Hotel industry vs. Booking.com: A landmark legal battle over price parity clauses

In a sweeping legal move, over 10,000 hotels across Europe have joined forces to demand damages from Booking.com for what they claim were years of anti-competitive practices. The heart of the dispute lies in the use of so-called “best price clauses” – contractual provisions that restricted hotels from offering lower prices than those listed on Booking.com, either only on their own websites or also on other platforms.

The upcoming lawsuit not only provides an opportunity for a refresher on best price clauses but also to outline possible effects of the claim on other industries and more general remarks to consider when operating with best price clauses.

The origins: Investigations by the German Federal Cartel Office

In Germany, the controversy began more than a decade ago, with the German Federal Cartel Office (FCO) scrutinizing the use of so-called “wide best price clauses”. These clauses prohibited hotels from offering better prices on any other sales platform, including their own websites. In 2013, the FCO first banned such clauses in a case against HRS. Booking.com, against which the FCO had conducted proceedings for the use of wide best price clauses in parallel, subsequently and because also other European regulators had expressed concerns about the clauses used by Booking.com, switched from wide best price clauses to so-called “narrow best price clauses”. These clauses would “only” restrict hotels from offering lower prices on their own websites, while allowing better deals on other platforms. However, the FCO remained unconvinced and ruled in December 2015 that even Booking.com’s narrow best price clauses were anti-competitive, arguing they limited pricing freedom and restricted competition.

The case went on appeal and ultimately, the German Federal Court of Justice sided with the FCO in May 2021.

Booking.com’s declaratory action and the ECJ’s verdict

In 2020, Booking.com filed a declaratory action in Amsterdam (where it is headquartered), seeking a ruling that its narrow best price clauses did not violate EU antitrust law. This was reportedly supposed to be a strategic move to preempt damage claims being pursued in Germany. In response, more than 60 German hotels filed a counterclaim for compensation, prompting the Amsterdam court to refer the matter to the European Court of Justice (ECJ) for a preliminary ruling.

In September 2024, the ECJ delivered its judgment: Both wide and narrow best price clauses do not fall outside of the EU’s cartel prohibition (Art. 101(1) TFEU) on the ground that they are ancillary to the agreements. The ECJ rejected Booking.com’s argument that the clauses were ancillary restraints necessary to prevent free-riding and emphasized that Booking.com’s business model would function also without such clauses and that they were not indispensable to the platform’s operation.

The damages lawsuit: Scope, implications and challenges

Almost a year after the ECJ’s ruling, the so-called Hotel Claims Alliance has prepared for a collective damage action in the Netherlands (not yet filed and still open for others to join; over 10,000 hotels across Europe have already joined). The Alliance argues that Booking.com’s clauses caused financial harm by preventing hotels from offering competitive prices directly to consumers. The claim spans conduct of two decades (2004-2024) and will seek substantial compensation – the Alliance argues that commissions paid to Booking.com may have been inflated by at least 30%.

Even though the plaintiffs have the ECJ ruling “on their side”, their lawsuit will nevertheless most likely not be a sure-fire success. There are still several unresolved issues, such as e.g., questions of market definition, quantification of damages etc. While the ECJ ruling clarifies that best price clauses are not automatically exempted from antitrust law on the grounds that they are ancillary to an agreement, the ECJ has also not labeled them as per se anti-competitive. Instead, the ECJ emphasizes that the bar is high but not unattainable for companies seeking to justify such clauses, whether it is under the ancillary restraints doctrine, the Vertical Block Exemption Regulation (VBER) or according to Art. 101(3) TFEU:

• The ancillary restraints doctrine might apply where companies can prove that the economic viability of their business model would be jeopardized without the use of the best price clause.
• An exemption under the VBER requires in the first place that the VBER is applicable, in particular that market shares of the respective undertakings do not exceed 30% on the relevant markets.
• There is also the possibility of an exemption from the cartel prohibition under Article 101(3) TFEU. This requires that (i) there are economic benefits that (ii) consumers participate in appropriately, that (iii) the restrictions on competition are not indispensable to achieving these benefits, and that (iv) competition is not eliminated for a substantial part of the goods/services concerned.

In view of the disputed period of two decades, there might not be a “one-size-fits-all justification”.

Outlook

Best price clauses have developed into somewhat of an evergreen in platform antitrust law. The legal battle between Booking.com and the European hotel industry shows this all too clearly.

The implications of this case might set a precedent for similar actions in other sectors. Players in industries that rely on platform-based intermediation – such as e.g., e-commerce, ride-sharing, or food delivery – should examine the use of best price clauses or similar contractual practices carefully. In the case of companies with significant market power, attention must also be paid to abuse of dominance rules and the regulations of the Digital Markets Act, namely Art. 5(3).

As market conditions and the specific circumstances in each individual case will be decisive for assessing the compatibility of best price clauses with antitrust law, companies are well advised to constantly re-evaluate and ensure the compliance of their clauses with antitrust law.

Photo by John on Unsplash