Booking.com BV is a well-known Dutch company providing worldwide intermediary services for accommodation reservations through its online platform. This type of business is commonly referred to as an Online Travel Agency (OTA).
Upon its entrance in the European Market in 2004, Booking.com included in the general delivery terms (GDT) of the agreements concluded with accommodation providers the so-called “wide parity clauses”. Under the regime of these wide parity clauses, hotels in Europe were disallowed to offer lower rates or better conditions on any distribution channel other than the Booking.com platform. After the intervention of several European competition authorities (e.g. France, Germany, Italy, Sweden), in July 2015 Booking.com was forced to replace the “wide” parity clauses with “narrow” parity clauses, under which the contractual obligation of accommodation providers to offer their rooms at better prices than those offered through Booking.com was limited only to offers made through their own online sales channels.
On 22 December 2015 the German Federal Cartel Office (FCO) concluded that the narrow parity clauses were also in contradiction with the European competition law and ordered the cessation of their use by Booking.com. According to the FCO’s findings, the narrow parity clauses restrict (price) competition between the OTAs, downscale the hotels’ direct sales channels, and thereby promote the increasing market concentration in the OTA market. Booking.com had argued that the parity clauses were essential for the functioning of the OTAs in that they prevent unloyal free-riding by the hotels. However, the argument was rejected by the FCO and this FCO’s decision was fully upheld judicially by the German Federal Supreme Court (BGH) in a ruling of 18 May 2021.
In subsequent parallel damage action proceedings initiated by 300 German hotels in the Netherlands (legal seat of Booking.com), in early 2023 the District Court of Amsterdam pondered over whether the legal assessment by the FCO and the BGH was correct. In order to ensure clarity in this respect, the District Court of Amsterdam submitted relevant questions to the European Court of Justice (ECJ) for a preliminary ruling. With its judgment of 19 September 2024, the ECJ ruled that the cartel prohibition in article 101(1) of the Treaty on the Functioning of the European Union (TFUE) indeed applies to wide and narrow parity clauses. This judgement adopted actually the legal opinion of both the FCO and the BGH.
As repeatedly confirmed by the ECJ, infringements of EU competition law (namely articles 101 and 102 TFEU) establish corresponding cartel damages claims. Hence, the hotels’ damage claims for compensation against Booking.com in relation to the anti-competitive parity clauses originate directly from EU primary law. To this extent, a pan-European class action supported by Hotrec is under preparation, so that European hotels collectively seek compensation from Booking.com BV in regard to these illegal practices. In particular, the participating hotels request compensation for the unlawfully high commissions paid to Booking.com during the period 2004-2024, because of the imposition of parity clauses.
Despite the fact that the abovementioned action of 300 German hotels before the District Court of Amsterdam evolves separately from Hotrec ’s relevant initiative, its progress serves as a solid blueprint, since the legal issues under examination are quite similar. Further developments on the case of German hotels are expected by the end of September, when a judgement of the Dutch court has been scheduled. It is noted that through the preliminary ruling the ECJ intends to provide an answer that is useful for the resolution of the dispute in the main proceedings before the courts of EU-members. However, it is for the national court to identify the specific consequences of the answers given by the ECJ, when ruling on a certain dispute. Thus, the outcome of the procedure before the District Court of Amsterdam is crucial. This judgement by the Dutch court shall not only determine the course of the 300 German hotels’ claims, but it will also set a potentially positive legal precedent for the claimants participating in the class action supported by Hotrec.
KARAGEORGIOU & ASSOCIATES CURRENTLY ACTS AS LEGAL ADVISOR OF THE HELLENIC CHAMBER OF HOTELS FOR THE SUPPORT OF ITS MEMBERS IN RELATION TO THE HOTREC’S CLASS ACTION INITIATIVE.
Edited by Thodoris Magklaras