platform has prohibited hotels from directly pricing rooms more cheaply than they are listed on Booking.com.

Anti-competitive practices?

Challenged by German anti-trust regulators, which said Booking.com was violating competition laws, Booking.com then appealed to the European instance in Amsterdam. The European court weighed in on Thursday, 19 September, criticising the rentals site for the contracts, known as “parity clauses”, that prevent hotels from offering rooms more cheaply than elsewhere.

The European Court acknowledged that the rental site model is good for consumers in some ways as it allows them to “quickly and easily find hotels and compare prices”. However the court found that the parity clauses stopping hotels from adjusting their own prices are not a required element of Booking’s business model. The restrictions, the court said, go further than is needed “to ensure the economic viability of the hotel reservation platform”.

While the judges accepted there might be a case for preventing hotels from listing rooms at prices that undercut Booking, they said it was outweighed by the negative impact Booking’s business practices may have on small businesses and rival accommodation providers. “It has not been established that price parity clauses, whether wide or narrow, first, are objectively necessary for the implementation of that main operation and, second, are proportionate to the objective pursued by it,” the judges said.

Dependency on booking platforms remains too high, European hotel industry says

Gatekeeper business

In May 2024, the European Union designated Booking.com as a “gatekeeper” business, under its Digital Markets Act. This is a label that recognises some firms’ marketplace importance and capacity to act as an accelerator or bottleneck. Gatekeeper firms have a duty to “allow their business users to promote their offer and conclude contracts with their customers outside the gatekeeper’s platform.”

Earlier this summer, a report by Hotrec, a hospitality industry association, found that online travel associations (OTAs), such as Booking.com, “undercut prices set by hotels in 4 out of 10 cases.” This, Hotrec said, affected 50% of hotels in Europe, creating “multiple operational challenges for hoteliers (such as price inconsistencies).”

The body accused Booking.com of daily “unfair booking practices” that result in “financial loss, operational strain and reputation damage”, as well as “withholding guest data from hotel partners” – again something that gatekeeper businesses are not supposed to do.

However, the European Court declined to go as far as ruling that Booking’s clauses are anti-competitive under EU legislation, as they “cannot, in principle, be classified as ‘ancillary restraints’ for the purposes of EU competition law,” the latest ruling found.