European court 'tears up' Booking.com's parity clauses

The Court of Justice of the European Union (CJEU) determined that the parity clauses related to rates set by Booking.com for hotels were not demonstrated to be “objectively necessary” or “proportional,” as they could potentially hinder competition. These clauses restricted hotels from offering lower prices on their own websites and on competing sales channels.

The European Commission had previously established a deadline for this Booking.com practice, which was set for May of last year. As a gatekeeper platform, Booking was given a six-month period to comply with all regulations from Brussels, ultimately ceasing the use of these clauses by July 1st.

Following a ruling from a German court that supported several hotels claiming Booking's practices violated competition law, the European court has now confirmed this stance, providing a broader perspective on the issue.

The CJEU noted that the online hotel booking services provided by platforms like Booking.com have a neutral or even beneficial impact on competition. These services enable consumers to access a wide array of accommodation options and easily compare them based on various criteria, while also enhancing the visibility of accommodation providers.

Furthermore, the court stated that it has not been shown that price parity clauses, whether broad or restricted, are necessary for the primary operation of these platforms or suitable for achieving their intended objectives.

The CJEU pointed out that broad parity clauses could diminish competition among different hotel booking platforms and pose risks of excluding smaller or newer platforms. The same concerns apply to restricted parity clauses, which, while appearing less restrictive at first glance, still carry similar competitive risks.

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